Bitcoin advocates have long referred to this cryptocurrency as ‘digital gold’, and such a description is gaining more traction among American politicians. The latest episode was provided by Donald Trump, the Republican candidate in the presidential elections in November, who was the keynote speaker at the largest bitcoin conference held in Nashville last weekend.
In his speech at the event, Trump dismissed the idea of the U.S. creating official strategic financial reserves in bitcoin. However, if he becomes president, the U.S. government will not sell any bitcoin it currently owns, emphasized the former White House resident, as reported by CNBC. The federal sheriff’s office has been auctioning off assets seized by U.S. police and the Federal Bureau of Investigation (FBI) from criminals for years, and in recent years, cryptocurrencies have also been sold at these auctions. Trump promised to put an end to such practices.
– For too long, our government has violated the fundamental rule that every bitcoin owner knows: never sell them – Trump said at the gathering. – If I am elected, that would be the policy of my administration – to hold all the bitcoins that the government currently has or will receive in the future – added Trump.
Sales Pressure
The U.S. is not the only country where the government sells bitcoin stocks seized from criminals. Recently, this was also the case in Germany. The government in Berlin decided to sell about 50,000 bitcoins that were seized in January in the state of Saxony in the east of the country. At the time of the seizure, these bitcoins were worth 2.2 billion dollars. Circles close to the crypto community claim that the German government’s sale is responsible for the selling pressure that reduced the price of bitcoin in early July to as low as 56,000 dollars, but it quickly rebounded. The pressure could continue as the Federal Police Office holds about 30,000 bitcoins. The current price of bitcoin is 69,450 dollars.
Trump’s proposal is significantly milder than the idea put forward by Robert F. Kennedy Jr., a politician and conspiracy theory advocate who wants to be a third candidate in the elections, alongside Trump and likely Kamala Harris. He also spoke at the conference in Nashville, promising to build strategic reserves consisting of four million bitcoins, which would be equivalent in value to the U.S. gold reserves. According to the World Gold Council, the U.S. currently holds the largest gold reserves in the world, at 8,133 tons. The son of Robert Kennedy, the former U.S. Attorney General and senator assassinated in 1968, stated that as president, he would sign an executive order requiring the Treasury Department to purchase 550 bitcoins daily.
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Crypto market analyst Boris Agatić, commenting on Trump’s announcements, says that this politician is known for his controversial statements and positions that often provoke various reactions.
– His announcement that the U.S. government will not sell seized bitcoins if he becomes president could have significant implications for the crypto market. It could be positive for the market as it would reduce the supply of bitcoins on the market, potentially leading to a price increase. If the government does not sell seized bitcoins, they become ‘frozen’ and withdrawn from circulation. This could reduce the pressure on the selling side of the market and potentially increase the price of bitcoin due to reduced availability. On the other hand, Trump’s refusal to build strategic bitcoin reserves may be perceived as a lack of long-term vision regarding this digital asset. Robert Kennedy advocates building strategic reserves, which could bring stability and confidence in bitcoin as a store of value. Rejecting this idea can be interpreted as a lack of understanding or trust in the long-term sustainability of bitcoin. I believe there is little chance of a ‘Bitcoin standard’ being introduced, although there are many advocates in the industry for tying the national currency to bitcoin – emphasizes Agatić.
Instant Regulation
According to U.S. laws, a presidential order to purchase bitcoin would not be sufficient to build strategic reserves. New regulations would be needed, which would require Congressional approval. However, some lawmakers have already begun to prepare in this direction. Senator Cynthia Lummis announced shortly after Trump’s speech her plan to create such regulations. According to Lummis’s plan, over a five-year period, the U.S. will collect one million bitcoins, which is five percent of the global supply. Washington would hold these bitcoins for two decades, with the main goal of reducing the public debt that has reached the value of the U.S. economy.
In theory, if bitcoin were to take on the role of gold reserves in the vaults of central banks, it would signify a fundamental change in the global financial system, believes Boris Agatić.
– Bitcoin is often promoted as ‘digital gold’ due to its limited supply and resistance to inflation. If central banks began to hold bitcoin instead of gold, it could provide a similar level of stability and protection against inflationary pressures. Bitcoin’s decentralized nature could also reduce risks associated with political influence on monetary policy. Ultimately, bitcoin is software that is immutable and provides high security and resistance to attacks – assesses this expert.
However, bitcoin is not a perfect solution.
– Bitcoin is still an extremely volatile asset, which could pose a problem for central banks seeking stability. Additionally, the regulatory framework is still not fully developed, which could present further challenges – believes Agatić.
In summary, Agatić lists the main advantages of bitcoin as an alternative to gold reserves, primarily its limited supply of 21 million pieces, making it resistant to inflation. Furthermore, bitcoin is decentralized and not subject to political influences. Additionally, transactions on the bitcoin network are public and transparent.
The disadvantages include volatility as the price can vary drastically, which poses risks for the stability of reserves. There are also regulatory risks, as the lack of a clear and uniform regulatory framework can present challenges. Finally, one should not overlook the technical complexity – securely storing and managing bitcoins requires technical expertise and can be complex, concludes Agatić.
