The idea of the U.S. adopting a strategic bitcoin reserve has spawned lively debate online. Distant, unwalkable, and, indeed, improbable, the idea is suddenly catching on—partly with political figures and also amid a shifting economic narrative. Former President Donald Trump’s recent claim that the U.S. must become the “crypto capital of the world” and Senator Cynthia Lummis’ steadfast promotion of bitcoin have catapulted the idea.
A crypto advocate, Lummis is behind the “Boosting Innovation, Technology, and Competitiveness through Optimal Investment Nationwide (BITCOIN) Act.” The legislation proposes that a strategic bitcoin reserve could strengthen the U.S. dollar and address the national debt. The proposal has ignited conversations across the industry, but it is not without its challenges in making a real impact.
You Have Data Until October 2023
As the discussion picks up steam, responses vary from good-natured predictions to utter disbelief. Many of the influential people in crypto have expressed their opinions, some of which have turned into massive wealth. The CEO of Blockstream, Adam Back, implied that if the U.S. adopted a Bitcoin reserve, the price of Bitcoin could rise exponentially. “The market has hardly priced this in, though; if the U.S. Strategic Bitcoin Reserve happens, brace for seven-figure bitcoin this cycle,” Back shared via social media.
But others, like George Selgin, an economist at the Cato Institute, contend that such a change would be unnecessary. Selgin likened a bitcoin reserve to the U.S. stock pile of gold, arguing that it would play no useful role in bolstering the dollar’s value. His editorial also emphasized the dollar’s supremacy in international capital markets, arguing that the U.S.’s current foreign exchange reserves are largely superfluous.
Historical Analogies and Fears of Overreach
The potential for government overreach has also raised concerns. Cake Wallet founder Vik Sharma cites historical events such as Executive Order 6102, in which the U.S. government confiscated gold held in private hands in 1933. Sharma further warned that nations that adopted Bitcoin on their reserves could be “tempted” to “suddenly seize” their citizens and constantly justify the need for those dollars in the national interest.
“You think this is going to happen only in countries led by despots? The U.S. did that in 1933,” he warned, calling on people to protect their financial independence. These fears also point to a deeper ideological battle. Bitcoin was conceived as a decentralized alternative to state-controlled currencies, a financial freedom flag for its supporters. To others, allowing governments to co-opt Bitcoin as a strategic reserve is antithetical to its founding values.
Freedom or Control?
Central to the argument is a philosophical question: should a currency created to decentralize financial power be incorporated into state-controlled systems? For advocates, a bitcoin reserve could indicate mainstream acceptance and possibly bolster the U.S. economy. For critics, it is a betrayal of the cryptocurrency’s ethos, turning a tool of individual empowerment into one of government control.
And this has implications that go beyond economic strategy. The use of Bitcoin as a national reserve calls into question the U.S. government’s interest in personal freedom and financial independence. If Bitcoin becomes integrated into public policy with greater regulation or confiscation, then its allure as a source of financial liberation may be greatly undermined.
Unknown Unknowns and Possibilities
The case for a U.S. Bitcoin reserve marks a conflict between decentralized technologies and centralized deployments—a source of contention everywhere Bitcoin goes. Supporters view it as a chance for the U.S. to take the lead on cryptocurrency, while opponents flag dangers and contradictions. That discussion is part of broader tensions between economic strategy and technological progress and economic freedom and self-determination with regard to monetary policy.
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