The “strategic reserve” exposes crypto as the scam it always was

https://alexkolchinski.com/2025/03/03/the-strategic-reserve-exposes-crypto-as-the-scam-it-always-was/

by kolchinski • 1 year ago

131 140 1 year ago

alexkolchinski.com

herodotus• 1 year ago

Incredible conflict of interest here.

alsoforgotmypwd4• 1 year ago

And probably emoluments too.

sega_sai• 1 year ago

While I completely agree crypto is full of shysters and most likely crypto has zero intrinsic value, as well the current administration tries to enrich itself through crypto, I disagree that recent change in prices after announcement proves it is a scam. Because if the government would have announced a strategic reserve in maple syrup, the syrup futures would have increased in price drastically as well.

schwarzrules• 1 year ago

Was curious if a maple reserve existed. looks like Canada is leading the charge on that one: https://ppaq.ca/en/sale-purchase-maple-syrup/worlds-only-res...

wolfgang42• 1 year ago

Famously subject of the biggest heist in Canadian history: https://en.wikipedia.org/wiki/Great_Canadian_Maple_Syrup_Hei...

Eddy_Viscosity25• 1 year ago

Strategic reserves for actual physical commodities makes some sense. Then can reduce the volatility in markets due to sudden unexpected market shocks. In the case of maple syrup that might mean a stretch of really bad harvests.

But digital currency is made up. It isn't 'needed' for anything. So there is no sense to have a strategic reserve.

kolchinski• 1 year ago

Oh yeah agreed that the change in prices doesn't prove it's a scam, my thought was more along the lines of - when crypto insiders who have been talking up crypto as valuable/important because it's independent of the government quickly change their tune and cheer on government intervention when it goes into their pockets, it makes it pretty clear what the dynamic actually is.

desumeku15• 1 year ago

Lumping an entire industry into a single convenient strawman isn't very good for you.

77pt77• 1 year ago

crypto has zero intrinsic value

So do fiat currencies.

arbitrary_name2• 1 year ago

You need fiat to pay your taxes.

citadel_melon• 1 year ago

USD is used and is useful for transacting — especially in global markets — because of its high trading volume, stability, limited/no capital flow restrictions, federal reserve’s monetary policy to favor neither exporting or importing (meaning they will not chose to intentionally deflate or inflate the dollar’s value to favor/disfavor certain industries), and also USD’s global acceptance.

On the other hand, people don’t usually transact with BitCoin because of its volatility and because BitCoin’s currency deflation. I’m also almost certain Bitcoin protocols couldn’t keep up with global transactions even if the currency did stabilize. One last point (there are way too many to write them all here) is that there will be no incentive for people to verify blocks when all 21 billion coins are completely mined.

Bitcoin is a game of betting there is a bigger sucker who comes after you. Bitcoin whales realized that the government is the biggest sucker of them all. It’s ironic to me that they have lobbied so hard for the government to subsidize their assets when they have been preaching libertarian idolatry for years.

mcosta• 1 year ago

The USA military/industrial complex does not agree.

s1artibartfast3• 1 year ago

Intrinsic vale is not a prerequisite for utility. USD has no intrinsic value. Yes, you can pay your taxes with it. That is a contingent value.

The only intrinsic value of crypto is that it can not be unilaterally inflated away, and can be difficult to digitally seize.

In this respect it is similar to gold. It lacks the physical uses of gold, but is easier to transport.

No, I don't think the US government should invest in it. It should make sure it's own currency retains value.

RealStickman_2• 1 year ago

USD is backed by the US economy and a significant portion of global trade.

BTC is backed by hopes, dreams and market speculation.

JeremyNT• 1 year ago

This is actually a re-announcement of something already announced!

The only difference here is mentioning of specific cryptocurrencies.

