I can’t think of any. The current oil reserve is supposed to be used in the case of another oil embargo. But its actual use is to lower gas prices when the administration in power needs a political win.
I actually think the purpose of a Bitcoin reserve is to temporarily increase the price so tech-bros (re: Elon) can sell at a massive profit. Then buy back at a much lower price. It’s just a way to indirectly transfer federal dollars into administration pockets.
I can’t find any reason for the government to buy crypto and hold it in reserve.
temporarily increase the price so tech-bros (re: Elon) can sell at a massive profit.
Actually it is similar to gold reserves (bitcoin is better) without advantaging competitor nations that have gone in on gold reserves already. There is an energy/mining motivation aspect as well as a populist widespread participation.
In terms of “real purpose”, US debt can grow much more unsustainably, and there is something to fall back on when a default occurs. The tech bros that helped Trump do want to use other crypto projects for fintech and other innovation, rather than pump it and dump it.
Bitcoin isn’t gold or oil.
Gold is a thing. It has some utility. You can make other things with it. You can reprocess it into different things.
Oil is a thing. It can be burned as fuel, or made into other things.
Bitcoin is a ledger protocol with limited entries. It is good for peer-to-peer transfer of cash, and speculation. The speculation aspect is a pyramid scheme though, as it’s only backed by the hope that people keep paying more for the ledger spaces, which undermines its function as a medium of exchange, and is unlikely to last as alternative ledgers are abundant, including those that are better suited for private exchange like Monero or ZCash.
Lacking intrinsic value, the only reason to create a strategic reserve of Bitcoin is like that of any other foreign currency. So, market manipulation? A lack of stability in your own currency (but Bitcoin is mostly USD backed)? International exchange (but USD and Euros are better)?
There will never be a default on US debt unless it’s by choice. US debt is in US dollars, which the US makes. There will be inflation. Goods may end up being exchanged in another national or international currency someday. It won’t be Bitcoin.
The jewelry and industrial value of gold is minimal to its reserve value. Vast majority of gold is in form of bars sitting in national vaults. Zero intention of ever using those bars for jewelry/industrial applications.
Bitcoin’s advantages over gold include
- proof, security, and cheapness of reserves including greater protection from war pillage.
- Cheaper and secure transactions. war, piracy, shipwreck proof. Divisibility is also a transactional advantage.
- wealth escape options, including banking/sovereign failure and sanctions.
- Cryptographic applications and protocol extensions including layer 2. But other crypto networks depend on bitcoin.
- Better “tokenomics” than gold. Mining supply of gold increases when prices rise, and also attracts jewelry owners to trade in their jewelry for it to be melted. New reserves always possible finds.
- Points 2 and 3 also make for faster and more secure banking system settlements. You don’t need to rely on counter party bank not declaring bankruptcy for next 3 days.
Bitcoin is mostly USD backed?
No. You can buy bitcoin miners in bitcoin. Electricity costs are always charged in local currency.
There will never be a default on US debt unless it’s by choice. US debt is in US dollars, which the US makes. There will be inflation. Goods may end up being exchanged in another national or international currency someday. It won’t be Bitcoin.
QE worked last time because China helped QE by also buying up US bonds. A much larger QE with US at war/tariff war with whole world will put USD at a credibility crisis, if not in next recession then the one after that. Fractional banking is the real ponzi scheme, and a banking crisis, a property collapse that causes bank collapse. Colonial currencies are not an option to escape USD devaluation, unless they free themselves from servitude. Chinese policy has so far not embraced strong currency value. Bitcoin will always be protection from financial collapse/decline.
Yes, it’s going to make some people very rich.
Ohh, you mean to the country as a whole? No.
The only real benefit I can see would be to have the ability to suddenly crash the market on demand. This might be an interesting way to temporarily disrupt states trying to evade sanctions with crypto, but probably not a great investment on the $ to impact scale.
The worst part about this is the thick as shit stupid tony countries who will have their citizens robbed even worse by their own small thick shitty governments. This is the age of fucking stupidity
This vice article gets into some technical reasons why, although appearances can, and often do, operate independently of incentive and benefit.
I would much rather we had a BTC reserve than we CONTINUED MAKING ACTUAL COINS.
When I visited the Denver mint around 25 years ago our tour guide mentioned we lost about half a cent on every penny we make.
Oh boy, an excuse to share another CGP Grey video!
I was in Australia recently. I don’t think I got any change smaller than 20¢. I did find a 5¢ coin on the sidewalk. The smallest “paper” money is $5, and it’s plastic.
And everywhere here you can pay a $1 bill with credit card so I don’t carry money anymore
Just the rumor of it alone benefits HODLers, and Trump has HODLers who donated to his election campaign.
Dunno, just make sure your stop-loss orders are set so you don’t get burned when the dip comes.
yeah you got it. I mean maybe in some alternate universe where energy overabundance is a real problem and we have to figure out how to get rid of excess because it causes explosions or something. then it would make sense.
“I actually think the purpose of a Bitcoin reserve is to temporarily increase the price so tech-bros (re: Elon) can sell at a massive profit. Then buy back at a much lower price. It’s just a way to indirectly transfer federal dollars into administration pockets.”
This is the way. It’s the only reason they’d do it.
I seriously doubt BRICS has anything to do with Bitcoin, but the US is absolutely concerned about losing the status of world currency. It’s literally how we survive while running a massive deficit. When the rest of the world finds a way to do business without the US getting its cut we’re going to be in deep shit.
That’s exactly what the plan is. They’re funneling themselves government money, but in a way that’s less traceable
It’s not “less traceable”, bitcoin is a public ledger, literally every transaction is documented on the blockchain for anyone and the IRS to see.
… Less traceable in that the price of the coin going up and them cashing out isn’t a direct line from the government coffers to their pocket.
I’m aware it’s a public ledger.
It lets those with bitcoins cash out and leaves the taxpayer holding their bags. That’s it.
The idealism Bitcoin was allegedly created on is long dead.
2010: We can have a currency that the government can’t manipulate!
2024:…
Does the US government control Bitcoin? Can it create new Bitcoins?
Are bad faith questions asked in bad faith?
they can pump the price by buying it
They can do so for gold as well.
Short version: No.
Long version: Nooooooo.
Polite answer: No.
Impolite answer: Fuck no!
I don’t think there is a good reason for anyone to buy Bitcoin, let alone the US government.
No, Please tell me it’s not in Elon playbook ?
US money is incredibly strong, so US$ is way more interesting.
15 years after it’s creation the bitcoin failed to meet the expectation of being a usable money or even “way to pay”
It can’t process 1/100th of what visa does in a day, let alone the other card processors on top of it
