The Strategic Crypto Swindle
theatlantic.com
theatlantic.com
P.S.: For that matter, why not the Strategic Russian Ruble Reserve?
Sure, it means asking US taxpayers to suffer in order to prop up a warmongering dictator whose local propaganda is that America might need to be nuked, but modern Republicans think it'd be awesome 'cuz reasons.
It's a 3 TRILLION dollar market...so far! Looks to me like people want to buy it.
For context, the Beanie Baby craze in the 90's at peak, was $2.6 Billion dollars adjusted for inflation today. Crypto is world wide phenomena, and so far, is 1000x larger. It also has utility for those that don't like bank lineups and banker's hours.
PS. FYI The Atlantic has become an extreme left leaning digital publication (source: https://www.allsides.com/news-source/atlantic). It stopped writing balanced articles years ago. Too bad, because it used to be great.
Can you create as many bitcoins as you want?
Source: https://www.smithsonianmag.com/history/there-never-was-real-...
To expand on my previous response: econ 101 teaches us that the price of any non-scarce product will converge to the cost of production plus some small profit margin.
Tulip is not a scarce asset because you can make more tulips. If cost to produce a tulip is $1 dollar and the price spikes to $100 due to demand outstripping supply, people will be incentivized to grow more tulips.
At some point they'll grow enough tulips for supply to meet the demand and they will have to sell tulips at merely small profit. In fact, some will likely have to sell tulips at a loss due to overproduction.
Mona Lisa doesn't have this problem. There's only one Mona Lisa so as long as demand goes up, the price goes up.
Bitcoin doesn't have this problem. There's a hard limit of 21 million bitcoins that will ever exist. As long as demand for bitcoin goes up, the price goes up.
And as long as the demand for Bitcoin goes down, the price goes down.
There's nothing magical about scarcity. The amount of Enron stock certificates issued was finite, but I'm not sure buying them would have been a good idea....
But I do invest in Bitcoin because you can't.
Bitcoin is scarce, your coinz aren't.
Do you get it now?
$3 Trillion dollars and 500+ Million people disagree with you.... so far.
Bonds are valuable because the company or government that issues them signs a contract to pay out a certain amount on them. They won’t always do that, but thats why we have rating agencies to help investors understand the risk.
The closest equivalent to crypto in traditional assets is probably precious metals and gemstones, though even those typically have some industrial uses to drive demand.
Diamonds are a great example of the downside of looking at the market value of something alone. The natural diamond market has been massively disrupted by the rise of artificial diamonds and diamond alternatives.
What kind of usefulness threshold would Bitcoin have to reach for you to assign value to it?
Is 25 million wallet not enough? Given that a wallet is basically a bank account except it cannot be seized by a government, a bank can't stop transfers, a bank employee won't demand to know why you're withdrawing the money and you can access your satoshis anywhere in the world.
Is 420 million Bitcoin owners enough?
Multiple Bitcoin ETFs? Legalized in multiple countries?
Bitcoin ETF becoming the fastest growing ETF ever?
Blackrock recommending 1-2% portfolio allocation to Bitcoin?
El Salvador stacking on bitcoin?
Strategy becoming the best performing stock in recent years with a simple strategy of stacking bitcoin?
Other than that, what did Romans ever did for us?
All wallets could become worthless in a weekend if a government makes the wrong stride in quantum research..
El Salvador is not recommending Bitcoin and found low interest in actual use.
Madoff also had a fund that could return very well. Satoshi just has to show up and cash out to ruin his pyramid or push the pyramid entirely to the US tax payers right now. Seems improbable like the chairman of NASDAQ running a scam..
These bizarre scams have no place in a real economy and we have to get rid of 0% interest to kill this garbage.
> All wallets could become worthless in a weekend if a government makes the wrong stride in quantum research..
TBF, you could say something similar about all stocks remotely related to transportation the moment someone invents a teleporter.
I agree there's a difference there, but I don't think it has to do with the vulnerability of the asset.
Bitcoin has none of those problems.
Additionally, El Salvador is only "dropping" bitcoin (officially) because they are being economically pressured by the IMF. So much for sovereignty for the little guy and democracy (he WAS elected, you know?).
Largest number factored with Shor's algorithm, 2012: 21
Bitcoin price, 2025: $90,000
Largest number factored with Shor's algorithm, 2025: 21
Point of numerology: 0
Maybe you have a real thought on that instead of an arbitrary comparison of numbers that don't really relate.. I.e. Quantum research investment would be at least be a faith number that says something about the number of believers in something. What that has to do with the possibility that it falls apart I don't know.
