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The biggest advantage of a BTC reserve lies in its scarcity: there will be no more than 21 million coins.
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Unlike gold, Bitcoin does not require complex management or costly security measures.
The bitcoin-based strategic reserve project, promoted by Senator Cynthia Lummis – known on Capitol Hill as “The Queen of Cryptocurrencies” – has captured the attention of numerous countries and prominent figures in the industry. With this proposal, the potential of bitcoin as an innovative tool to modernize national asset management is evident.
Lummis presented his legislative proposal in July of this year, making clear that its goal was to strengthen the US dollar and ensure US leadership in financial innovation. The project received the support of Donald Trump during his presidential campaign, who promised to make it a reality if he returned to the White House.thus guaranteeing a more favorable future in terms of regulation.
The issue has gained increasing prominence as Trump’s inauguration approaches, attributes achievements such as the increase in the price of bitcoin above USD 100,000. Various opinions have emerged: some, like Saifedean Ammous, consider that the president-elect’s promises They are nothing more than empty allegationswhile others, such as former Federal Reserve Chairman Bill Dudley, think that a bitcoin reserve would only benefit those who already own the asset.
Source: @SenLummis
The concept of a “bitcoin treasury” refers to a government beginning to accumulate BTC on a regular basis, with the intention of these funds being part of its national reserves. Traditionally, countries have stored securities such as gold, US dollars or bonds of other governments, considered by nations to be safe and stable. However, times have changed and More and more states are looking to diversify their assets and protect against fiat currency inflation, adopting strategies to ensure long-term economic stability.
The case of El Salvador and its importance
Under the leadership of Nayib Bukele, in 2021 El Salvador became the first country to adopt bitcoin as legal tender, which marked a milestone in the history of cryptoassets. Since November 2022, Bukele implemented the strategy of acquiring at least 1 BTC daily, which generated skepticism and criticism among financial specialists and multilateral organizations. However, El Salvador began to recover its investment as soon as bitcoin surpassed USD 43,000, and, at the time of writing, the reservations in BTC in the country exceeds USD 600 million. In the end, whoever laughs last laughs best. There are things that never change.
So, Salvadorans began to have more options to manage their economysomething especially valuable in a country with a high rate of debanking. Bitcoin allows anyone with a mobile phone to manage their finances, which is crucial in the Bukele-ruled nation, especially considering that a large part of its economy depends on remittances sent from abroad – the use of BTC can considerably reduce the high commissions associated with sending money through traditional methods.
However, the levels of bitcoin adoption in El Salvador, at least for now, have not met expectations of President Bukele. According to one survey from the University Institute of Public Opinion (Iudop) of the José Simeón Cañas Central American University (UCA), in 2023 80% of Salvadorans did not use the Cryptocurrency. However, when analyzed cold, this is not necessarily a negative. Breaking with the logic of the traditional financial system is a change that will not be achieved overnight – people have been used to building their plans around the US dollar for decades – but It is necessary to start at some point so that the population understands that they are not condemned to depend on the vagaries of any system or government..
Source: University Institute of Public Opinion (Iudop) – José Simeón Cañas Central American University (UCA)
Bitcoin is a technology that no one can or should imposean innovation suitable for attract foreign investment and generate new jobs. Its limited supply and growing global acceptance make it an ideal tool for drawing up long-term plans, offering an opportunity for countries to better manage their stores of value and economies, facing challenges such as inflation and external debt repayment.
Bitcoin vs traditional store of value methods
The main benefit of adopting a strategic bitcoin reserve is in its inherent scarcity, since There will never be more than 21 million units. On the other hand, fiat currencies can be issued without restrictions by central banks, which generates the harmful inflationary effect. On the other hand, since it is not controlled by any government, bitcoin can be used by countries seeking to reduce their dependence on foreign currenciesthus limiting the influence of international institutions on their economies.
Although the volatility of cryptocurrencies represents a risk, it also offers an opportunity for significant long-term appreciation. El Salvador is a clear example of how to make money with this phenomenon, since, over time, BTC price has shown an upward trend. That is, as bitcoin gains greater global acceptance, a reserve of this cryptocurrency will translate into funds that grow considerably, generating returns for the country that holds them. Germany, for example, stopped earning more than USD 2,000 million this year by selling 50,000 BTC that he had seized.
Another of the main advantages of a bitcoin treasure is that, unlike traditional physical assets, such as gold, leading cryptocurrency requires no rigorous handling or vault storage. Additionally, transactions can be completed in minutes or even seconds globally, allowing countries to move their reserves much more efficiently than with conventional assets.
It remains to be seen whether Trump will fulfill his campaign promise, but if he does, It could open the door for many small countries to adopt a similar strategy and start buying bitcoin on a regular basis. –which, naturally, could boost the price. The new president must comply with his voters, who, if deceived, will hardly accept whitewashing lies as a way of doing politics, no matter how much the administration begins to achieve achievements in other sectors. For now we can draw the following conclusions:
- The case of El Salvador demonstrates how the adoption of bitcoin can offer an alternative for countries with high levels of debanking. Although the results have not been immediate, the country’s experience has opened the doors to new economic opportunities, especially in the management of remittances.
- Despite temporary fluctuations in the value of bitcoin, it is possible to incorporate it as a national financial reserve and obtain value in the long term. To maximize profits, one of the key strategies is the regular purchase of BTC, which allows averaging the acquisition cost and reducing the impact of price drops.
- Bitcoin’s controlled scarcity makes it a safe haven for states or autonomous zones seeking to protect their economies from inflation and external monetary policies.
- Unlike physical assets like gold, bitcoin does not require expensive security measures; In addition, transactions are fast and global, which makes it easier for countries to move their reserves with greater agility and efficiency, without depending on intermediaries.
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