Senator Cynthia Lummis just dropped the Bitcoin Act of 2024, and it’s a doozy. She’s proposing that the U.S. sell off some of its gold reserves to the tune of $90 billion to scoop up 1 million Bitcoin—basically making our country a Bitcoin hodler. She argues that Bitcoin is a better asset than gold because it’s decentralized and has a capped supply. But, as with everything in crypto, there are pros and cons.
The Proposal
First off, let’s break down what this act entails. The plan is to sell some of the U.S.’s gold (we have plenty) and use those funds to buy Bitcoin. The proposal claims it won’t add any debt because they’re using existing financial assets. And get this: she wants to hold these Bitcoins for at least 20 years! The idea is that by then, Bitcoin will be so established that it’ll be foolish not to have it.
Lummis even goes as far as saying states can hold their own Bitcoin separately if they want. To fund this purchase, they plan on using $6 billion from the Federal Reserve’s annual remittances over the next few years.
Pros and Cons
Pros:
- Innovative: If passed, this would be groundbreaking.
- Potential Upside: If Lummis is right about Bitcoin’s future dominance, we’d be in an excellent position.
- Gold’s Long History: Gold has been a stable asset for thousands of years; maybe we should stick with something proven.
Cons:
- Volatility: Bitcoin isn’t exactly known for being stable.
- Regulatory Concerns: It seems like every week there’s news about countries cracking down on crypto.
- Environmental Impact: Mining consumes a lot of energy; could that become an issue?
Summary
I don’t know if I’m ready for my country to bet on crypto like some sports fan trying to make dollar bets on crypto betting sites. On one hand, it could put us ahead if other nations follow suit. On the other hand, it feels like a giant leap into an untested abyss. As always in crypto, time will tell!