If you want to put this to an empirical test, you should buy $10 worth of quantum computing stock and $10 of bitcoin and see which performs better over the next 10 years.
I don't know if the pricing of the champagne in the "champagne room" should be taken as reflecting market sentiment just because it has been globalized. In some sense any kind of scam that runs long enough is just the regular market, but if it has no legitimate revenue I think it must reach the plateau where it can't fulfill the fad function of investing in it. What is the market for currency as a casino, Forex is only half that illegitimate purpose and it doesn't command much respect.
> El Salvador is not recommending Bitcoin and found low interest in actual use.
El Salvador is not a person.
The president of El Salvador is hardcore Bitcoin believer. El Salvador, the country, is stacking as much Bitcoin as they can, despite pressure from IMF that tries (I wonder why?) to stop them.
> Madoff also had a fund that could return very well
Except he didn't. He was lying about returns of his investments and it crashed and burned when the truth came out.
Blockchain is fully transparent. Every Bitcoin transaction ever made is recorded in immutable database and you get to read the full ledger, from the day it was created.
There is no way to lie about Bitcoin transaction. The current price is decided by an auction with millions of participants.
OpenSSH >9.0 has algorithms in place for the post-quantum world:
* ssh(1), sshd(8): use the hybrid Streamlined NTRU Prime + x25519 key
exchange method by default ("sntrup761x25519-sha512@openssh.com").
The NTRU algorithm is believed to resist attacks enabled by future
quantum computers and is paired with the X25519 ECDH key exchange
(the previous default) as a backstop against any weaknesses in
NTRU Prime that may be discovered in the future. The combination
ensures that the hybrid exchange offers at least as good security
as the status quo.
RFC draft:
* https://datatracker.ietf.org/doc/draft-ietf-sshm-mlkem-hybri...
* https://datatracker.ietf.org/wg/sshm/documents/
See also TLS:
* https://datatracker.ietf.org/doc/draft-ietf-tls-hybrid-desig...
No need for the wrong stride in quantum research. A government can make it illegal and seize the exchanges and watch actual value go to a round 0 in seconds.
A nation's government has a vested interest in preserving the value and viability of its own currency, not Bitcoin's.
On one hand, multiple years of Russian government-controlled television running professional segments, depicting potential targets, stock footage of missiles flying and exploding, with supporting quotes and appearances from Russian government figures.
On the other hand, you recently saw *checks notes* internet randos venting, displeased how a portion of their government bends over backwards to appease Russia for no legitimate reason.
You want us to believe those are even remotely comparable? Weak.
If you do believe that then you understand why any person, company or country will benefit financially by stocking up on Bitcoin today.
If you believe that Beanie babies or russian ruble will 10x - 100x then you would believe that any person, company or country will benefit financially by stocking on beanie babies today.
1. Using money taken from you, preventing you from ape-ing-in yourself.
2. Doing it with zero promise that any future profits will benefit you, as opposed to offsetting a giant tax cut for the wealthy again.
In the long term AAPL and NVDA market cap / stock price will converge to their future financial performance and historically speaking it's guaranteed that those companies will decline. So if you're looking for a really long term investment, it's not a good one.
This is different than U.S. buying Alaska from Russia. There's only one Alaska, if U.S. has it then no-one else has it.
Bitcoin was designed to have the same scarcity as land. There's only 21 million bitcoins and if you buy 5 of them today, no one else will own those 5 until you sell them.
If you believe that Bitcoin will become the largest "store of value" asset class that any person, company or country buying Bitcoin today will benefit compared to people / companies / countries that do no buy Bitcoin today.
Is such belief speculative? Of course it is. Buying Alaska from Russia was also speculative purchases. Not everyone thought it was a good deal and no-one knew it has gold and oil.
Is there strategic benefit to U.S. to owning scarce financial asset?
Well, U.S. does benefits from dollar's status as world's reserve currency. If Bitcoin does become planetary store of value and planetary currency, it's better for U.S. to own larger part of it than China or Russia or Iran.
If a group of people has all the bitcoin in the future, and other people have possession of things they want/need... Well, the value of bitcoin will be zero unless you can compel people who possess actual useful and necessary things to accept it. Which you can do if you are a government with power of taxation. It actually has negative value, because you need the computers running the software that represents it to keep running.
