Nick Szabo is a popular cryptographer who has recently said that Central Banks might resort to cryptocurrency reserves as a means of supplementing the national gold reserves. The industry expert also thinks that countries with troubled economies will see an increase in the usage of cryptocurrency.
At the Bitcoin Summit at the Israel University of Tel Aviv earlier this week, Szabo spoke his mind on the cryptocurrencies and their position in traditional economies. In addition, Szabo says that Bitcoin will see an increase in demand in nations where the economy has been disrupted from failing financial ventures. Even in countries which have been blacklisted the worldwide trade will have the same occurrence.
As reported by Live Bitcoin News, the Russian university lecturer who has connections to the government, Vladislav Ginko has said that the nation is planning to invest in Bitcoin in order to circumvent US sanctions. Ginko stated that “because of US sanctions, Russia’s elite is forced to dump US assets and US dollars and invest hugely into Bitcoins. The central bank of Russia sits on $466 billion of reserves and has to diversify in case there are limited opportunities to do it (in the future).”
On top of this, Szabo holds that Central Banks will eventually turn to cryptocurrency reserves as a way to supplement the nation's gold reserves. The cryptographer also believes that this will be driven by the lack of trust between foreign governments.
“There’s going to be some situations where a central bank can’t trust a foreign central bank or government with their bonds for example. […] One solution that’s been developed is to have the Swiss government hold it for you – that’s not a trust minimized solution. The Swiss government itself is subject to political pressures and so a more trust minimized solution is cryptocurrency.”
Another good point was raised by Szabo by highlighting that gold is technically vulnerable whereas this isn’t the case for Bitcoin.
So in the end, the leading cryptocurrency could actually replace gold as a whole and therefore receive mainstream adoption. For this though, only time will tell to see how well this could become reality. What are your thoughts? Let us know what you think down below in the comments!