Nick Szabo is a cypherpunk and cryptocurrency pioneer who in the 1990s proposed smart contracts as well as Bit Gold, a predecessor to Bitcoin. He has also written some of the most influential articles in the cryptocurrency space, including “Shelling Out: The Origins Of Money,” “Trusted Third Parties Are Security Holes” and “Money, Blockchains, And Social Scalability.”
The history of money has for centuries been dominated by either precious metals — especially gold — or government-enforced fiat currency. How does Bitcoin fit into this history?
The history of money ties in because Bitcoin solves a number of fundamental historical shortcomings of both precious metals and fiat as money: costly delivery and insecure custody, expensive and/or trust-based validation, and digital centralization.
How does Bitcoin solve these problems?
“Costly delivery and insecure custody are the same problem for gold, but solved by Bitcoin in two distinct ways. The first is solved by its seamlessly global transfer of control, the second is mostly but not entirely solved by good key management techniques, e.g. multisig.
“Expensive and/or trust-based validation is solved by Bitcoin full nodes’ inexpensive and trust-minimized validation of all transactions, so there’s no necessity for coins or IOU bank notes with their abusable trust.
“Digital centralization, arising either under a vault-and-IOU gold standard or fiat — enables and incentivizes financial censorship, turning money into an unreliable store of value, more a medium of political activism and less a medium of exchange. Bitcoin fixes this with its censorship-resistant decentralization.”
What effect do you think the introduction of Bitcoin could have in the context of the current fiat currency system?
“Our 1971-plus fiat experiment has given rise to a growing mountain of world debt, both public and private, increasing risks of both inflation on one hand or debt collapse on the other. Bitcoin fixes this by being a readily-validated form of hard money with a publicly-auditable money supply, and with its 21 million cap being a superior store of value which will be strongly resistant to inflation and compete, as Michael Saylor notes, with the hundreds of trillions of dollars’ worth of fiat-denominated securities.”
Szabo will deliver his keynote where he expands on these topics at the Bitcoin 2021 conference in Miami on June 4, at 10:10 AM. Make sure that you set a reminder for the Bitcoin 2021 day one YouTube live stream and one for the Bitcoin 2021 day two YouTube live stream now. Also be sure to follow Szabo on Twitter, and read more of his content on his Unenumerated blog.
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