Bitcoin Reserve Proposal: A $100 Billion Bet on Halving U.S. Debt

Senator Cynthia Lummis has proposed a strategic Bitcoin reserve for the U.S., suggesting the government purchase 200,000 BTC annually until 2030, with the aim of holding it for 20 years to potentially halve the national debt. This proposal has sparked debate and analysis about the feasibility and implications of such a move.

The proposed reserve would initially be worth around $100 billion, with the U.S. national debt currently exceeding $36 trillion. Lummis expects the reserve to cover 50% of the debt in 20 years, assuming no increase in the debt. To achieve this, the price of Bitcoin would need to reach $18 million per token or the government would need to find creative ways to generate profit from it.

However, the math behind this scenario is questionable. A 17,900% increase in Bitcoin's price would bring its market cap to over $356 trillion, which is more than the total value of all money globally in USD. This suggests that the first scenario is not realistic.

A more viable solution would be for the government to issue investment instruments linked to Bitcoin, such as T-bills, options, or indexed bonds, and generate revenue from selling these to investors globally. This would significantly increase the value and role of Bitcoin in the U.S. economy and likely lead to further depreciation of the dollar.

While it is too early to judge whether Lummis' proposal is absurd or genius, it is a major step toward mainstream crypto adoption by institutions and governments. Coinbase CEO predicts that Bitcoin's market cap will soon hit that of gold – $18 trillion, which means one Bitcoin would cost $908,000.

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While Lummis' Bitcoin reserve idea might not slash the national debt in half, the fact that government officials are taking crypto this seriously is a significant development. Now is the perfect time to prepare for the crypto revolution with a wallet that matches your ambition. To join the ecosystem