Prove? That's a high bar to clear. But this is a spike at merely reiterating a bailout plan.

tdeck• 1 year ago

We are coming to the end of the era where you could avoid major exposure to crypto speculation by simply not "investing" in it. When the government and major banks and top S&P500 companies are putting their money in crypto, just imagine the damage the next bubble pop will inevitably cause.

xtracto3• 1 year ago

I have a theory that the volatility we have seen in crypto historically is due to the influence that speculators have in the price of the asset given the % of speculator vs non-speculator money sunk into BTC

As more and more "non-speculator" money enters BTC, the swings in the price will decrease. I see the "rainbow chart" as a backing to this theory. It shows how the price has been slowly settling . In 25 years we should have a very stable deflating BTC price.

r3ctilinear4• 1 year ago

Exactly. People forget that btc is still in price discovery. A brand new global monetary standard isn't priced by edict, the market must figure it out. Of course it's volatile, if it were smooth/predictable then this predictability would be exploited by traders and it would cease being predictable.

horsawlarway2• 1 year ago

But this is just more "speculator" money... if I'm being pessimistic, this is an outright scam play to make the early speculators filthy rich by defrauding the US public out of their tax dollars.

The whole freaking problem is that crypto turns out to suck absolute cock as a real method of paying for things (Said as someone who has actually paid for items with bitcoin, incl on the OG silk road...)

How many of these folks investing in bitcoin have EVER bought a physical item at a physical store with it? Hell, even online stores... how many of these people are actually using these things as currency, instead of as pure speculation plays?

The answer is a resounding "Almost no one".

They're a complete crap way to pay for anything that's not literally illegal to buy.

---

And there is no utility to the coins unless you're either buying things with them, or speculating that you can exchange them for more of a usable currency at a later time. Period.

panarky• 1 year ago

The fact that scammers, fraudsters, Ponzi schemers and extortion racketeers have run trillions of dollars of swindles using US dollars is not evidence that the US dollar is a scam, a fraud, a Ponzi scheme or an extortion racket.

m3sta• 1 year ago

Not at all similar.

zanecodes• 1 year ago

What percentage of USD transaction volume is made up of scams, fraud, Ponzi schemes, and extortion rackets? What percentage of BTC?

peterldowns3• 1 year ago

Can anyone who is pro-crypto (particularly: btc, eth) make the steelman argument for why a "strategic reserve" is necessary for these cryptocurrencies? Or even beneficial? I've been involved in the industry in various ways for years and I fundamentally don't understand why the government owning a lot of btc/eth is advantageous. I understand the "reserve" part, but I don't understand the "strategic."

I'm open to the idea that this could be both a good idea and a way to line insiders' pockets with US taxpayer money, but it really just looks like the latter to me.

(I've been able to come up with a few theories but they all involve the complete destruction of value of the US dollar, and I don't understand how that would be net good for America.)

quantadev17• 1 year ago

I can almost guarantee you most everyone who owns BTC will be 100% in favor of anything that will drive up it's price, because they falsely equate it's price as it's value. It has zero value despite it's price, just like beanie babies and Tulips always did.

goosejuice3• 1 year ago

How are you defining value here?

peterldowns3• 1 year ago

You're wrong — I own BTC and believe in the value of cryptocurrencies, but I am opposed to the US government doing this with my tax dollars.

darthrupert• 1 year ago

I also own some and am very suspicious and a bit nervous that USA is getting in on it. Especially with the current administration.

Eddy_Viscosity25• 1 year ago

The purpose is to have a bag-holder with deep enough pockets to absorb any selling pressure by the whales who own substantial crypto holdings. That's it. That's the whole reason.

stogot• 1 year ago

Isn’t that provided by satoshi, the dead and those who lost their hard drives?

protocolture• 1 year ago

I am pro crypto and I absolutely could not steelman this.

Well let me put it this way.

From the perspective of crypto, crypto doesn't need the government. Honestly, the way eth has been running since the move to PoS, sort of operates with a reserve already. Crypto the technology, crypto the ecosystem does not need this. Its kind of stupid and as the article makes out, would have cypherpunks rolling in graves, unless the US goes the whole hog and converts entirely to crypto (so we can publicly audit bank holdings etc, and the government cant issue money) but that's unlikely. Honestly, adoption should be driven by making crypto more accessible without compromising security, and nothing else.

From the perspective of the government, it might make sense to have a reserve if they were going to do some kind of integration/development of crypto technology. Even if it was just to bring a wafer of stability to the platform while they participate.

