March 3, 2025 - 7:30pm
Elon Musk and Donald Trump are still trailing their auditing trip to Fort Knox, to figure out what’s gold bullion, and what’s gold spray-painted polystyrene blocks. But the question circulating on Sunday was more esoteric than whether there is still any gold in the US Treasury: namely, what is the digital equivalent of Fort Knox? Is there a wallet yet made that could safely hold $100 billion?
Yesterday, the US President announced a “new strategic reserve” of cryptocurrency. This would, he claimed in a post on Truth Social, make the US “the Crypto Capital of the World”. Immediately afterwards, the prices of the five coins he named in the initial reserve — Bitcoin, Ethereum, XRP, Solana and Cardano — spiked by about 60%, illustrating just how volatile crypto is.
The plan is that the US Government will hold these in much the way that the Treasury holds gold, or foreign bonds as a hedge. What sets crypto apart, however, is that it is highly correlated with precisely the kinds of market downturns that one would normally hedge against. One might wonder why the US Government should be getting into the game at all — only this is a regime which likes shiny new things, while crypto entrepreneurs like to finance Trump’s election campaigns.
One Republican-backed Senate bill wants to direct the US Treasury to buy one million Bitcoin. Were the cryptocurrency to shoot up in value across the next decade as much it has done in the last one, that stock would be worth over a trillion dollars. As a matter of neo-cold war geopolitics, the argument goes, it would be better that America has the biggest stake in crypto, rather than the Chinese or the Russians. But, much like sending a dog into space, while impressive, the exact strategic payoff here is harder to see.
In many ways, it’s the opposite of a hedge, traditionally an insurance against loss. Instead, Trump’s crypto strategy is an insurance against enemy profit, which takes government into the realm of mere gambling. The point of governments holding gold or bonds is historically that they might be sold off in order to defend the national currency; selling off Bitcoin to shore up the dollar is a far more indirect act.
Another proposal is to use the stock of cryptocurrencies already confiscated by the FBI and other agencies from criminals. This would at least take the sting out of throwing taxpayers’ money at the reserve. Musk is also set to launch X Money — another key step on his road to the “everything app” he wants X to be. X Money will inevitably feature crypto trading, as Revolut and Cash App already do.
Of course, top of Trump’s reasons for the strategic reserve is simply “the legitimation of crypto”, growing the industry by giving it the halo of government backing. Yet legitimation without utility is an obvious negative, and the energy now clustering around crypto represents a market misallocation. Real dollars are being spent buying up imaginary assets: dollars that could be used to found real companies. Even as he rips down the fake economy of, say, USAID with one hand, Trump erects a whole new Potemkin city with the other. It’s going to be a confusing four years.
Oh , where to start. This article is a poor article that cant really be argued with. I mean, everything is in a bubble really – stocks, real estate, crypto. Everything just going up and up. Why ? Because they print money, thry lower interest rates, they save banks, the government keeps borrowing to fund everything from education to war to social housing, cushy contracts, soup kitchens ( i.e good and bad causes). They just keep throwing “real dollers” at every problem. The upshot is that work doesnt pay enough to buy a house and start a family for the average person.
You cant save in a devalueing currency. Bitcoin though is designed to appreciate ( limited supply) . People are cottoning on slowly. If interested read the bitcoin standard or, the big print.
The other ” cryptos” are scams btw. My guess is that trump is throwing these in the pot to distract from the big move into bitcoin that is coming ( as a smokescreen basically). As dollers are printed to fund the 36trillion debt bitcoin goes up. Americas bitcoin holders will be the beneficaries of the coming devaluation if bitcoin continues to work.
Perhaps the fundamental problem with Bitcoin is that although its supply is limited, the number of potential cryptocurrencies is infinite.
Most cryptocurrencies are worse.
For details, see “Attack of the 50 foot blockchain” by David Gerard.
Central bank digital currencies are worst of all.
The conclusion of the article seems fair to me:
Technocrats like Musk know that real wealth is in natural resources. Whatever game they’re playing here, it won’t end well for the little people.
Hmmm, i have sympathy with that argument as it is logically flawless. Btc isnt magic and in theory could be usurped by a better crypto but it is reputable in that it is decentralised and based on consensus rules. But as its market cap continues to grow relative to the other cryptocurrencies and outlasts them it just doesnt look like it will be competed with effectively even if a “better” crypto comes along
Crypto is only useful for traders. Buy at a price point and hopefully sell higher. It has little functional value.
Crypto currency makes as much sense as electronic voting machines.
People promoting it don’t have your best interests at heart.
CBDC is perhaps the worst idea I’ve seen in my lifetime.
Where was the Bitcoin price spike following the announcement? I can’t find it in any of the price charts.
Humm
Well I not sure if any form of currency is solid. Currently using the Country’s dollar or pound etc would stand up to the internet crashing. Certainly doesn’t when that happens, and it does happen.
Banks literally own your assets once you “put your assets on their side of the counter” and heaven help you if they shut the door.