Central Banks might resort to cryptocurrency reserves as means of supplementing national gold reserves according to veteran cryptographer Nick Szabo. He also holds that the use of digital currencies will rise in countries with distraught economies.
Cryptocurrency Over Gold
Speaking at the Israel Bitcoin Summit at Tel Aviv University on January 8th, legendary cryptographer, Nick Szabo, said that national central banks might resort to cryptocurrency reserves as means of supplementing existing national gold reserves.
— Steph Vaughan👩💼🚀 (@GoodStephV) January 8, 2019
One of the reasons for this to happen, according to Szabo, is the potential lack of trust between foreign banks or 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.
In addition, Szabo also notes that gold reserves are “physically vulnerable,” saying:
The other problem with gold reserves is that they’re physically vulnerable. When the Nazis conquered countries in Europe, the first place they went to was a central bank’s gold reserves.
Bitcoinist reported on the uncanny resemblance in the historical performance of gold and Bitcoin in the past. Unlike gold, however, Bitcoin “has more utility” admitted US economist and Bitcoin-critic Paul Krugman.
The Winklevoss twins also recently stated that “Bitcoin is better at being gold than gold,” predicting that it should surpass the precious metal’s $7 trillion dollar market cap in the future.