From Trey WalshExecutive Director of The Progressive Bitcoiner
I'll start by saying that I have many doubts about the United States pursuing a Strategic Bitcoin reserve, given the major plans I've seen include legislation proposed by Senator Lummis and a draft Government order since Bitcoin Policy Institute (this does not include those proposed state-by-state, which is a different and slightly more direct focus as they hold some bitcoin to diversify their assets). My doubts include time, political (polarizing) effects, methods/cost of acquiring Bitcoin, why would the USA continue this as a nation that is already leading as the world's reserve currency, the government's more involvement in Bitcoin could lead to more involvement/influence with Bitcoins development, and ramifications on Bitcoin as a currency for US citizens (would privacy, medium of exchange, self-preservation be at greater risk ?). i guess Nick Carter write the excellent piece questioning the SBR and advocating against the US follows this which I would highly encourage you to read.
Although I have seen support for the SBR from Bitcoin supporters, most GOP politicians and Trump (in fairness Democratic Rep. Ro Khanna has said he supports it in theory I ' believe), no attention has yet been given to this in a positive way from a positive. In fact, only criticism. While my doubts and objections as I have clearly stated are evident here, I would like to focus on some ways in which the US Strategic Bitcoin Reserve could be a positive thing for Americans, from a positive and values lens with an emphasis on social safety net spending. This has not been discussed at any level yet, and I would like to offer some ideas, and what social good this could do beyond just “strengthen the United States as a global power and strengthen the dollar.” Okay, but what could this do for real, everyday people in America? That's what I like, and maybe you too.
This shocking photo was captured today from https://www.usdebtclock.org/. What the US does not have a solid answer for is how we are going to pay for the vital services that citizens need and expect at this point when we against a debt and spending crisis compared to our budget / tax receipts. Depending on who you ask and what economic theories you accept, there are different ways to handle this – but the question remains: the US is kicking down the road on debt, spending and refusing to either raise taxes or cut spending dramatically and catastrophically. I wanted to set the stage first, and then offer some strategic use cases of SBR towards social safety net spending, the budget deficit, and government by the people, for the people with Bitcoin .
1. Hedge Against Inflation to Protect Public Programs
- Sustainability for Social Spending: Inflation and currency depreciation are eroding the purchasing power of government budgets, reducing the effectiveness of social safety net programs. The Bitcoin reserve, as a deflationary asset, could act as a hedge against such economic risks, ensuring stable funding for programs such as Medicare, Medicaid, and Social Security. As things get more expensive in fiat terms (salaries, health care bills, critical hospital technology, medications, treatments, etc.) they get cheaper in Bitcoin terms.
- Future proof benefits: Bitcoin's limited supply could protect against long-term depreciation of fiat currency, ensuring that entitlement programs maintain their value and beneficiaries in the decades to come.
2. Generate income for safety nets
- Asset valuation: Bitcoin has shown significant price appreciation over the long term. Bitcoin reserves held by the government could be used in times of financial need to generate additional revenue to fund social programs. The key here is a long-term view, not a short-term trade-off.
- Liquidation under control: Under a progressive framework, the government could design strict protocols for selling shares of the reserve during economic downturns or crises so as not to destroy the long-term value of the reserve while providing support to public welfare.
3. Alternative to Taxpayer Liability
- Reducing taxpayer trust: Traditionally, funding for social safety nets comes from taxes, which can disproportionately affect middle- and low-income families. The Bitcoin reserve could provide another source of funding, reducing the reliance on direct taxes for safety net programs.
- Reduces deficit spending: One of the main issues of inflation is deficit spending through money printing methods from the Fed, Treasury and Congress passing legislation far beyond our assets and tax revenues. SBR could be used to help us become less dependent on the hyperinflationary money printing of the lower and middle class that is often used to fund our programs government and social safety net funding. By introducing Bitcoin alongside traditional reserves such as gold, the government could increase its fiscal capacity to sustain welfare programs without relying on deficit spending.
4. Emergency Financial Assistance
- Emergency Mitigation Fund: During a financial crisis, the government often struggles to quickly mobilize resources to expand the safety net. Bitcoin, because it is highly liquid and globally accessible, could be an emergency reserve for direct money transfers or funding unemployment benefits in times of economic crisis.
- Global Return Efficiency: The borderless nature of Bitcoin could streamline the delivery of international aid or reparations to support diaspora communities or vulnerable populations abroad, aligning with positive values of global equality.
5. Promoting Financial Inclusion of Vulnerable Populations
- Bridging the Wealth Gap: A Strategic Bitcoin Reserve could be paired with policies that encourage public ownership of Bitcoin, enabling individuals and communities to participate in a financial system less dependent on banking structures traditional. Check out programs like the Alaska Permanent Fund which pays dividends based on Alaska's oil reserves and production
- Direct redistribution devices: The government could use profits from Bitcoin reserves to fund Universal Basic Income (UBI) programs or targeted support for low-income families. Margot and I discussed this possibility Scott Santensleading expert on UBI on our podcast.
Although not directly related to the SBR, the adoption of Bitcoin at this stage could open the door for more opportunities for Bitcoin mining and the community.
6. Promotion of Green Bitcoin Mining for Job Creation
- Jobs for Communities at Risk: Bitcoin mining operations, if encouraged to use renewable energy, could create jobs in underserved sectors, bringing the double benefit of economic recovery and environmental progress.
- Revenue for Local Governments: Tax revenue generated from sustainable Bitcoin mining operations could be redirected to strengthen local safety nets, such as affordable housing or community health care initiatives.
7. Economic Stability to Fund Long Term Programs
- A buffer against economic crises: In times of economic recession or geopolitical instability, Bitcoin's independence from fiat money systems could provide a financial buffer. This could ensure that critical safety net programs continue to operate without disruption.
- Strengthen the social contract: By maintaining a reserve that protects national economic security, the government reaffirms its commitment to protecting vulnerable populations, which is a key positive principle.
8. Increasing Public Trust in Social Programs
- Obvious Funding Mechanism: Bitcoin's blockchain technology ensures a transparent ledger. Using the Bitcoin reserve to partially fund social programs could increase public trust in how resources are allocated and managed, reducing suspicions of government waste or corruption. The SBR bitcoin addresses would be published publicly (as El Salvador is)
- Public Property: Progressives could propose distributing a small portion of Bitcoin's benefits directly to citizens through discounts or credits linked to social programs, creating a substantial link between national resources and public benefit. Again, back to the dividends or UBI approach
This is just the tip of the iceberg for how developers could theoretically approach a Strategic Bitcoin Reserve. While this is more of an intellectual exercise at this point, and I am still focused on local adoption of Bitcoin and how it can change the lives of individuals and communities around the world, it is ' raising an important point – what social good we could think of Bitcoin to provide. in our ever changing, changing, and financially challenging world? More than just an increasing number, crypto traders, and wall street getting richer, what role could Bitcoin play in improving everyday people's lives on a deep, structural level ? We will continue to explore these questions here at The Progressive Bitcoiner.
This is a guest post by Trey Walsh. Their views are entirely theirs and do not necessarily reflect the views of BTC Inc or Bitcoin Magazine.