I really cannot figure why people think bitcoin is special. The value of money comes from the power of taxation, not from the underlying representation of the money.
Why would you want men with guns taking away your money (and mine) to buy crypto for their own uncontrolled slush-fund purposes, instead of letting you invest it yourself??
And no, don't even get me started on how Social Security is different, because insurance plans are not the same as the somebody else's investment account.
Pardon my ignorance here, but don’t the central banks of most nations hold foreign currencies in a strategic reserve? I feel like we probably already have Ruble reserve.
https://home.treasury.gov/data/us-international-reserve-posi...
There are physical limits, my friend.
Come to think of it, I think George Washington warned us about foreign entanglements, which is pretty prescient given that qubits hadn't been invented yet, only cubits.
Selling the crypto reserve will hurt the country if there is a loss.
Trump's 'Crypto Reserve' Is Such Brazen Corruption
https://news.ycombinator.com/item?id=43261899
The “strategic reserve” exposes crypto as the scam it always was
It'd break the main point of this though which imo is to boost the price of various crypto assets they're probably flush in since the Trump family personally just did two back to back memecoin rug pulls.
https://www.npr.org/2025/03/04/g-s1-51748/trump-crypto-reser...
https://www.whitehouse.gov/presidential-actions/2025/01/stre...
If you "borrow" $100 and "buy" $100 with it, nothing has changed. You didn't spend anything hence you didn't incur any additional debt.
If you buy $100 equivalent of Bitcoin then nothing changes either.
Only future changes in Bitcoin price relative to dollar are changing your "debt".
If price of Bitcoin goes down, you have a paper loss.
If price of Bitcoin goes up, you have a paper gain.
When you convert Bitcoin back to dollars, that paper gain or loss converts to a smaller or bigger debt.
Strategic Bitcoin Reserve is motivated by the belief that the price of Bitcoin will go up drastically in which case the more Bitcoin U.S. buys today, the more debt it'll be able to reduce in the future.
This is Status Quo Bias.
If you accept that Bitcoin, like gold, is a hedge against devaluing currency, then it makes sense for China or US to stock up on Bitcoin just like they stock up on gold.
Unlike gold, Bitcoin has a non-zero chance to supplant (or at least become a viable alternative to) US dollar as a global currency. In which case it's strategic for a country to own as much of such asset as possible.
This is incorrect. You’re confusing a neutral net worth with a lack of debt. They’re not equivalent.
If you borrow $100 then you have incurred $100 of debt. It doesn’t matter if you still have $100 in your hand, you still have $100 of debt to service.
That last part is important: The government would have to service the interest on the money they borrowed. As time went on, the effective size of the debt will grow.
Is it the government's job to speculate on crypto. If you think it is, why only crypto? Why not shares? Why not property?
I object to calling it "debt" because you can't tell. And my greater point was that buying a liquid asset is neutral to, let's call it, "net worth" of country.
The government does "speculate" on gold. That is the closest equivalent. Gold is a hedge against declining value of a dollar, just as Bitcoin would be.
You are betraying your ignorance. I am not engaging further. Go and educate yourself.
I appreciate opinions on (physical) gold vary, but this seems particular line seems unnecessarily dismissive.
Why does the author think the Strategic Petroleum Reserve make sense? It's not like the SPR is enough to rely on for very long should some massive unexpected/external shock shut down the ability of the USA to either produce or import oil/oil products.... (?)
We’ve now come a full circle where the US government is bailing out crypto bros.
We don't need governments to "bail us out".
The value of Bitcoin rose from $0 to $2 trillion without ownership of large governments (small governments, like El Salvador, did benefit from that rise).
It'll rise to $20 trillion without U.S. government buying it because we're still in very early days of Bitcoin adoption.
People, companies, countries need Bitcoin much more than Bitcoin needs them.
But yeah, knowing that $100 in bitcoin today might be worth $150 in a year does deter buying non-essential stuff. Why is that a bad thing?
Personally, It won't discourage me from buying a hamburger when I'm hungry, but maybe it would make me hold on to my iPhone for a year or 2 longer but you can do as you please and spend every cent you make.
If you have excess cash, be it $100 or $1 million and keep it in dollars, you'll loose ~8% a year, which is the historical yearly rate of US money printing which is the real inflation (not the fake 2%; check the inflation of health care plans, college education or housing).
To preserve that value you can do simple / safe (bank savings account rate, bonds, S&P 500 etc.) and underperform that 8%.
