A Blockchain and Crypto pioneer, Nick Szabo – many believe that he could be the anonymous developer of Bitcoin (BTC), Satoshi Nakamoto – said that central banks will more than likely turn to digital currencies to support their reserves, while speaking at the Israel Bitcoin Summit at Tel Aviv University on Tuesday, January 8, 2018.
Nick is a veteran cryptographer who developed the construct of “BitGold” – an unenforced, pre-BTC privacy-aimed crypto way back in 1998. Nick is the first person to have gestated smart contracts in the year of 1996 and remain as the top thinker in the cryptocurrency industry.
Nick suggested that in 2019, cryptos may highly be viewed as a potential alternative to existing central bank reserve denominations, saying:
“There’s going to be some circumstances where a central bank can’t completely trust a foreign central bank or a foreign government with their bonds for example. One significant solution that’s been developed is to have the Swiss government hold it for you – that’s not a trust minimised solution. The Swiss government itself is not immune to political pressures and so a more trust minimised solution is crypto.”
Central bank reserves are an integral breakwater of the financial system currently in place, and are employed to backstop liabilities, offer a backbone against economic risk, and to shape monetary policy.
Nick described physical gold as particularly weak, referencing the historical case in point of the Nazi’s robbery of Europe’s gold reserves, starting with Austria’s gold reserve in 1938.
Nick further anticipated that cryptoasset adoption would increase in nations where economic misdirection has head-longed blasting national currency devaluation and/or rising prices, and in addition to politically blackballed states arced by the extreme pressure of international authority and sanctions.
Coming to the latest state of technological growth in the digital currency industry, Nick predicts that this year will inaugurate surged adoption of second layer solutions like Lightning Network.
Nick’s remarks were precipitated by a dissentious opening speech from the head of Israel's National Economic Council, Avi Simhon. He is also a senior economic policy advisor to the prime minister of Israel.
On Tuesday, January 8, Simhon started the Israel BTC Summit by stigmatizing BTC as inefficient, anticipating the crypto’s fading. However, for the last two years, digital currencies such as BTC, BCH, ETH, XRP have been gaining grip in countries such as Venezuela, Iran and Zimbabwe.