What does the Strategic National Bitcoin Reserve consist of?
US President-elect Donald Trump usually leaves no one indifferent, and his plans for cryptocurrencies are no exception. One of his election proposals consists of create a strategic national bitcoin reserve. Although El Salvador has already done this, for the world’s largest power, the implementation of this project will be a major milestone and could have an impact on the rest of the world. But what does Trump promise?
First of all, you need to know that the Republican election platform does not include this measure as such. The promise to create a Bitcoin reserve was made by Donald Trump this summer at a global crypto event held in the United States. If completed, the United States will be making a strong bet on the digital asset. However, no details are known about the Republican’s specific plans and nothing has been specified about this. It is therefore striking that, despite the significant measure, it is not included in the official program. It remains to be seen what will happen during the next term.
Although the Republican leader did not provide details, it is possible to understand what the creation of a national bitcoin reserve would mean. Overall, this proposal is not far short of adding another asset to the Federal Reserve’s (Fed) reserves, such as cash, gold or foreign exchange. The central bank could buy Bitcoin and diversify its current portfolio. In practice, the agency would purchase the bitcoins and store them in a box.
Central banks accumulate reserves to ensure their liquidity and safety. Not only do they have money in their own currency as it can register ups and downs, but they also protect themselves with other currencies so that they can use them more profitably, have some margin with exchange rates and not put their risk in one currency. object. In particular, gold’s role in reserves is more focused on protecting a portfolio from inflation. Adding bitcoins will long-term bet with the prospect of continued growth of the token and will provide a refund.
In its long-term strategy, the Fed has largely stuck to the gold it has accumulated over the past few decades, although some has also arrived, but in small quantities. Something similar could happen with Bitcoin. Although Trump did not specify, there are proposals from his party in this regard. Republican Senator Cynthia Lummis introduced Bitcoin legislation to the Senate. The proposal suggests buying 200,000 bitcoins per year until one million is reached and storing them for 20 years.
That’s right, will be purchased by selling part of the current gold reserves, who have worked at the Fed for decades and whose value has increased significantly. In fact, the agency has several gold bars worth $42, so if it decides to sell them at current prices of around $2,650 an ounce, the profit is clear.
In any case, the US already has Bitcoin. In fact, it is the country in the world that has the most. Specifically, 213,246 Bitcoins, according to crypto data company CoinGecko. Next comes China with 190,000 Bitcoins, the UK with 61,000 units and El Salvador with approximately 5,800. It should be remembered that the total number of Bitcoins is 21 million.
That is, Donald Trump’s country already has bitcoins, although they are not part of the national reserve. All these cryptocurrencies valued at nearly $19.87 billion at current prices and is the result of criminal activity. they were therefore confiscated by the authorities. If Bitcoin were added to the Fed’s reserves, that amount could be included in the amount earmarked for savings in Senator Lummis’ proposal.
The United States has precedent in El Salvador, the first country in the world to accept Bitcoin as legal tender. In addition to this measure, Naib Bukele is creating his own strategic reserve. As we already said, you already have about 5800 Bitcoins. Bukele has always advocated the strategy of gradually buying bitcoins and holding them for the long term. In fact, according to a website that lists all of its operations, the profit margin was more than 100%.
Any country that would make such a risky bet would do so because it has blind trust in Bitcoin and assumes prices will rise.
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