Wise minds in any presidential administration would quickly sell every barrel of oil stored in the Strategic Petroleum Reserve. Why stockpile a global commodity that is always and everywhere accessible at a globally arrived market price?
If the reasoning is based on historical embargoes, it’s flawed. The 1970s oil embargo did not prevent oil from reaching the U.S. – it was merely symbolic. The same logic applies to cryptocurrencies. Why would any government stockpile digital assets that are globally available at market prices?
While a strategic petroleum reserve may disrupt basic economics, at least oil represents real wealth. Digital money, on the other hand, is just an effect of wealth and not a source of it. Why hoard something that is readily available online?
The Trump administration is reportedly considering a Strategic Bitcoin Reserve and Digital Assets Stockpile. But what is the strategy behind this? What benefit would it provide in an emergency? Unlike tangible assets such as dollars or gold, digital coins lack physicality.
Supporters might argue that this reserve is an investment opportunity, noting Bitcoin's limited supply of 21 million coins. However, ignoring Bitcoin's historical volatility and the impracticality of government investment in cryptocurrencies raises questions about the wisdom of such a reserve.
Regardless of whether the value of a digital asset rises or falls, the concept of a strategic reserve highlights the limitations of cryptocurrencies as mediums of exchange. Money is fundamentally an effect of wealth, facilitating transactions among producers of value.
The idea of a digital reserve implies an expectation that the value of these coins will continually rise. If this is true, it benefits private holders of digital wallets but could be detrimental for those who don't.
Volatile assets cannot effectively serve as money. Therefore, the best outcome for proponents of a digital reserve is skyrocketing prices that only reinforce the notion that these coins are not true money. This raises the question: what is the value of government involvement in such speculative assets?
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