The Bitcoin Frontier
Should the U.S. build a national strategic bitcoin reserve?
Jan 7, 2025
Join George Selgin, a monetary economics expert and former Director at the Cato Institute, as he delves into the complexities of bitcoin’s role in today’s economy. He shares his journey from marine biology to economics, defines money’s shifting landscape, and argues why bitcoin may not qualify as money. Selgin critically assesses the idea of a national bitcoin reserve, discussing its potential risks and costs to the U.S. dollar and highlighting the tension between bitcoin as an investment versus a viable currency.
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Quick takeaways
- Bitcoin's classification as a synthetic commodity highlights its unique properties but challenges its acceptance as a functional currency.
- The proposed national strategic Bitcoin reserve poses significant risks and lacks a solid foundation, raising questions about its viability for the U.S. economy.
Deep dives
The Viability of Bitcoin as Money
Bitcoin is considered a synthetic commodity money due to its unique properties, blending features of both commodity and fiat money. Its scarcity, capped at a maximum of 21 million Bitcoins, aligns it with commodities like gold, yet its primary use is as a financial asset, lacking inherent commodity applications. The challenge lies in Bitcoin's current classification as money; it doesn't meet traditional definitions as a generally accepted medium of exchange in most places, which restricts its practical use in transactions. Despite being a popular investment asset, Bitcoin’s increasing value may discourage spending, raising concerns about its long-term viability as a functional currency.
