When Dennis Porter helped to create the non-profit Satoshi Action Fund in 2022 and began pushing for a national bitcoin reserve, it didn’t seem likely that the US would soon be holding bitcoin. The cryptocurrency exchange FTX was about to go bankrupt, and it looked like the Biden government was completely against digital assets.
The idea was kept up by Porter, who had worked in politics in Oregon at the city and state levels. A big part of his time was spent on online social networks for crypto fans. It was there that he met Mandy Gunasekara, co-founder of his charity and former chief of staff at the EPA during the first Trump administration. To complete their team, they hired Eric Peterson as the policy head of Satoshi Action Fund. Peterson has worked as a policy analyst for conservative groups like Americans for Prosperity for many years.
One person should own bitcoin to protect their purchasing power in the future. We also think that the states and the federal government should do the same,” said Porter, who is the main person who made the idea famous.
Porter has been working hard for years on the idea that bitcoin BTCUSD +2.61% can be used as a national strategic asset. Now, he is seeing the fruits of his labour.
This week, Bitcoin prices have gone down after going up for a week because people were hoping that a Trump government would make crypto-friendly laws. Traders in bitcoin are very excited about the idea that the U.S. Treasury might buy bitcoin directly to build a “strategic bitcoin reserve.”
A federal bitcoin reserve would have seemed crazy just a few months ago, especially to crypto purists who see bitcoin as a way to keep the government from controlling it. Still, this idea that was once on the fringes has gained a lot of political support, with Trump being one of its most well-known backers. This has led some analysts to see the possibility of government purchases as a turning point for cryptocurrency markets.
An support from the president
It was in July at a bitcoin conference in Nashville, Tenn., that Trump first supported the idea of a bitcoin reserve. Trump was on the floor of the New York Stock Exchange earlier this month, and CNBC’s Jim Cramer asked him if he wanted to make a strategic coin reserve like the way the government stores oil. Trump replied, “I think so.” “Crypto is going to help us do something great.”
Porter said that Trump’s support for the idea has led other politicians to do the same, but that the most important change was the outcome of the election in November, when politicians who seemed to back crypto had an edge over those who didn’t.
He said, “The election made it very clear that politicians need to pay attention to bitcoin.” “This is important to a lot of people, and they will fight for it and win.” That’s what made so many people very interested in the strategic bitcoin hoard.
Porter did say that the idea might be criticised for making it look like present bitcoin holders would get rich, but he also said that a strategic bitcoin reserve would be very good for the asset.
But he said this is the same as a lot of other government schemes.
He said, “The government owns gold, which helps people who own gold, and it buys oil, which helps oil companies.”
People asked the Trump transition team for a response, but they didn’t answer.
The movement starts to burn.
Some people from both parties agree that the government should keep bitcoin on hand.
Democratic Rep. Ro Khanna of California thinks the U.S. would benefit from having a bitcoin reserve. He has also pushed for the U.S. to keep bitcoins it has taken from criminals instead of selling them, which is what most countries do.
Khanna told BourseWatch, “Bitcoin that the U.S. government has taken should not be sold for a certain amount of time and should be added to our reserves.”
A Wyoming Republican named Sen. Cynthia Lummis has been the most vocal supporter of a bitcoin strategic reserve on Capitol Hill. During the summer, she put forward a bill that would have the US buy 1 million bitcoins over five years.
As Lummis told MarketWatch, “for years, my generation has spent federal funds carelessly, adding to an unmanageable $36 trillion in national debt with no clear end in sight.”
“We owe it to future generations to take bold and meaningful steps to solve our debt crisis. Setting up a strategic bitcoin reserve is the best way to pay off almost half of our national debt with the resources we already have, and it will also keep America at the forefront of financial innovation in the 21st century.”
Porter from the Satoshi Action Fund has also been able to get the plan approved at the state level. The head of the Texas House financial committee presented a bill last week to create a bitcoin reserve for his state. Similar bills have also been introduced in Ohio and Pennsylvania.
Get rid of the old gold and bring in the new
Part of Lummis’s plan to pay for the bitcoin purchases is based on the fact that the U.S. has a huge amount of gold GC00 +1.24% stored away from when the U.S. dollar was backed by gold and people could exchange their dollars for gold at a set price.
Dollars and gold have not been able to be exchanged since the early 1970s, but the Federal Reserve and the Treasury still own about 8,100 metric tonnes of gold.
As of right now, the gold is worth only $42 an ounce on the market, which is a lot more than its value.
To Lummis’s mind, the Treasury should revalue that gold at the current market price and use the paper profit to buy bitcoins without having to raise taxes or make more Treasury debt.
Critics, on the other hand, say that this plan wouldn’t come for free and that the Federal Reserve would have to make money or sell assets to pay the Treasury the difference between how much their gold certificates are worth now and how much they are worth now.
In a recent email, monetary economist George Selgin said that this plan would be the government “backdoor borrowing.”
Selgin wrote that the Lummis bill relies on a lot of “gold-plated hocus pocus” to avoid adding to the debt and “skip past the ordinary appropriations process” and “kick the American people in the balls in other ways.”
“Making it look like it won’t cost anything is the best way to get people to support a plan that might only help bitcoin holders get rich.”
Bitcoin enthusiasts were shocked
Bitcoin was created so that strong organisations like the government and banks would not be able to mess with or spy on its users.
Some bitcoin purists who are committed to the original idea don’t like calls for the government to own a big chunk of the total amount.
Editor and chief of Bitcoin Magazine Mark Goodwin said on X, “I will never be able to properly express how deeply sad this whole stunt makes me.”
He said that the reserve would eventually stop bitcoin from becoming a real currency and make the global financial system led by the United States stronger.
In a November blog post, Catherine Austin Fitts, who used to work as an investment banker and as assistant secretary for the Department of Housing and Urban Development, said that the idea of a strategic bitcoin reserve was pushed by so-called bitcoin billionaires who wanted to find rich people who would buy their holdings.
She wrote, “Bitcoin began as a digital payment system that had the potential to grow into a strong decentralised network and community that offered a lot of value and could indeed change the way money works.”
Fitts was upset that bitcoin had become a “pump-and-dump” product, with the federal government now being seen as the final target.
Porter is still not bothered. “These criticisms are like water off my back,” he said, adding that he has long been criticised by “purists” who say bitcoiners shouldn’t be involved in politics at all, an idea he thinks has been debunked.
He said, “I’ve been shown to be right many times about how we should do these things.” Bit coin is too important to give up on at the end of the day.
