Elon Musk and other VIPs approved of it. This is why the Federal Reserve should seriously consider BTC for its balance sheet. The United States will adopt bitcoin as a reserve asset. Why? Because it is unequivocally in the strategic interests of the United States to do so.
The question is not if this will happen, but when. Whether it happens within 12 months, two years, five or 10 years, it will have major repercussions in terms of US positioning for decades.
The inability to embrace bitcoin (quotation BTC in real time) will sooner or later damage the strategic interests of the United States and benefit the rivals who adopt it first. By examining how the United States and other countries manage their reserve assets today, we can already see the logic of this transition.
The golden empire
Today the United States holds 261 million ounces of gold, or approximately $ 475 billion. This makes the United States the largest gold holder in the world - by a wide margin - over Germany, second in the world by half.
Historically, there was a good reason the US owned gold: the US dollar was pegged to its value. However, the United States broke with the gold standard in 1971, ushering in the era of fiat currency. So why do the US and other countries continue to own all this gold?
Here are some of the reasons given directly by the central bankers themselves:
- Gold is in fact a safe haven asset. It is an insurance policy against major economic, monetary or geopolitical changes. Given gold's ample liquidity and universal appeal, countries can easily liquidate it for other assets in turbulent times.
- Gold is both independent of a given country's economic or monetary policies, but also has a fixed supply (on Earth) with relatively stable supply growth, making it an ideal hedge against both monetary inflation and fluctuations of other reserve assets.
- Gold is seen as “nobody's responsibility”: it cannot be frozen (in a bank account) or defaulted when friction arises between countries.
Combining these reasons with the cultural importance of gold, it is indisputable to say that having more gold than everyone else is a very good thing.
Fort Knox 2.0
Bitcoin's similarities to gold are well documented, earning it the nickname "digital gold". However, while bitcoin shares many similarities with gold, including scarcity, stable supply inflation, fungibility, and durability, it also brings major improvements over gold in a few key areas:
- When gold is in high demand, miners have an incentive to dig more, increasing the supply. Bitcoin's supply does not change in the face of demand, making it less inflationary and more predictable.
- It is much easier to verify the authenticity of bitcoin than gold.
- Bitcoin is much easier to transfer than gold and it costs a lot less to keep it securely.
- Bitcoin is easily divisible, while gold is not.
For these reasons, more and more people, companies and institutional investors agree that having more bitcoins than everyone else is a great thing.
Today, these include the richest man in the world, wealth managers, industry leaders and the world's leading macro-investors. Tomorrow it will also include countries.