However, the people that this benefits the most are the traders, so my cynicism is very high here. What shits me the most is that this brings honest to god sovereign risk to a sector thats meant to be asovereign. What if the next president dumps it all at a loss?

tejohnso• 1 year ago

Steelman is a bit of a stretch on this move. It sounds to me like the government is seeding doubt in its own reserve currency and propping up a different currency. The only sane thing I can think of is that it's a hedge against a complete loss of faith in the dollar. But then the case would have to be made for this over going back to gold.

bediger4000• 1 year ago

I've been wondering about Gresham's Law with respect to dollars and crypto. Which one will drive out the other?

cypherpunks01• 1 year ago

The best case is an argument similar to the reason the US gold reserve exists. While the gold no longer directly backs the currency, gold is a neutral asset and wouldn't go to zero during wars/depressions, so could be sold strategically if needed to fund government in a dire situation.

The claim is that BTC is also a neutral asset, meaning it's not linked to any one government or economy, and it has certain properties similar to gold. And that the US should not let China or other countries stockpile this reserve asset first.

It's obviously not "necessary" for any government to function, but the claim is that the reserve properties would be strategically beneficial to weather the worldwide crises in the coming decades.

peterldowns3• 1 year ago

That's the best argument I've heard, thank you. I disagree with aspects of this argument but it at least makes some sense to me.

bufferoverflow3• 1 year ago

BTC is better than gold in many regards.

- impossible to counterfeit

- trivial to audit

- easy to transfer

- easier to store

- its supply is actually limited (unlike gold, which is near-infinite in the universe). Most of it has been mined. Its supply will actually diminish over time, as keys get lost forever, though it's hard to tell how fast that process is.

rifty• 1 year ago

I think the one thing with crypto assets that differs it from other strategic reserve assets is that there is no baseline demand rooted in usage and consumption. If the US was in such an emergency position that it needed to liquidate the crypto, it could be worthless and unmovable because of lack of baseline demand at that time.

Although perhaps emergency purposes aren't the only reason to have reserve assets..

cactacea• 1 year ago

Sold for what though? Dollars of course. But why not just print more dollars in the first place? Gold could be used to make payments directly and I don't see that happening with BTC.

This argument still makes no sense, what am I missing.

alexashka• 1 year ago

Would bricks of gold really change anything in a dire situation? I don't get it.

I'd bet on aligning with people who know how to make use of bullets personally.

desumeku15• 1 year ago

Hi, crypto steelman here. I have two answers:

The first is the reality answer: the CEOs of all these companies (SOL, XRP, and ADA specifically) are directly involved and meeting with Trump officials and senators in order draft upcoming crypto legislation as, as told by ADA's creator[1]. BTC and ETH aren't included here, but they are the two largest and most impactful, recognizable cryptocurrencies already, kind of would be foolish to exclude them.

Secondly, the reason I don't think this is just "pumping insider's bags": from the perspective of a crypto-optimist, these are paradigm shifting technologies that have the potential to revolutionize global financial systems (at minimum). The "strategy" is coming from betting on this being true, and thus these assets will have high(er) value, use, and importance, in the near future. I also don't think the reserve is going to be as large as people might get the impression. Anything in bllions sounds extremely unrealistic.

[1] https://m.youtube.com/watch?v=xgGTW_GK9vM I highly suggest watching this video. He gives a quite sobering and optimistic take of the situation.

hakfoo• 1 year ago

They've had the potential to revolutionize global financial systems for a decade now. So why haven't they?

If I'm looking for the promise of "virtually instant, virtually free transfer of value", SEPA and FedNow are delivering it at vast scale without the blockchain woo-woo. Adoption could be broader, but you can hardly say Bitcoin is universal either.

Whether intentionally, or by accident, the crypto space has created assets, rather than functional currencies, and the problems we want to solve with the financial system are usually currency shaped (broad acceptance, stable value, limited number of systems to choose from).

