Back 2020, Micro strategy (Nasdaq: mstr) Founder and CEO Michael Saylor made global headlines when he announced that his company would convert his Treasury Holdings to BTC. Several other companies such as Tesla (Nasdaq: TSLA) and square, followed.
Now the idea of BTC’s strategic reserve is spread to national states. El Salvador made the move in 2021, and US President Donald Trump announced their intention To do it as early as 2024.
During the first month of 2025, the Czech national bank governor Aleš Michl announced that he was considering adding BTC to his country’s reserves. The Financial Times reported That up to 5% of the bank’s 140 billion euros ($ 143.3 billion) could be converted into so -called digital gold.
Shortly after the Czech announcement, the European Central Bank (ECB) stroke President Christine, hopes that the ECB could follow. She quoted money laundering and criminal activity, as well as security and liquidity, as reasons why the ECB would not consider BTC as a reserve supply. In October 2024 wrote a piece of paper illustrates how it enriches early holders at the expense of later adopters.
Opinion: The BTC reserve is a terrible idea
There are some good reasons to believe that a BTC strategic reserve is a bad idea, some of which were mentioned by the ECB President Legarde.
Firstly, BTC is extremely volatile and risky. It is known for epic price movements with the two -digit percentage variety per day, and in most bear markets it has been recalled 90% from its cycle peak. Central Bank Reserves are available to create financial stability, manage external economic shocks and support monetary policy. BTC is uniquely inappropriate for all these goals.
Part of the cause of BTC’s volatility is a lack of real liquidity. While there are a few dollars, euros and yen that offer it, the vast majority of trade volume in the USDT is issued by Tether. This Stablecoin the issuer has never proven US dollars back and have one Less than healthy history. There is no guarantee that central banks can convert BTC to other currencies if needed.
There are also many regulatory risks surrounding BTC and other digital currencies. While many nations have embraced them and work with regulations, some like Porcelainhave banned them. If powerful nations determine BTC is a threat to their superb currencies, they can do the same or at least squeeze it.
Another reason is that BTC has no inherent value. It is a digital token issued by an unknown unit with rules enforced by a network of anonymous nodes that can be controlled by anyone from the Central Intelligence Agency (CIA) to Russia or North Korea. In addition, unacceptable BTC developers can propose and implement changes that can radically change the value of the coin. If one day they break the network, central banks would be left with the bag.
There are much better things to use funds on
While all central banks have some currencies in reserve, and nations often have strategic reserves of important goods such as oil, there is no need to keep BTC. It has no case in reality.
Instead, governments could either return funds to the people, stimulate economic growth or spend them directly on education, labor development, healthcare, infrastructure and public goods. All these things have concrete, measurable economic benefits that grow gross domestic product (GDP), raise productivity and improve the standard of living.
Just like El Salvador had to go back his eager commitment to BTC to get a Loan of $ 1.4 billion From the International Monetary Fund (IMF), all central banks that rush to buy this completely speculative access will eventually have to go back it as well. Central banks should instead focus on how Scalable blockchain technology Can improve efficiency, reduce costs and increase transparency in global payments.
See: With blockchain, the tool becomes more and more important
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