Donald Trump's New Plan

Donald Trump is pushing for Bitcoin to counter China's economic power. He sees Bitcoin mining as key to US economic and energy leadership. A recent report suggests Bitcoin could become a new reserve asset. In this election cycle, Trump has become a strong supporter of Bitcoin and the crypto industry.

Trump is considering using Bitcoin to address the US national debt of $35 trillion. He is enthusiastic about acquiring "all the remaining Bitcoin" in the US to make the nation "energy dominant." Trump has criticized the current administration, stating, "Biden’s hatred of Bitcoin only helps China, Russia, and the Radical Communist Left." In an interview with Bloomberg, Trump stressed the importance of mining Bitcoin in the US to prevent China from gaining an edge.

With the right support, Trump believes Bitcoin mining can significantly boost the US economy and enhance national security. He also sees Bitcoin mining as a defense against the potential rollout of a central bank digital currency (CBDC).

Trump’s support for Bitcoin has led to speculation that the US might use it as a strategic reserve asset during his presidency. Bryan Courchesne, CEO of crypto investing company DAIM, expressed optimism on CNBC that Trump might adopt Bitcoin as a reserve asset. Courchesne noted that the Justice Department holds about 200,000 units of Bitcoin, making the US the largest holder of Bitcoin. He suggested transferring this Bitcoin to the Department of Treasury could be strategic.

Reserve assets are easily transferable and available to monetary authorities to manage international transactions, finance trade imbalances, and mitigate foreign exchange fluctuations. Policymakers control these assets, which are crucial for global trade stability.

A recent report by VanEck highlighted that central banks or businesses hold a currency as a reserve asset because they believe it will maintain its utility and value over time. This links to the currency’s ability to purchase a consistent basket of goods and services and to engage in legally permitted trade. Nations and businesses need confidence in their ability to access and use their funds as needed. VanEck identified the US, UK, EU, and Japan as current economic leaders, whose assets are widely held as reserve currencies. However, the report suggests that declines in these countries' relative global GDP will drive a shift towards favoring Bitcoin as a new reserve asset.

Bitcoin offers several unique properties that make it an attractive reserve asset. Its protocol guarantees perfect property rights, as it does not allow for seizure. Only those with access to an account’s private keys can access its Bitcoin. Bitcoin’s design replaces corruptible human authorities with immutable logic, ensuring holders do not need to worry about its value being diluted for political purposes.

Bitcoin’s framework enables anyone, from national governments to local citizens, to hold and transact it without an intermediary. This system contrasts with current systems that rely on intermediaries like banks and payment providers.

Unlike fiat currencies, which average a lifespan of 35 years and are vulnerable to monetary inflation, Bitcoin maintains its value through a fixed monetary policy, with a total supply capped at 21 million BTC. This scarcity is often compared to gold, seen as a universally recognized store of value and a hedge against inflation. Historically, nations have accumulated gold bullion in preparation for war and during times of economic uncertainty. However, Bitcoin has characteristics that arguably make it superior to gold, such as being easier to transport, more verifiable, and decentralized.

Given these unique properties, Bitcoin has the potential to counteract the influence of US geopolitical rivals and ensure a stronger financial economy. Therefore, Trump’s vision of incorporating Bitcoin into the national strategy could help the US enhance its economic position and secure its place in the global financial system.