Whistleblower in exile, Edward Snowden has given his honest opinion on the massive debate surrounding bitcoin. Last week, FRN reported that the cryptocurrency had hit a 13 month low, after deflating massively over the course of the last year.
Snowden gave an interview to Ben Wizner, Director of the ACLU ‘Speech, Privacy and Technology’ project, where he said that the belief which supports bitcoin acting as a global currency will merely transfer itself to other cryptocurrencies instead of dissipating.
The Power of Belief
Responding to a question from Wizner about whether he believes bitcoin has long-term intrinsic value, Snowden compared bitcoin to paper fiat money and pointed out that the only difference between fiat and monopoly money is the belief generated by state backing, which essentially boils down to “men with guns.” In his view, while bitcoin and other blockchain-based crypto assets have a severely limited amount of fundamental value, two things, in particular, ensure that bitcoin remains viable in the near term.
The first he said, is scarcity, which is caused by bitcoin’s limited supply of 21 million BTC. This scarcity engenders competition to mine the remaining few million bitcoin, and that alone gives it a measure of value. The second and more significant factor in his view is the fact that large segments of the general population view it as a bona fide means of exchange. According to Snowden, this belief in cryptocurrency frameworks as a method of transferring real-world monetary value outside of banking networks is transferable and will survive the death of bitcoin.
In his words:
“That belief is how cryptocurrencies move enormous amounts of money across the world electronically, without the involvement of banks, every single day. One day capital-B Bitcoin will be gone, but as long as there are people out there who want to be able to move money without banks, cryptocurrencies are likely to be valued.”
“Great Utility, Poor Implementation”
Snowden, who lives in Russia after claiming asylum there in 2013 also revealed that despite his prediction of its impending demise, he likes bitcoin because of the opportunities and possibilities it has created around the world. Using himself as an example he said:
“Let’s say Bank of America doesn’t want to process a payment for someone like me. In the old financial system, they’ve got an enormous amount of clout, as do their peers, and can make that happen. If a teenager in Venezuela wants to get paid in a hard currency for a web development gig they did for someone in Paris, something prohibited by local currency controls, cryptocurrencies can make it possible. Bitcoin may not yet really be private money, but it is the first “free” money.”
Going further, however, he criticised the existing blockchain hashing paradigm, stating that neither of the two main hashing methods are great and new ones should be developed. Without mincing words, he described Proof of Work as an environmentally destructive activity slanted in favour of the rich, and Proof of Stake as a direct handout to the rich in the hope that their greed will keep the system running