Now, there may be some interesting aspect of creating a new asset class-- it's uniquely "bottled scarcity" without beauty or utility like most other assets have-- but I think we need to get over the "revolutionizing finance" story until it revolutionizes something other than "I need something new to gamble on."

foogazi• 1 year ago

why does a nuclear superpower need a digital asset ?

Why wouldn’t the US make up their own Dollar$, outlaw all the others and force everyone to use it ?

tim3332• 1 year ago

I'm semi pro-crypto.

It's not that a "strategic reserve" is necessary for these cryptocurrencies. It's that holding those maybe be good for the US if their value goes up further and it can use them to buy stuff if need be. Same idea as the gold reserve really.

beefnugs• 1 year ago

It is all upsides actually:

- If the gov knows how to seize and keep it from criminals, then whales capable of controlling the market are reduced

- If the gov ever tries to sell, it will likely be predictable, so more manipulation benefits for those who know how to do it

- Hidden transfer of wealth from any corrupt animal directly into dump's hands without traditional paper trails

- Dump can use it to manipulate his own illegal meme coins

- Eventually it will be "hacked" and gone, definitely not by dumps closest friends who had the keys the whole time

oh by the word upside, that is for one group of people anyway

Yizahi• 1 year ago

The sole purpose of the strategic reserves of tokens is to make them "too big to fail". Tokenbros correctly guess that their luck with impotent SEC may not last long, it may be 4 years more, or 8 years, or maybe tomorrow some Gabbard will try to demolish their sand pyramid. If said tokens are somehow already integrated into the govt. itself, then outlawing them is now a hundred time harder.

quantadev17• 1 year ago

If tax dollars are ever used to buy cryptos, that's simply a transfer of wealth to the crypto sellers, in exchange for nothing in return. This is just another "Tax and Waste" policy. It's just money taken from one group just to give to some other group. It's immoral and illegal, because the gov't is not an investment bank.

tanseydavid• 1 year ago

Would you agree that the Strategic Oil Reserve has exactly the same qualities?

hashmap• 1 year ago

I dunno, can you fill your tank up with bitcoin when you need to get to work?

QuadmasterXLII• 1 year ago

that’s not “in exchange for nothing”, its in exchange for oil. not terribly complicated.

roughly• 1 year ago

That depends on whether there’s a use for oil aside from as a tradable commodity, and additionally on whether there are scenarios in which we might need it for that potential use case in quantities that exceed our ability to easily acquire it.

arbitrary_name2• 1 year ago

Short answer: no.

Long answer: no, oil is needed for the functioning of our society. Helping smooth price volatility is useful and valuable. On the other hand, BTC is not needed for our society to function, and so there is little to no value in managing prices of it. This appears to be an attempt to hedge against the collapse in the trust in the dollar.

amalcon• 1 year ago

Oil is notably necessary to keep the united states military operational (in addition to the uses in other comments).

quantadev17• 1 year ago

No, I wouldn't exactly call Oil worthless. lol. Thanks for the entertainment tho, with that post.

jordanb2• 1 year ago

On the bright side we're no longer wasting money on shit people don't need like weather prediction.

alsoforgotmypwd4• 1 year ago

Or nuclear stockpile maintenance, firefighters, or clean water. Who needs that shit anyhow when everyone has their own private firefighters, goons, and water filtration?

neilv• 1 year ago

Bigger picture, a genuine curious question:

For the sake of argument, let's imagine a scenario in which, someday, a ridiculously, blatantly corrupt person became President. And Congress was aware, but had controlling majorities that, one way or another, were aligned with this situation. And the Supreme Court had already been started to be stacked by the same person. And various agencies under Executive branch, which might normally be able to push back, were being systematically gutted, and otherwise intimidated, including blatant reprisal against law enforcement officers for even investigating some past corruption case. And let's imagine that some oligarchs bought up a lot of Fourth Estate, and most of the rest of the Fourth Estate was decimated by other oligarch "disruptive tech", and tech oligarchs also control much of the remaining grassroots channels of communication. And lets imagine that, partly due to media manipulation by the oligarchs, the majority of the electorate, of all parties, had forgotten everything that they ever learned in Civics class.

