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Bitcoin Might Replace Gold: Nick Szabo

Bitcoin might replace gold: nick szabo

Bitcoin Might Replace Gold: Nick Szabo

Bitcoin might replace gold: nick szabo

According to popular cryptographer Nick Szabo, Central Banks might resort to cryptocurrency reserves as means of supplementing national gold reserves. The industry expert also thinks that countries with troubled economies will see an increase in cryptocurrency usage. 

Cryptocurrency Demand to Increase in Failing Economies

Attending the Israel BTC Summit at the University of Tel Aviv on January 8th, Nick Szabo laid down his thoughts on cryptocurrencies and their position in traditional economies.

He holds that BTC, as well as other censorship-resistant cryptocurrencies, will see increased demand in countries where economies are shaken from failing financial practices. The same will happen in countries which have been blacklisted from international trade.

It’s easy to find reason in his words, especially after the events of late.

Just a few days ago, Vladislav Ginko, a Russian university lecturer with ties to the government said that the country plans to invest in BTC in order to circumvent US sanctions.

Because of US sanctions, Russia’s elite is forced to dump US assets and US dollars and invest hugely into BTCs. 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). – Ginko said.

Better Than Gold

In addition, Szabo holds that Central Banks will eventually turn to cryptocurrency reserves as means of supplementing national gold reserves.

The expert thinks 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.

Additionally, Szabo made another valid point, outlining that gold is technically vulnerable, while BTC, for example – isn’t.

Live BTC News recently reported that central bank innovation will mainly hinge on gold and BTC.

What do you think of Nick Szabo’s position on cryptocurrencies? Don’t hesitate to let us know in the comments below!

Tags: bitcoin, Bitcoin Gold, central banks, cryptocurrency, Gold, Nick Szabo

Published at Thu, 10 Jan 2019 21:00:48 +0000

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Howard Marks Admits ‘Mistake’, Changes Stance on Bitcoin

After previously slamming bitcoin and other digital currencies as “not real”, “fad”, and “a pyramid scheme”, billionaire traditional investor Howard Marks made a spectacular U-turn on his views on the new financial technology in his latest memo to Oaktree Clients.

Howard Marks’ 180 Degree Turn

In his July memo, Howard Marks explored the world of cryptocurrencies and leveled heavy criticism at them. However, after receiving significant backlash from various media outlets for his ‘dinosaur’ views and lack of understanding of the new financial technology, Marks decided to revisit the topic to get ‘enlightened’ and ‘educated’ on the subject. In his new September memo, he claims that bitcoin partisans encouraged him to think of bitcoin as a currency – a medium of exchange – rather than as an investment asset.

The billionaire investor acknowledged his ‘mistake’ as he had been looking at bitcoin the wrong way, and humbly conceded that much of the arguments he made against the cryptocurrency were applicable to the dollar as well. Marks subsequently made the case for qualifying bitcoin as a currency and concluded that although he sees no reason why bitcoin can’t serve as a currency and “become an accepted medium of exchange”, he warned against getting caught up in the hype and buying it with the sole view of making money off it.

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Warning Signs

bitcoin’s volatility, which has seen it rise over 350% in 2017 alone, concerned Marks, who was quick to point out that the lack of an upper ceiling for bitcoin which sees limitless appreciation fails to make sense to him. He asks, “Would you sell your house for euros that are said to be worth two or three times as much as the dollar?”

Although this represents a risk averse and extremely conservative outlook, it does provoke thoughts pertaining to long term stability of currencies. Marks also shares his other major concern, that the low barriers to entry give rise to many competing transaction systems. Would bitcoin’s utility as a payment mechanism be hampered if Amazon announced its own? He asks, “Would you rather transact in bitcoin or Amazonians?”

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The Bottom Line on bitcoin

In the new memo, Marks makes it clear that he advocates for bitcoin as a currency and warns against “lottery-ticket thinking”, which seduces people towards the cryptocurrency as it offers the possibility of vast wealth. Although some elements or “seeds for a boom” that contributed to past historical economic bubbles are evident in Bitcoin’s surge, Marks emphatically makes it known that none of them make bitcoin a ‘mistake’. He also mentions that with the existence of tons of cryptocurrencies and the possibility of endless more, the winner will be hard to call.

As evidenced by the hundreds of e-commerce start ups during the tech bubble, most of which ended up worthless, putting all your eggs in one basket might not be the wisest thing to do. Although Marks said that he still considers it a speculative bubble and therefore still doesn’t “feel like putting my money into it”, he also said that he was “willing to be proved wrong.” For such a juggernaut in the field of traditional financial investing, this is as close as anyone can get to singing the praises of the very technology that might be the cause of their own downfall.

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What do you think of Howard Marks’ new memo and shift in position on bitcoin? Do you agree with his bottom line? How would you respond to his apprehensions? Let us know in the comments below.

Images courtesy of Christopher Goodney/Bloomberg

The post Howard Marks Admits ‘Mistake’, Changes Stance on Bitcoin appeared first on Bitcoinist.com.

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