[peterldowns]

Can anyone who is pro-crypto (particularly: btc, eth) make the steelman argument for why a "strategic reserve" is necessary for these cryptocurrencies? Or even beneficial? I've been involved in the industry in various ways for years and I fundamentally don't understand why the government owning a lot of btc/eth is advantageous. I understand the "reserve" part, but I don't understand the "strategic."

I'm open to the idea that this could be both a good idea and a way to line insiders' pockets with US taxpayer money, but it really just looks like the latter to me.

(I've been able to come up with a few theories but they all involve the complete destruction of value of the US dollar, and I don't understand how that would be net good for America.)

[cypherpunks01]

The best case is an argument similar to the reason the US gold reserve exists. While the gold no longer directly backs the currency, gold is a neutral asset and wouldn't go to zero during wars/depressions, so could be sold strategically if needed to fund government in a dire situation.

The claim is that BTC is also a neutral asset, meaning it's not linked to any one government or economy, and it has certain properties similar to gold. And that the US should not let China or other countries stockpile this reserve asset first.

It's obviously not "necessary" for any government to function, but the claim is that the reserve properties would be strategically beneficial to weather the worldwide crises in the coming decades.

[peterldowns]

That's the best argument I've heard, thank you. I disagree with aspects of this argument but it at least makes some sense to me.

[r3ctilinear]

Absolute sovereignty is the important detail that brings the strategic reserve argument into complete focus. There are many types of wealth but none of them offer the level of freedom against censorship and external interference that bitcoin does. In an increasingly multipolar world bitcoin offers the greatest degree of self sovereignty for individuals and nations alike.

[SR2Z]

Bitcoin is vulnerable to 51% attacks, and before China banned it there were mining pools that were intentionally limiting signups to avoid hitting that number.

Then there's the throughput issue, the mandatory deflation, and a ton of other small issues that make it a terrible store of value.

Bitcoin is subject to far more limitations than folks normally consider and certainly does not offer more "self-sovereignty" than a pile of gold.

[r3ctilinear]

I have been using bitcoin since shortly after it's inception. I don't buy any of your spurious claims. Bitcoin survived the blocksize war of 2016 and it's only become more durable and secure since. 51% attack is now outrageously prohibitive. Gold is a fancy paperweight that's impractical to use. Adoption is happening hand over fist for a reason. If you can't see it too bad.

[dragonwriter]

> 51% attack is now outrageously prohibitive.

If there isn't a diversity of commodity suppliers of the best ASICs, then there are obviosuly actors for whom it is not prohobitive if a motive exists. Such actors exist even if there is such a diversity, really; the assumption has really always been that no one will have both the capacity and the motivatiom for carrying out a 51% attack.

[SR2Z]

> 51% attack is now outrageously prohibitive

No, it's not! It's almost happened in the past - Google it. The rapid adoption and deployment of ASICs around subsidized or cheap electricity makes it relatively straightforward for anyone with real resources to pull it off.

> Gold is a fancy paperweight that's impractical to use

Bitcoin (the core blockchain) can only process about seven transactions per second. Don't tell me gold is impractical!

> I have been using bitcoin since shortly after it's inception

Yes, and that's the only reason you seem to able to believe these things. Tell me, what can you ACTUALLY buy with Bitcoin without requiring a conversion to fiat currency under the hood? It's not just for tax reasons, it's because it's an awful store of value and would be disastrous for any modern, long-lead supply chain to rely on.

> If you can't see it too bad.

What I see is a "currency" with such terrible liquidity and deflationary properties that Trump is planning to sell off the US gold reserve to pay out these "Bitcoin billionaires" who would otherwise be totally screwed.

[rifty]

I think the one thing with crypto assets that differs it from other strategic reserve assets is that there is no baseline demand rooted in usage and consumption. If the US was in such an emergency position that it needed to liquidate the crypto, it could be worthless and unmovable because of lack of baseline demand at that time.

Although perhaps emergency purposes aren't the only reason to have reserve assets..

[cactacea]

Sold for what though? Dollars of course. But why not just print more dollars in the first place? Gold could be used to make payments directly and I don't see that happening with BTC.

This argument still makes no sense, what am I missing.

[ahel]

sold for whatever you want. Supposing the other party wants BTC (wild assumption) and you want 1Mton of lead, I guess the exchange would happen.

[alexashka]

Would bricks of gold really change anything in a dire situation? I don't get it.

I'd bet on aligning with people who know how to make use of bullets personally.

[tacon]

Since Russia is loading planes with bricks of gold to pay for imports and evade banking sanctions, they must think bricks of gold are useful in a dire situation.

[defrost]

With an obvious drawback highlighted on the 15th of March 2018.

[harambae]

I had to look this one up…

“Approximately 3,400kg of gold ingots break free from a Nimbus Airlines Antonov An-12 cargo plane and fall onto the runway at Yakutsk Airport.”

[bufferoverflow]

BTC is better than gold in many regards.

- impossible to counterfeit

- trivial to audit

- easy to transfer

- easier to store

- its supply is actually limited (unlike gold, which is near-infinite in the universe). Most of it has been mined. Its supply will actually diminish over time, as keys get lost forever, though it's hard to tell how fast that process is.

