What Would Be The Point Of A 'Strategic Bitcoin Reserve'?
President-elect Donald Trump has been promoting the idea of creating a ‘Strategic National Bitcoin Stockpile,’ but the purpose of such an institution remains unclear.
The price of a bitcoin (BTCUSD) surged to a record high this week, briefly passing the $108,000 mark after President-elect Donald Trump repeated his campaign trail proposal for the government to hold some amount of the popular cryptocurrency officially.
Even though bitcoin swiftly reversed direction after the Federal Reserve's meeting this week, the idea of a reserve is gathering some steam. It has also attracted some skepticism from economists who question the purpose of establishing a strategic reserve of a volatile speculative asset.
Trump first proposed the idea at a bitcoin conference in Nashville in July. At that time, he said cryptocurrency the government has seized during criminal prosecutions would serve as the core of a “Strategic National Bitcoin Stockpile” and that his policy would be never to sell it.According to BitcoinTreasuries, a website that tracks cryptocurrency ownership, the U.S. owns 198,000 bitcoins worth $21 billion.
Bitcoin's supply is capped at 21 million, and 19.79 million of those are already in circulation.
The idea has echoes of the Strategic Petroleum Reserve. The reserve was established in 1975 in the wake of the oil embargoes against the U.S. which caused shortages and wreaked havoc on the economy. The U.S. stores up to 727 million barrels of oil in underground caverns for use in emergencies.And, like any good trader, the government seeks to sell oil from the reserve when prices are high, bringing prices down, and refill it when prices are low.
The idea of establishing an equivalent government stockpile of bitcoins