In this totally hypothetical situation-- but please bear with me, and imagine, for the sake of this fun intellectual exercise, that someday this could somehow happen in the US, in theory...

What remaining US gov't checks and balances would there be? How could that corruption scenario be thwarted?

(For example, is there a way for a minority in Congress to successfully bring charges? Does the FBI or some other agency have powers to investigate and intervene, below the radar? Does Judicial have any power to intervene, perhaps if petitioned? Do states have rights to contest the situation? What if there is also a treason angle; does that activate powers from anywhere else in the government to intervene?)

If this scenario was discussed in Civics class, it flew right over my head at the time, but now seems interesting.

goosejuice3• 1 year ago

It's my understanding that the prevailing pro-crypto view is that it's a store of value not a payment system.

alsoforgotmypwd4• 1 year ago

That's the sucker view. It's only useful for transactions because it's too risky to hold.

DennisP2• 1 year ago

That's the view Bitcoin took, after they gave up on the kind of scaling they'd need to be a practical payment system. Ethereum is working hard on scaling beyond 100K tx/sec:

https://vitalik.eth.limo/general/2025/01/23/l1l2future.html

N_Lens• 1 year ago

I hold crypto, mostly BTC, and think this is just another grabby move by the Trump administration that will ultimately harm crypto.

karp773• 1 year ago

Well, somebody has to HODL the bag at the end. Why not the taxpayers?

xtracto3• 1 year ago

Better yet, why not AMERICAN tax payers. I (non American) would be extremely happy for trump to pump BTC price so that I can sell my crypto at a 50x win. Thanks !

jordanb2• 1 year ago

I'm assuming that next, the US will invest in a "Strategic Tesla stock reserve."

toomuchtodo• 1 year ago

I would not be opposed to the Federal Reserve buying VTI and distributing the dividends as UBI.

tim3332• 1 year ago

I'm relieved TRUMP and MELANIA meme coins have not yet been included.

throwaway48476• 1 year ago

The trump coin is on the chain of one of the announced reserve coins.

alsoforgotmypwd4• 1 year ago

I'm fine with crypto for transactions, but I'm not fine with my government using our money to pick winners and losers, conflicts of interest, emoluments, or artificially propping up what are likely bubbles and pyramid schemes.

qgin• 1 year ago

The United States government is now officially betting against the United States Dollar.

jxjnskkzxxhx2• 1 year ago

Trump has been willing to put his interests ahead of those of the US for a long time now.

lolc• 1 year ago

Wow this is going to be epic! The US govt prints dollars to prop up cryptocoins!

The sad thing is how this puts more money in the hands of bad people: This is inflating the holdings of shady orgs worldwide. And the way this admin has been bumbling its way into cleptocracy, I fully expect them to lose the keys later in a Mtgox scenario. Nobody will be able to explain how the funds were drained. They'd hired the best smart contract experts from the X roster, what more could they have done?

dpc_012342• 1 year ago

Notably, Bitcoiners are very upset about all the worthless shitcoins added to the BTC there.

While the Ethereum is arguably decentralized, maybe, kind-of, the other ones: XRP, Solana, and Cardano, are basically centralized nonsense, that at best can be considered a payment system and not a decentralized commodity.

bigyabai2• 1 year ago

Bitcoiners are barking up the wrong tree - their blockchain is effectively unusable without L2 chains. There is pretty much no way to transact Bitcoin quickly or cheaply without acquiescing to a third-party service that could very well be centralized.

Time will show us that all of them are shitcoins in the end. But don't take my word for it, just wait and see.

dpc_012342• 1 year ago

For something "unusable" it sure seems weird that it's near all time highs, while fees are very low. Very weird.

The real long term value is and always was due to a trustworthy, sovereign store of value properties. Trying to compete with Visa or Venmo, or enable online gambling is catchy, but does mean anything, as nothing there requires the underlying shitcoin asset. Stablecoins are far better at that, but it's hard to sell a sucker idea that the stabelcoin is going to "moon".

jxjnskkzxxhx2• 1 year ago

"bitcoin reserve" is the dumbest idea I've heard since "bitcoin".

The “strategic reserve” exposes crypto as the scam it always was

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