Mint Quick Edit | Trump’s idea of a Bitcoin reserve is richly ironic
Summary
- The purpose of an official Bitcoin reserve proposed by the US president-elect is unclear. Perhaps it’s a stand-in for gold. But Bitcoin’s launch aim was to supplant all manipulable currencies. Hence, the irony of Trump’s embrace.
Ever since Donald Trump won the US presidential election, Bitcoin has been soaring, thanks to the president-elect’s positive views on crypto. On Monday, it got another boost after Trump affirmed he would set up a Bitcoin reserve a la the US oil stash.
That sent the price of the world’s largest digital token to a record high of more than $106,000.
A rich government like America’s buying Bitcoin this reserve status would imply a burst of demand for it, which itself is a “buy" signal for other investors looking for value appreciation.
Also read: Crypto frenzy: With Bitcoin above $100,000, will ‘Hodlers’ have the last laugh?
What purpose such a reserve would serve, apart from rewarding “crypto bros" with big gains, remains unclear. Perhaps the appropriate analogy is not with oil, but gold, which every country holds as a back-up.
Like gold, Bitcoin offers no returns but acts as a store of value because of its scarcity, but it has the added advantage of weighing nothing and imposing no storage costs.
Also read: Behind Bitcoin’s rally is a simple fact: Supplies are limited
Since nobody can influence its supply, by design, it is a credible substitute for bullion.
That said, this cryptocurrency is likelier to challenge the dollar dominance that Trump wants upheld than any nationally promoted alternative currency. Legitimacy for Bitcoin would be rich in irony.
Also read: India's crypto industry expects Bitcoin surge to boost domestic business