If you want to match / outperform that 8% (i.e. not loose money over time) you have to become a successful (better than average) stock investor or invest in real estate with all the hassles it involves (like managing tenants).
Or you can invest in Bitcoin, which, historically, over 4 years, outperforms dollars, gold, us stocks.
Bitcoin outperforms dollars because US can (and does) print as many dollars as it wants, whenever it wants. Bitcoin has a fixed limit of 21 million bitcoins. You can't print more bitcoin than that therefore you can't devalue bitcoin.
It's even worse in countries like Niger or Argentina because they print even more money than US, causing even greater inflation, making it ever more important to park assets in non-inflationary asset.
If you self custody bitcoin, you remove the risk your money will get confiscated by the government or bank.
In some countries you can already pay directly in Bitcoin.
In US you can use Strike to basically store you net worth in Bitcoin and convert to cash (dollars) to pay for stuff.
a) Why would a government/state want to back a currency that it cannot control by definition? Especially if they own the world’s reserve currency. What’s the upside for them?
b) I doubt that Bitcoin is the answer with its slow transaction times, low throughput, high fees, abysmal privacy and non-fungibility. It enjoys the network effects and undoubtedly that’s the most important thing in a currency so there’s that.
That is the bail out. On the long term the value of bitcoin is negative because you need to keep the computers representing it running, and there is no inherent demand beyond "it might be possible to exchange it for more fiat currency - that I can use to pay taxes and buy food and shelter - in the future".
The only way to guarantee it has value is government backing because governments can tax and thus they can manufacture demand for stores of value of their choosing.
This strategic reserve is the bailout. It's the pay off. It's making the tax payers the bag holders. It's so incredibly transparent.
That said, let's limit it to BTC. ETH at least isn't so insider-owned. The inclusion of ripple, solana, and especially cardano though is especially stupid. Those are majority owned by the "foundations" and a pump in price enriches a select few.
Here are some items that stuck out to me:
> As for American gold holdings, they’re essentially pointless: Fort Knox is a legacy of the days when the U.S. promised to exchange gold for dollars on demand.
> More to the point, bitcoin was created to be an alternative to the dollar, not a support for it. Far from strengthening the dollar, having the U.S. purchase billions of dollars of assets that were created to be alternatives to the dollar would at best be economically pointless and at worst would actually weaken confidence in the dollar.
so why other than fort knox, are you advocating for this position?
Countries and banks (including central banks) are still buying gold as a hedge against dollar and other currencies.
For example, "from November 2022 to April 2024, China reported adding about 314 tons to its reserves, bringing the official total to 2,264 tons by mid-2024".
The logic for holding Bitcoin is the same as the logic for holding gold: a hedge against dollar and other currencies.
Before invading Ukraine, Russia held assets across the world and they were frozen (some of it USD).
Now imagine you are a large holder of US treasuries, would you take some off the table and purchase this other asset (gold) that can ensure you're less susceptible to your enemies sanctions?
Replace this with those who borrowed money for expensive degrees of specious value and the bondholders who will be repaid at par.
History does not repeat itself, but it does rhyme.
I believe strongly in the power of education, an educated populace that is able to deeply hone it's craft and practice it's interest is the path to prosperity.
I recoil at the kind of outlook you need to have to believe what this post seems to believe.
Take a poll of student debtors, and see what per cent of them regard their specious degrees as an exercise in "Furthering personal knowledge".
Unless you're Canadian protester and the government freezes your bank account.
Unless you're American, like Melania Trump, and the bank decides to kick you out and take away your credit card because the politician sent them a letter threatening "oversight" if they don't kick out "risky" clients.
Unless you trip bank's fraud metrics and they freeze your account for months, refuse to say why, ignore your attempts to contact them and fix it.
Unless you're Russian and U.S. bans you from using international banking system.
Other that that, there's no difference.
We should be cautious about whether past precedent applies to future bitcoin, because the bitcoin halving mechanism ensures that bitcoin enters uncharted territory (with regards to the incentives at play) every four years for the next ~100.
Satoshi's design was that bitcoin would be used as cash and transaction volume would provide the funds to secure the network. That largely hasn't happened (it's a "store of value" now, lightning exists, etc.), so mining incentives are still ~95-98% funded from the exponentially diminishing supply of new coins.
Short of some institution stepping in to secure the bitcoin network by mining at a loss, it's hard not to imagine a 51% attack being relatively cheap on the time scale of decades.
Currency is not a “thing”—it is a promise. We invest in promises, whether currency, stock, etc.