Of Trey WalshCEO of The Progressive Bitcoiner
I'll start by saying that I have many reservations about the United States pursuing a strategic bitcoin reserve, and the main plans I have observed include <a target="_blank" href="https://www.lummis.senate.gov/press-releases/lummis-introduces-strategic-bitcoin-reserve-legislation/”>legislation proposed by Senator Lummis and a <a target="_blank" href="https://x.com/DavidFBailey/status/1869098934754570305″>draft executive order from bitcoin Policy Institute (This does not include state-by-state proposals, which is a different and slightly simpler approach given that they have some bitcoins to diversify their assets.) My reservations include the timing, the (polarizing) political ramifications, the mechanisms/cost of obtaining bitcoin, why the United States would pursue this as a nation that is already a leader as a global reserve currency, if the government becomes more involved with bitcoin it could lead to greater participation/influence with bitcoin. development and ramifications of bitcoin as money for US citizens (would privacy, medium of exchange and self-custody be at greater risk?). Believe <a target="_blank" href="https://x.com/nic__carter”>Nico Carter I wrote an excellent article questioning the SBR and advocating for the United States to pursue this, and I highly recommend you read it.
While I've seen support for SBR from bitcoin advocates, mostly Republican politicians and Trump (to be fair, Democratic Rep. Ro Khanna has said he supports it in theory, I think), there hasn't been any attention to this yet. positively by progressives. In fact, they are really just criticisms. While I have my reservations and criticisms, as I have clearly stated that I am transparent here, I would like to focus on some ways in which a US bitcoin Strategic Reserve could be a positive thing for Americans, from perspective and values. of a progressive. an emphasis on social safety net spending. This has yet to be discussed on any scale, and I would like to offer some ideas and some real social good that this could generate beyond simply “strengthening the United States as a global power and strengthening the dollar.” Okay, but what could this do for ordinary people in America? That's what matters to me, and probably to you too.
This overwhelming image was captured today from https://www.usdebtclock.org/. What America does not have a solid answer to is how we are going to pay for the vital services we need and expect from citizens right now when we face a debt and spending crisis compared to our budget and tax revenues. Depending on who you ask and what economic theories you subscribe to, there are different ways to handle this, but the problem remains: the United States is kicking the can down the road on debt, spending, and refusing to raise taxes or cut the spending dramatically and catastrophically. I wanted to first lay the groundwork and then offer some strategic use cases of an SBR towards social safety net spending, budget deficits, and a government of the people, for the people with bitcoin.
1. Inflation coverage to protect public programs
- Stability for social spending: Inflation and currency devaluation erode the purchasing power of government budgets, reducing the effectiveness of social safety net programs. A reserve of bitcoin, as a deflationary asset, could serve as a hedge against such economic risks, ensuring stable funding for programs such as Medicare, Medicaid, and Social Security. As things become more expensive in fiat terms (salaries, healthcare bills, vital hospital technology, medications, treatments, etc.), they become cheaper in bitcoin terms.
- Future-proof benefits: bitcoin's limited supply could protect against long-term depreciation of the fiat currency, ensuring that entitlement programs maintain their value and benefit recipients for decades to come.
2. Revenue generation for safety nets
- Asset appreciation: bitcoin has shown significant long-term price appreciation. A reserve of bitcoin held by the government could be tapped in times of financial need to generate additional revenue to fund social programs. The key here is a long-term vision, not a short-term negotiation.
- Controlled Liquidation: Under a progressive framework, the government could design strict protocols for selling parts of the reserve during crises or economic downturns to avoid undermining the long-term value of the reserve while supporting public well-being.
3. Alternative to taxpayer burden
- Reduce taxpayer dependency: Traditionally, funding for social safety nets comes from taxes, which can disproportionately affect low- and middle-income households. A bitcoin reserve could provide an alternative funding source, reducing reliance on direct taxes for safety net programs.
- Reduce deficit spending: One of the main cases of inflation is deficit spending through money printing mechanisms by the Federal Reserve, Treasury and Congress passing laws that go far beyond our assets and tax revenues. An SBR could be used to help us become less dependent on the money printing that is responsible for the overwhelming inflation in the middle and lower classes and that is often used to fund our government and social safety net programs. By including bitcoin alongside traditional reserves like gold, the government could improve its fiscal ability to sustain welfare programs without relying on deficit spending.
4. Emergency financial assistance
- Crisis mitigation fund: During financial crises, the government often struggles to quickly mobilize resources to expand the safety net. bitcoin, being highly liquid and globally accessible, could act as an emergency reserve for direct cash transfers or fund unemployment benefits in times of economic hardship.
- Global remittance efficiency: bitcoin's borderless nature could streamline the delivery of international aid or remittances to support diaspora communities or vulnerable populations abroad, aligning with progressive values of global equity.
5. Promotion of financial inclusion of vulnerable populations
- Reduce the wealth gap: A Strategic bitcoin Reserve could be combined with policies that encourage public ownership of bitcoin, offering individuals and communities the ability to participate in a financial system that is less dependent on traditional banking structures. Look for programs like Alaska Permanent Fund that pays dividends based on Alaska's oil reserve and production
- Direct redistribution mechanisms: The government could use profits from bitcoin reserves to fund Universal Basic Income (UBI) programs or targeted assistance for low-income households. Margot and I discussed this possibility with <a target="_blank" href="https://x.com/scottsantens”>Scott Santensa leading UBI expert in our podcast.
While not directly related to the SBR, bitcoin acceptance at this stage could open the door to more possibilities regarding bitcoin mining and the community.
6. Encourage green bitcoin mining for job creation
- Jobs for communities at risk: bitcoin mining operations, if incentivized to use renewable energy, could create jobs in underserved regions, providing a dual benefit of economic revitalization and environmental progress.
- Revenue for local governments: Tax revenue generated by sustainable bitcoin mining operations could be redirected to strengthen local safety nets, such as affordable housing or community healthcare initiatives.
7. Economic resilience to finance long-term programs
- Shock absorber against economic crises: In times of economic downturns or geopolitical instability, bitcoin's independence from fiat currency systems could provide a financial cushion. This could ensure that critical safety net programs continue to operate without interruption.
- Strengthening the social contract: By maintaining a reserve that safeguards national economic security, the government reinforces its commitment to protecting vulnerable populations, which is a fundamental progressive principle.
8. Improve public trust in social programs
- Transparent financing mechanism: bitcoin blockchain technology ensures a transparent ledger. Using a bitcoin reserve to partially fund social programs could increase public confidence in how resources are allocated and managed, reducing skepticism about government waste or corruption. SBR bitcoin addresses would be made public (as <a target="_blank" href="https://bitcoin.gob.sv/”>El Salvador does)
- Public ownership: Progressives could propose allocating a small portion of bitcoin profits directly to citizens through rebates or credits tied to social programs, creating a tangible connection between national reserves and public benefit. Again, back to the dividend or UBI approach.
This is just the tip of the iceberg of how progressives could theoretically approach a bitcoin Strategic Reserve. While this is more of an intellectual exercise at this point, and my focus remains on grassroots adoption of bitcoin and how this can transform the lives of people and communities around the world, it raises an important point. : What social good could we imagine bitcoin providing? In our constantly evolving world, changes and fiscal challenges? Beyond increasing numbers, enriching cryptocurrency traders and Wall Street, what role can bitcoin play in improving the lives of everyday people at a deep structural level? We will continue to explore these questions here at The Progressive Bitcoiner.
This is a guest post by Trey Walsh. The opinions expressed are entirely their own and do not necessarily reflect those of btc Inc or bitcoin Magazine.
