Charles Hoskinson: Bitcoin cannot become the world’s reserve currency – Cardano can
Bitcoin has been lauded for its many capabilities, including creating freedom, hedging against inflation, and becoming a world reserve currency. However, Cardano (ADA) founder and Input Output Hong Kong (IOHK) chief Charles Hoskinson believes certain weaknesses will prevent Bitcoin from being the world’s reserve currency.
In a recent interview on the Crypto Jebb YouTube channel , Charles Hoskinson discussed “dystopian systems of government, blockchain solutions for the former, and leadership principles to thrive in the crypto economy.” He questioned bitcoin’s ability to become a world reserve currency, saying that rising energy consumption is leading to centralization — which goes against the core of the blockchain ethos. He believes there is no reason for a cryptocurrency to use an energy-intensive process when there are better alternatives.
Cardano – the better world reserve currency?
Bitcoin’s proof-of-work (PoW) algorithm consumes significantly more energy than the network (PoS) proof-of-stake algorithm. Some researchers believe the PoS algorithm consumes 99.99 percent less. That, and the global environmental goals, especially reducing energy consumption, are the reasons why Ethereum wants to switch to PoS with “The Merge”. And although bitcoin mining has reportedly become more environmentally friendly of late, its thirst for energy is still a concern for many.
Nor does Charles Hoskinson share the view that scarcity arises from high production costs. Rather, he sees the causes of scarcity as a product of monetary policy made with an asset and in its utility.
“If you make paintings where you can paint one by hand and the other by machine, and both look the same and the demand for both is the same, then the effort for one is a thousand times greater than for the other.”
According to the developer, a suitable digital standard requires smart contracts, metadata standards and systems with high throughput and millions of transactions per second. Bitcoin has certain limitations, he says, but it certainly has the potential to evolve.
Displacement of the dollar by cryptocurrencies
It is “not impossible,” he says, for cryptocurrencies like his own creation, Cardano, to become the world reserve currency. But whichever cryptocurrency fills that role, crypto billionaire Hoskinson believes “dedollarization” is inevitable.
“It will just come down to what nation states think they need.”
The reason for de-dollarization is the rising US national debt, which is driving people to turn to alternative monetary standards. According to USDebtClock.org, the US national debt currently stands at $30 trillion. According to forecasts, this value will increase to $89 trillion by 2029, which would significantly slow down the country’s economic growth.But Hoskinson does not expect such an event to happen overnight.
“It’s not going to be like a light switch where we suddenly lose the dollar, it’s going to be more like a glider.”