[1659447091]

And completely worthless in the event of war with attacks on power grids electronics etc. Gold on the other hand, I could trade for food.

[bufferoverflow]

If you are at a war where your whole electric grid and internet and SMS are completely down, you have much bigger problems than currency not working.

It means your bank accounts are gone, your credit cards are gone.

And how are you actually going to use gold as currency? Walk into a shop and shave off some gold at the checkout? And how will the store owner authenticate that it's actually gold?

Bullets will be a better currency than gold in that scenario.

[1659447091]

Trading jewelry for goods in desperate times is a thing. Even desperation in current times has examples of this. Pawn shops advertise in large letters that they buy gold.

But I agree, bullets are always a better currency; one of the positives (for people who responsibly enjoy firearms) living where I do is minimal restriction on such things.

[lesuorac]

I'm not sure war even needs to be that large for it to be a problem.

Basically unless its like China vs US then you don't need sell BTC to fund the country (even then I don't think you would; but if you never need to sell BTC its pointless).

If China vs US then realistically, China can and probably will cut a lot of the internet traffic between the two. Bitcoin only functions because of the public ledger; if Chinese miners aren't sync'd with non-Chinese miners then you have a double-spend problem and I can't see bitcoin not going to 0 pretty quickly.

[InfiniteTitan]

> And how will the store owner authenticate that it's actually gold?

Umm this is a solved problem. Believe it or not gold has been used as currency for thousands of years.

[bufferoverflow]

It's not a solved problem. Notice how you didn't actually answer the question of how a random store will authenticate your gold shavings.

Even banks and large jewelers fail to authenticate gold.

https://testyourgold.com/gold-plated-tungsten-in-russian-ban...

https://decrypt.co/34033/chinese-firm-dumps-83-tonnes-of-fak...

[sadeshmukh]

Gold is similarly useless when it's heavy and hard to move. There is little chance of that, and Bitcoin offers advantages in ease of transfer, transparency of transactions, and lack of government interference.

[InfiniteTitan]

> Heavy and hard to move

This only applies to very large amounts of monetary value. $1m USD is currently under 24lb/10.7kg.

[latchkey]

Easy to detect if you want to "move" between countries. You wouldn't want to try to get that through an airport.

Bitcoin is just some words on paper (or in your head).

[fragmede]

Can you? What use is gold in the Mad Max era?

[dragonwriter]

> its supply is actually limited (unlike gold, which is near-infinite in the universe)

100% (to very many significant figures) of the gold in the universe has a sufficiently near infinite cost to deliver to the surface of the earth that it is irrelevant to any discussion of human economics; once that subset is eliminated, the available supply of gold is quite finite.

[Eddy_Viscosity2]

The purpose is to have a bag-holder with deep enough pockets to absorb any selling pressure by the whales who own substantial crypto holdings. That's it. That's the whole reason.

[stogot]

Isn’t that provided by satoshi, the dead and those who lost their hard drives?

[3np]

Only for as long as those coins are (presumably by your comment incorrectly) considered part of the market.

[tejohnso]

Steelman is a bit of a stretch on this move. It sounds to me like the government is seeding doubt in its own reserve currency and propping up a different currency. The only sane thing I can think of is that it's a hedge against a complete loss of faith in the dollar. But then the case would have to be made for this over going back to gold.

[protocolture]

I am pro crypto and I absolutely could not steelman this.

Well let me put it this way.

From the perspective of crypto, crypto doesn't need the government. Honestly, the way eth has been running since the move to PoS, sort of operates with a reserve already. Crypto the technology, crypto the ecosystem does not need this. Its kind of stupid and as the article makes out, would have cypherpunks rolling in graves, unless the US goes the whole hog and converts entirely to crypto (so we can publicly audit bank holdings etc, and the government cant issue money) but that's unlikely. Honestly, adoption should be driven by making crypto more accessible without compromising security, and nothing else.

From the perspective of the government, it might make sense to have a reserve if they were going to do some kind of integration/development of crypto technology. Even if it was just to bring a wafer of stability to the platform while they participate.

However, the people that this benefits the most are the traders, so my cynicism is very high here. What shits me the most is that this brings honest to god sovereign risk to a sector thats meant to be asovereign. What if the next president dumps it all at a loss?

[beefnugs]

It is all upsides actually:

- If the gov knows how to seize and keep it from criminals, then whales capable of controlling the market are reduced

- If the gov ever tries to sell, it will likely be predictable, so more manipulation benefits for those who know how to do it

- Hidden transfer of wealth from any corrupt animal directly into dump's hands without traditional paper trails

- Dump can use it to manipulate his own illegal meme coins

- Eventually it will be "hacked" and gone, definitely not by dumps closest friends who had the keys the whole time

oh by the word upside, that is for one group of people anyway

[Yizahi]

The sole purpose of the strategic reserves of tokens is to make them "too big to fail". Tokenbros correctly guess that their luck with impotent SEC may not last long, it may be 4 years more, or 8 years, or maybe tomorrow some Gabbard will try to demolish their sand pyramid. If said tokens are somehow already integrated into the govt. itself, then outlawing them is now a hundred time harder.

