- Charles Hoskinson is pessimistic of Bitcoin becoming the world reserve currency of the future
- He cited, among other reasons, the lack of smart contract functionality and low throughput
Input Output Hong Kong CEO Charles Hoskinson has opined that Bitcoin is not fit to become a world reserve currency but acknowledged that it could evolve into suitability for the role.
Hoskinson was responding to a question by Crypto Jebb on YouTube that sought to establish what evolution away from the dollar would be like. Despite Bitcoin’s first mover advantage, the Cardano CEO dismissed its submission as a world reserve currency, explaining that it was plagued by characteristics that “don’t make it very desirable.”
So, why not Bitcoin?
As a Proof of Work digital asset, Bitcoin mining consumes massive amounts of power. According to Hoskinson, this translates into a tendency towards centralisation, which he finds unnecessary.
The IOHK CEO reckoned that there is no apparent need to use mechanisms that consume high amounts of energy while there exists alternatives (PoS) that could make flush the same reliability and security while using significantly less power.
Hoskinson also argued against the standing that high cost of production results in scarcity, explaining that in actual sense, the derived scarcity of an asset comes from its utility and monetary policy.
“…if you can do the same work with a different means but use a thousand times less energy and have the same level of reliability and security, then why would you choose up front to spend that? They say that’s what creates scarcity inside the system, and I say well, the scarcity comes from the monetary policy and the use utility of the underlying asset.”
Hoskinson added that Bitcoin lacks in crucial traits that an appropriate digital standard to take over would require; very high throughput to the scale of millions TPS, metadata standards, identity standards, and smart contract functionality.
The national debt crisis means progressive de-dollarisation
On de-dollarisation, Hoskinson noted that El Salvador’s decisive decision to empower Bitcoin as legal tender is proving infectious. He pointed out that more countries, including Brazil and Argentina, are now considering trekking down a similar path.
The CEO explained that de-dollarisation would result from the progressive movement by smaller economies away from the dollar, in addition to the diminishing pricing of things in the dollar – the recent China-Russia natural gas deal was denominated in Euros.
With the US national debt in shambles, Hoskinson explained that this trend is likely to continue pushing users to seek alternative monetary or digital standards. Thus, he observed that the de-dollarisation would not be instant but rather forge a progressive course – more like a glider than a light switch.