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  • Writer's pictureGideon Samid

A World Based on Cryptocurrency: The Ultimate Argument Against It

Following its defeat in WW-I, Germany was crushed under its war reparation burden, and its currency collapsed -- only to quickly bounce back to fund Hitler's ominous war machine. Fiat currencies are hinged on national assets: the land, the construction, the industry, and the trained people to operate them. And hence there is no reasonable scenario for 'overnight collapse' and 'disappearance' of any national currency, however teetering.

By contrast crypto currency is hinged on the unproven assumption that the computational complexity that creates it, will hold up. The chance that a smart mathematician with a powerful quantum computer will cause bitcoin or any cryptocurrency to vanish, is not negligible. Cryptocurrency zealots say, 'it won't happen', and cryptocurrency opponents claim, it is imminent. There is no debate though, that if the computational complexity shield is cracked, then the entire currency, every last coin thereto, is blown out of the water. And guess what: there is no authority to hold accountable for this calamity, no replacement government to be voted in to restart the economy.

A persistent total vanishing scenario is unique to cryptocurrency. It was born in a lap of an algorithm, and it will die by a zap of an algorithm. Fiat currencies are born from the talent, sweat and assets of the people ruled by the issuing government. There is no overnight disappearance scenario for fiat currency. Cryptocurrency is a ticking time bomb. It may find parochial uses, shady or otherwise, but it is not a candidate for national, and definitely not global, money.

Fair disclosure: I am the CTO for BitMint , we design digital currency that is mined from a new technology called "The Rock of Randomness". It runs on cryptography, but is not generated by a 'mortal' algorithm. We believe that materially backed digital currency is the future.

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