[bediger4000]

I've been wondering about Gresham's Law with respect to dollars and crypto. Which one will drive out the other?

[tim333]

I'm semi pro-crypto.

It's not that a "strategic reserve" is necessary for these cryptocurrencies. It's that holding those maybe be good for the US if their value goes up further and it can use them to buy stuff if need be. Same idea as the gold reserve really.

[desumeku]

Hi, crypto steelman here. I have two answers:

The first is the reality answer: the CEOs of all these companies (SOL, XRP, and ADA specifically) are directly involved and meeting with Trump officials and senators in order draft upcoming crypto legislation as, as told by ADA's creator[1]. BTC and ETH aren't included here, but they are the two largest and most impactful, recognizable cryptocurrencies already, kind of would be foolish to exclude them.

Secondly, the reason I don't think this is just "pumping insider's bags": from the perspective of a crypto-optimist, these are paradigm shifting technologies that have the potential to revolutionize global financial systems (at minimum). The "strategy" is coming from betting on this being true, and thus these assets will have high(er) value, use, and importance, in the near future. I also don't think the reserve is going to be as large as people might get the impression. Anything in bllions sounds extremely unrealistic.

[1]: https://m.youtube.com/watch?v=xgGTW_GK9vM I highly suggest watching this video. He gives a quite sobering and optimistic take of the situation.

[hakfoo]

They've had the potential to revolutionize global financial systems for a decade now. So why haven't they?

If I'm looking for the promise of "virtually instant, virtually free transfer of value", SEPA and FedNow are delivering it at vast scale without the blockchain woo-woo. Adoption could be broader, but you can hardly say Bitcoin is universal either.

Whether intentionally, or by accident, the crypto space has created assets, rather than functional currencies, and the problems we want to solve with the financial system are usually currency shaped (broad acceptance, stable value, limited number of systems to choose from).

Now, there may be some interesting aspect of creating a new asset class-- it's uniquely "bottled scarcity" without beauty or utility like most other assets have-- but I think we need to get over the "revolutionizing finance" story until it revolutionizes something other than "I need something new to gamble on."

[foogazi]

why does a nuclear superpower need a digital asset ?

Why wouldn’t the US make up their own Dollar$, outlaw all the others and force everyone to use it ?

[quantadev]

I can almost guarantee you most everyone who owns BTC will be 100% in favor of anything that will drive up it's price, because they falsely equate it's price as it's value. It has zero value despite it's price, just like beanie babies and Tulips always did.

[peterldowns]

You're wrong — I own BTC and believe in the value of cryptocurrencies, but I am opposed to the US government doing this with my tax dollars.

[quantadev]

I'm still correct, because I said "most".

[goosejuice]

How are you defining value here?

[quantadev]

Everything that hodls it's desirability even after a grid-down scenario.

[goosejuice]

In such a scenario you wouldn't be able to use fiat either. Guns and food would be of greatest value. Maybe we should just reserve guns and ammo?

[quantadev]

I never claimed fiat was an asset. Nobody considers cash an asset.

I'm a software developer since 1990 so I recognize the value of blockchain technology, but I'm also smart enough to know a number in a computer ledger is not an asset.

[desumeku]

Your idea of value is completely and utterly disrupted from the rest of the world, then.

[quantadev]

I can't think of any assets that exist only in cyberspace. But even if you assert that grid-independence is not important, you're still stuck making the false claim that there's any scarcity in cyberspace. New crypto-coins can be created at the press of a button, thus your whole entire faith and hope is that everyone will always use Bitcoin, which is provably false.

[desumeku]

>New crypto-coins can be created at the press of a button

Oh? Can you prove this? How are you capable of creating new Bitcoins without mining them? Surely this big secret you have should be worth sharing.

[darthrupert]

I also own some and am very suspicious and a bit nervous that USA is getting in on it. Especially with the current administration.

[quantadev]

The very fact that new crypto coins are about to be (or even ever could be) sanctioned by different governments/nations, is proof positive that the concept of scarcity is a myth.

Even Diamond-Hands Hodlers all admit that without scarcity there is no value either.

[3np]

Not at all following how presence or possibility of sanctions supposedly invalidate scarcity as such. How does it follow? I think you are confused.

[quantadev]

There is scarcity in BTC, but no scarcity on Cryptos. Every BTC investor/hodler is betting the farm that BTC will be the dominant crypto forever. BTC is very similar to a cult or Ponzi scheme where you only achieve your goal if you can convince others to join.

Why do you think nearly every BTC Maxi will claim all other coins are "Sh|t coins"? ...including coins/blockchains that are running identical code to BTC?

[desumeku]

There is scarcity in USD, but no scarcity on Fiat. Every USD bond investor/hodler is betting the farm that the USA will be the dominant nation forever. USD is very similar to a cult or Ponzi scheme where you only achieve your goal if you can convince others to join.

Why do you think nearly every USA Maxi will claim all other countries are "Sh|t countries"? ...including nations/currencies that are using identical macroeconomics as USD?