Nick Szabo: Bitcoin More Secure Than Gold

By Kyle Torpey Dec 3, 2015 6:55 PM EST

Nick Szabo is perhaps best known for his research in digital currency and for popularizing the concept of smart contracts. In the past, Digital Gold Author Nathaniel Popper has claimed there is convincing evidence that Szabo is Bitcoin Creator Satoshi Nakamoto.

[Read More: Nakamoto Institute’s Krawisz: Bitcoin Does Well When Governments Act Stupidly]

Although his work is highly respected in online circles, the computer scientist, lawyer, and cryptographer has not made many public appearances over the years. That changed during the recent Bitcoin Investor Conference as Szabo decided to make a relatively short presentation on Bitcoin and other blockchain-based assets.

Improving Gold with Computer Science

Before talking about bitcoin, Szabo put aside a portion of his presentation to discuss his own creation, bit gold. Bit gold is often referred to as the direct precursor to Bitcoin, and the two systems share many common attributes. Szabo discussed his intention to improve gold through computer science with his bit gold idea:

“Bit gold was pretty much a transparent attempt to . . . take the properties of gold — the economic properties of gold, such as unforgeable costliness — but let’s improve the security properties . . . The idea was to use the tools of computer science to come up with something better.”

It’s Difficult to Secure Gold

One of the reasons Szabo wanted to make a new gold for the digital age was that real gold is not all that secure. The bit gold creator mentioned a few real-world examples of gold’s security issues during his presentation:

“In the history of money, gold has been very insecure. The Spanish looted the Aztecs. The English looted the Spanish. FDR confiscated gold. There’s a lot of situations where gold was not secure enough to use.”

Bitcoin is much easier to store than gold because all one must possess to truly own some bitcoin is the private key to a Bitcoin address. This private key can be stored in a computer, on a piece of paper, or even in one’s own mind. Access to one’s bitcoin can also be protected with a mnemonic phrase. In many cases, information is much easier to protect than a physical object.

[Read More: Bitcoin Hardware Wallets Could Become as Ubiquitous as Smartphones]

Bitcoin as a Better Reserve Currency

Due to bitcoin’s superiority over gold in terms of security, Szabo also mentioned that the digital currency may be useful as a reserve currency for banks and governments. He explained:

“Reserve currency — this one [bitcoin] hasn’t been used for yet, but it’s something I envisioned when I was [developing] bit gold and something you could still do with bitcoin. Governments and banks could use [bitcoin] as their reserve currency. When political distrust rises — when wars break out — it’s going to be a lot more secure to be holding cryptocurrency than to be holding gold, especially since a lot of the world’s gold is held and entrusted in the United States anyway.”

[Read More: Sidechains Could Turn Bitcoin into the Reserve Currency of the Internet]

It appears that Szabo has decided to become more of a public figure as of late, as he also recently presented at DEVCON 1 in London. Whether he created Bitcoin or not, the cryptocurrency community is happy to listen when Nick Szabo speaks.

Featured image via MadBitcoins.


Kyle Torpey is a freelance journalist who has been following Bitcoin since 2011. His work has been featured on VICE Motherboard, Business Insider, RT’s Keiser Report, and many other media outlets. You can follow @kyletorpey on Twitter.

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