When Google’s director of engineering, Ray Kurzweil, started accepting audience questions at the Exponential Finance conference earlier today, the first three asks were about blockchain.
The man who in large part built his reputation based on what are widely considered accurate predictions based on historical data, talked about the power he believes cryptocurrencies have to cross borders and maybe replace national currencies.
But, he expressed skepticism that bitcoin would be that replacement. Addressing an audience of 700 senior executives, technologists and more, at the Exponential Finance event hosted by Singularity University, which he co-founded, Kurzweil explained his doubts.
While he described “assumptions” about bitcoin’s ability to scale as “quite accurate” he said that people won’t be looking at algorithms to make their spending decisions.
Instead he argued that it was the historic stability of a currency that makes it valuable, stability he said has been lacking in bitcoin.
“Ultimately, people need to have confidence in their currency and bitcoin in particular has not really demonstrated that. It’s had a good year, but a very rocky life before that.”
In the past year bitcoin’s price has increased from about $580 to almost $3,000. In February, the cryptocurrency surpassed a three-year old record of $1,165, only to regularly experience drops in price in excess of $100 in an hour and hundreds of dollars in a day.
According to Kurzweil, who has developed a reputation as a “futurist” for his uncanny predictions, such inconsistency undermines the cryptocurrency’s value as a currency.
“I wouldn’t put my money into it,” he said.
In spite of Kurzweil’s skepticism of bitcoin as a currency, he also expressed interest in the possibility that the blockchain technology that powers bitcoin and other cryptocurrencies could eventually be adopted by national governments.
He called the “theory” behind blockchain “sound” but said that “people don’t yet have confidence in it.”
While bitcoin’s ability to store value and facilitate transactions across borders has developed a loyal following among a relatively small group of people, Kurzweil said that wider adoption won’t rely on the power of its algorithm, but its historic reliability.
“There’s no reason why currencies should be associated with particular national boundaries and governments,” he said. “However, currencies like the dollar have provided reasonable stability, bitcoin has not.”
However, even as Kurzweil expressed his doubts about cryptocurrency as it currently exists, he argued that the promise of “greater transparency” and control over the creation process behind cryptocurrency could eventually lead a re-imagining of the way countries mint their native currencies.
“Providing greater transparency, and blockchain does provide that, could be something adopted by leading currencies like the existing national currencies.”
Image of Ray Kurzweil on a robot via Michael del Castillo