Bitcoin’s Evolving Role in International Finance
As governments increasingly study Bitcoin as a strategic reserve, there are questions about whether such is in line with its original mandate. While Satoshi Nakamoto perhaps did not consider Bitcoin to be found in national treasuries, industry experts suggest its application by nation-states was inevitable.
Bitcoin’s Inevitable Application by Nation-States
Jan3 CEO and Bitcoin enthusiast Samson Mow believes Bitcoin’s rise as a state reserve asset was bound to happen. “If Bitcoin was ever going to be worth anything, then it was only a matter of time before institutions and nation-states would want to hold it”. He compared Bitcoin’s adoption to gold or any other currency that became popular organically.
Bitcoin’s Original Purpose: A Payment System
Nakamoto’s white paper on Bitcoin established BTC as a “purely peer-to-peer version of electronic cash” that was meant to facilitate online payments without financial intermediaries. Bitcoin has since grown to become a widely recognized store of value, also referred to as “digital gold.”.
Even the U.S. Federal Reserve Chair Jerome Powell accepted Bitcoin as a substitute for gold and not as an adversary to fiat currencies. The shift has encouraged governments and corporates to invest in BTC as a part of their financial strategy.
“While I do not think that Satoshi envisioned nation-state adoption, strategic hoarding is part of his plan,” said Quantum Economics founder Mati Greenspan. He emphasized Nakamoto’s motive is a second-order problem now compared to the role of Bitcoin in global finance.
Government Bitcoin accumulation is not accepted by all players in the industry. BitMEX co-founder Arthur Hayes has warned that government-owned Bitcoin can be inflationary and an instrument of political leverage. Some are also apprehensive about manipulation in the markets by large holders.
“There are a handful of Bitcoiners who are upset at the prospect of governments controlling Bitcoin, but it’s important to understand that it doesn’t give them jurisdiction over the Bitcoin protocol,” Mow explained. He argued that government BTC reserves could actually act as a force to assist Bitcoin adoption.
Reliability Over Centralization
Trezor Bitcoin analyst Lucien Bourdon views state Bitcoin adoption as a seal of approval of its dependability. “Rather than centralization, this is a sign of the growing role of Bitcoin as a safe asset in an evolving financial environment,” he stated.
For Bitcoin to thrive, it must be beneficial to individuals, institutions, and states without enabling any party to take control of the network unilaterally.
Would Bitcoin Push Inflation?
Others, such as Rafi Farber, contend that Bitcoin accumulation is inflationary based on its relationship with stablecoins like Tether (USDT). Mow refuted that assertion, saying whatever effect it might have on T-bills or fiat demand would be insignificant in the overall scheme.
“Fiat currency is going out of style. Bitcoin is a superior asset and will capture all the demand for fiat currencies,” Mow said, solidifying Bitcoin’s long-term status as a top financial vehicle.
