Trump’s Promised Strategic Bitcoin Reserve: How Does It Work?
With Donald Trump’s victory in the 2024 election, the crypto world is buzzing with excitement. Bitcoin has reached record highs, nearing $100,000 per coin, leaving investors on the edge of their seats. Altcoins like Solana and XRP are also experiencing unprecedented growth, adding to the euphoria in the industry.
Investors are eagerly anticipating the implementation of Trump’s campaign promises, particularly his plan to establish a strategic bitcoin reserve in the United States. This project, first mentioned during the Bitcoin 2024 conference in Nashville, Tennessee, aims to diversify the country’s reserves by incorporating cryptocurrencies into the mix of assets.
But how would a strategic bitcoin reserve work, and what would it entail? Essentially, it would involve purchasing 200,000 bitcoins each year for a period of five years, totaling one million units. This reserve would represent about 5% of the total global supply of bitcoins, which is approximately 21 million. The proposal is to maintain this reserve for a minimum of 20 years to hedge against the devaluation of the U.S. dollar and strengthen national balance sheets.
One of the proposed mechanisms for purchasing bitcoins involves using the surplus that the Federal Reserve returns to the Treasury, along with reevaluating gold certificates held by central banks to reflect the metal’s current market value. Interestingly, the U.S. administration already holds over 208,000 bitcoins seized from various cases, including those confiscated from the founder of Silk Road, Ross Ulbricht.
Other countries, like El Salvador and Bhutan, have already established their own strategic crypto reserves, with El Salvador being the first to adopt bitcoin as legal tender in 2021. These countries have made significant investments in bitcoin, using it as a hedge against inflation and leveraging mining operations to build their reserves.
As the crypto industry continues to evolve, the establishment of strategic bitcoin reserves could have far-reaching implications for the global financial landscape. While the details of these plans are still being ironed out, the potential impact of such initiatives is certainly worth keeping an eye on in the coming years.
