Bitcoin Reserve: Potential Largest Crypto Scam Ever
The US government is considering creating a strategic reserve dedicated to Bitcoin, as President-elect Donald Trump seems to be contemplating. Many are wondering if this is a good idea. In short, it doesn’t seem like it. In fact, it could be the biggest crypto scam yet.
Bitcoin has been on a wild ride lately, surging more than 50% since Nov. 4 and surpassing $100,000. Part of this rally is driven by hopes that crypto advocates, who have donated generously to Trump and other politicians, will convince Trump to establish this reserve. But the devil will be in the details.
President Trump has hinted that the reserve might involve holding on to Bitcoins confiscated in criminal cases, which amounts to about 200,000 Bitcoins, or $20 billion. However, Senator Cynthia Lummis has introduced a bill that would take it a step further, directing the government to purchase an additional one million Bitcoin over five years, and then hold on to that stockpile for at least another 20 years.
But why would the government need a Bitcoin reserve? Strategic reserves are typically established to secure crucial commodities like oil for the economy or national security. The Federal Reserve, for example, trades assets to maintain full employment, low inflation, and financial stability.
Using taxpayer money to buy Bitcoin doesn’t serve any clear public purpose. Bitcoin has no practical use in industry and isn’t backed by any physical assets. So, creating a Bitcoin reserve seems like a risky move that might not benefit the public in any meaningful way.
