The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.
Arguably his most controversial proposal is the creation of a strategic bitcoin reserve SBR. But there has been debate between advocates of the plan and sceptics like Federal Reserve chair Jerome Powell. The main political questions have centred around what an SBR would look like and whether Trump will even be able to deliver on this proposal. However, there is potentially an even bigger idea in play — a significant shift in the global economic order, where new players and new forms of currency begin to take an ever-larger role.
But a more likely first step is to designate the approximately , bitcoin already held by the United States as a reserve to be held by the US Treasury. Any additional large purchases of bitcoin would require a law change and the assent of the US Treasury, which is currently opposed. However, there are already 13 US states that are actively considering or have proposed legislation to establish a SBR. Whereas typical currencies can be printed at will by central banks, causing their value to decrease, there is a fixed supply of bitcoin the number in circulation cannot pass 21 million , potentially limiting its devaluation.
So advocates say an SBR could act as a relatively safe store of wealth in much the same way as gold reserves are now. Another popular argument is that the monetary value of the SBR could appreciate rapidly and hence pay down US national debt.
This too is largely a theoretical and untested argument however, and the precise mechanisms remain unclear. On the other hand, some analysts are concerned that an SBR could undermine confidence in the dollar, leading to financial instability. Beyond these concerns, however, the SBR highlights a more fundamental, era-defining shift — one that is already under way. To understand this shift, it is helpful to place the rise of cryptocurrencies in context.
