American computer scientist and cryptographer Nick Szabo has suggested that cryptocurrencies such as Bitcoin will begin to be used far more frequently as rescue packages for struggling economies, particularly in nations hit by sanctions, and that gold will be heavily supplemented by cryptocurrency in the future.
Countries currently facing sanctions from the US alone include Cuba, Venezuela, North Korea, Iran, Zimbabwe, Syria, Russia, Somalia, Sudan, and Yemen. To date, Venezuela has been the most prominent in adopting a cryptocurrency solution for its failing economy, with Zimbabwe and Iran also turning to a central bank cryptocurrency to fight economic pressure and sanctions.
Zimbabwe’s central bank imported over USD 400 million last year in an attempt to ease the cash shortage, with citizens traveling to border towns South Africa to access cash from international banks, in a virtually cashless economy. During the past six months, the country has shifted from a total ban on cryptocurrency to viewing it as a solution to its economic plight.
At the recent Israel Bitcoin Summit in Tel Aviv, Szabo said that hyperinflated countries are increasingly turning to cryptocurrency and central banks will show a greater dependency on digital currencies to supplement gold reserves moving forward. He also referred to gold’s historical vulnerability as a reason for promoting cryptocurrency as a global reserve, arguing:
“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.”
At the same conference, Israel’s Head of the National Economic Council, Avi Simhon, made comments that Bitcoin technology was inefficient and would consequently become obsolete, a suggestion that Szabo refuted.
Reportedly, Szabo’s comments were in response to the statements made by Simhon claiming that cryptocurrencies will be the future, and nations will turn to crypto over gold, given time.
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