Who Was Hal Finney and Is His Bitcoin Prediction Coming True?
Finney was interested in — and committed to — cryptography and privacy issues. Still, it wasn’t until he created the cypherpunk mailing list that he could express his opinions on the subject with more assiduousness and focus.
His most notable contribution to the early cypherpunk movement was the first anonymous remailer’s creation, together with Eric Hughes. Specifically, the cypherpunk remailer, Type I, was used for this group’s mailing list.
What Were Hal Finney’s Predictions?
Since Hal Finney was close to bitcoin, he had quite a bit to say about the then-brand-new cryptocurrency. First, in 1993 he predicted the non-fungible token (NFT) boom. Second, he used geo-population stats to predict that bitcoin could have a potential value of up to $10 million.
Another fascinating prediction that seems to be true is cryptocurrencies’ relationship with traditional banking and currencies. The below excerpt was taken from a forum thread on bitcointalk.org on Dec. 30, 2010.
“There is a very good reason for bitcoin-backed banks to exist, issuing their own digital cash currency, redeemable for bitcoins. Bitcoin itself cannot scale to have every single financial transaction in the world broadcast to everyone and included in the blockchain. There needs to be a secondary level of payment system which is lighter weight and more efficient. Likewise, the time required for bitcoin transactions to finalize will be impractical for medium to large value purchases.
“Bitcoin-backed banks will solve these problems. They can work like banks did before the nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserves, while others may be 100% bitcoin-backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others.
“I believe this will be the ultimate fate of bitcoin, to be the ‘high-powered money’ that serves as a reserve currency for banks that issue their digital cash. Most bitcoin transactions will occur between banks to settle net transfers. Bitcoin transactions by private individuals will be as rare as … well, as bitcoin-based purchases are today.”
Are Hal Finney’s Predictions Coming True?
Bitcoin could hit $10 million one day, and Finney was undoubtedly right about NFTs. But what about his prediction of crypto and the banks? Here are two examples of this possibly coming true.
Terraform Labs’ Founder and CEO Do Kwon recently announced digital transformation solutions company Ust would be backed by a $10 billion bitcoin (BTC) reserve. Terraform Labs created the Terra protocol, which has developed the stablecoins terraUSD (UST) and luna (LUNA), the latter of which algorithmically backs the former.
Terraform Labs is not exactly a bank, but it’s releasing its own digital currency to simplify payments and it’s about to be backed by bitcoin. Even if you vehemently reject altcoins (non-bitcoin cryptos), this is monumental news for bitcoin enthusiasts.
The UK Government and Stablecoins
Cryptocurrencies called stablecoins typically peg their value to a fiat currency such as the dollar to maintain a stable value. As a result, they could expand consumer choice and provide more efficient means of payment with appropriate regulation.
In the U.K., legislation will be introduced to bring stablecoins — where they are used as a payment method — within the payments regulatory perimeter, allowing stablecoin issuers and services providers to operate and invest there.
Recognizing and regulating this technology from the beginning will ensure financial stability and high regulatory standards. Moreover, this new technology can be used safely and reliably.
Recent remarks by the U.K.’s Economic Secretary to the Treasury John Glen at the Innovate Finance Global Summit outlined the U.K.’s vision for becoming a global hub for crypto-asset technology.
Hal Finney passed away in 2014 at age 58 from complications of Lou Gehrig’s disease. One thing is for sure — he played a significant role in creating and promoting cryptocurrency. And he clearly could see pretty far into the future.