Cryptocurrency's Misconception Regarding Currency Value, Reinforcing Crypto's Non-Currency Nature
Look, even the most shrewd brains in any White House would ditch the idea of hoarding every single bitcoin sitting in the Strategic Petroleum Reserve. I mean, seriously, there's not a peep about bitcoin or cryptocurrency policies in the Constitution, right? So why on earth would a government stockpile something like bitcoin, a digital commodity accessible worldwide, with its price determined on a global scale?
If we're thinking that countries can block us like they did back in the '70s, we should hit the books again, or better yet, never open them in the first place. The '70s blockade didn't keep a drop of oil from reaching the U.S. Scarcely an economic move, more of a symbolic gesture. The oil will always find its way.
Comparably, this bitcoin situation is no different. Why stash digital coins in a government vault when they're already available everywhere, ready for purchase at a globally agreed price?
Mind you, unlike oil, which represents tangible wealth, digital money is just, well, money. It doesn't generate wealth but, rather, represents it. Why hang onto digital assets that are already at your fingertips, just a click away?
But, here's the kicker, the Trump administration is working on creating a Strategic Bitcoin Reserve and Digital Assets Stockpile. WTF is strategic about that? In a pinch, you can't chow down on digital coins. Heck, they're not even real, just numbers on a screen. What's the strategic angle behind stockpiling digital assets?
Some might argue it's to let the federal government get a cut of the crypto pie. Don't you know that there are a limited 21 million bitcoins? They've only go up!
OK, fine, let's ignore Bitcoin's choppy past price movements, the risk of government playing amateur investor, and not giving a hoot about government being right or wrong about the future of crypto. Let's pretend that a strategic digital reserve makes sense. We can't ignore, though, what having such a reserve suggests about a government hell-bent on starting one. This applies whether the crypto market soars or collapses.
Whichever way the cryptocurrency market moves, it shows just how limited digital currencies are as a medium of exchange. That's because, at the end of the day, money is just a reflection of actual wealth. It's not a stimulator of wealth—it's merely a negotiated value system among producers of real wealth, allowing them to swap goods of roughly equal value.
Back to the digital coin reserve, it's clear that the idea of stashing crypto in a digital wallet is that the coins are destined for a never-ending rise. If that's true, awesome for those outside of government holding crypto wallets. Sucks for everyone outside government who owns crypto wallets but assumes the coins are about to bust.
Either way, what's volatile is the anti-money. Because products for products underlie all trade deals referred to as "money," unstable money fails as an exchange medium. In other words, the best crypto boosters can hope for is a dramatic increase in coin prices, transforming crypto into the polar opposite of money—at which point someone might explain the benefits of giving government money to play with so that they can have more money.
Cryptocurrencies like bitcoin, unlike oil, are globally accessible and priced on a global scale, so it seems counterintuitive for governments to hoard them, as John Tamny suggests. The Strategic oil reserve and the proposed Strategic Bitcoin Reserve are not comparable, as oil is a tangible resource whereas digital money is just a representation of wealth. If the Trump administration's goal in creating a Strategic Bitcoin Reserve is to gain a portion of the crypto market, it raises questions about the government's role in managing digital assets and the potential consequences for everyday investors.
