Why the US Government Plans to Buy 1 Million Bitcoin

this afternoon I'm laying out my plan to ensure that the United States will be the crypto capital of the planet and the Bitcoin superpower of since his electoral Victory Trump's transition team has tapped people championed by the crypto industry to lead various agencies this video is brought to you by Aura the United States of America is planning to buy 1 million Bitcoin that's around 5% of the total remaining Bitcoin Supply this idea comes in the form of a new bill called the Bitcoin app Act of 2024 a lot of people out there are wondering is

this really a good idea and hang on how did America even get to this point this all seems a bit out of nowhere doesn't it a question that people want to ask is why why do this will America become the leader in digital Finance or are we witnessing Peak stupid in this episode we'll answer those questions and we'll see what's in the Bitcoin bill you are watching cold fusion TV [Music] firstly it might surprise a lot of you to find out that the US government already owns roughly 27,000 Bitcoin with a price of $100,000 per

coin 207,000 coins is a mammoth amount of Locked Up value the Bitcoin act which is actually acronym for this mandates that all Bitcoin held by any federal agency must be transferred to the treasury to be held in a strategic Bitcoin Reserve but there is a question here though how on Earth does the US government already have so much Bitcoin well it's simple Bitcoin seizures due to criminal activity interestingly around 144,000 of the SE Bitcoin were from one guy Ross Albridge AKA dread pirate Roberts he was the founder of Silk Road a dark website that sold

narcotics for Bitcoin a US man was able to hide behind a false identity operating a sophisticated illegal drug website the site operated much like eBay it allowed users to buy and sell illegal drugs guns and even hire Hitmen the FBI spent two years trying to find The Man Behind the site in 2013b was ambushed in a library while he was working on his laptop unfortunately for him he didn't get a chance to turn off the laptop before being arrested so the FBI had unencrypted access to all of his coins you wanted to get that that

computer while I was open and running as quickly quickly as possible uh I think he initially thought he was being robbed of the computer uh but then once identifications came out he was uh he he understood what was happening if you remember my silkroad episode from a few years back you know the story but back to the Bitcoin act this Bitcoin Bill isn't just about relocating seized Bitcoins it's a lot more than that here's what the Bitcoin Act is at a glance it mandates that the Secretary of Treasury purchased quote not more than 200,000 Bitcoins

per year over a 5-year period for a a total acquisition of 1 million Bitcoins the 1 million Bitcoins is then to be held by the treasury for at least 20 years before any selling can take place there's also other restrictions on sales the bill also mandates that the first 6 billion of earnings of the Federal Reserve Banks each year has to be used to purchase Bitcoin for the Strategic reserve and next is the most significant part of the bill exchanging gold reserves for Bitcoin well kind of in the media there's a lot of talk about

the US Government selling off its gold to buy Bitcoin an absolutely hairbrained idea but as far as I can tell this isn't technically true the government will be selling gold certificates to buy the Bitcoin so how does that work currently the US government supposedly has a stockpile of about 8,133 metric tons of gold in Fort Knox and other vaults the thing is the gold held by the US government is valued at $ 4222 per ounce or about 11 billion in total it's been stuck at that value since February 12th 1973 but today the market price

of gold is around $2,700 per ounce that's over 70 Times Higher for a total of approximately 775 billion so the treasury will issue new gold certificates or claims of gold based on the current market price they'll exchange those certificates for dollars and use the resulting cash about 775 billion to buy up the Bitcoins so no physical gold is actually being sold sold just the gold certificates the United States stopped publicly issuing gold certificates officially back in 1934 so Reviving The Concept is certainly interesting Senator Cynthia Lumis who introduced the bill tells Bloomberg quote we already

have Financial Assets in the form of gold certificates to convert to bitcoin so the effect on the US balance sheet is pretty neutral end quote in other words this is supposedly at no expense to us taxpayers okay so that's the bill but what's the point of doing all of this up next in this episode we will see why America is doing this how the nation got to this point also explore if this is a good idea and we'll see what happens next but before we continue let's hear a quick word from today's sponsor Ora do

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weeks free that will be enough to find out if any of your personal data is exposed thank you now back to the episode the way the US government is thinking about this is as follows bitcoin's value may be volatile over the short term but over the long term its price has always moved in the same direction up there's only a limited supply of Bitcoin out there and eventually they all be mined if America holds on to an appreciating asset on its balance sheet the presumed appreciation in value would help reduce the national debt after all

the government can't print more Bitcoin the aim of the bill is to reduce the federal debt by 50% within 2 two decades by using Bitcoin there's also a geopolitical component it's a reaction to the brics Nations trying to get away from the US dollar right now they're dumping us treasuries for physical gold according to Fortune America could use Bitcoin as an economic leverage over China and Russia we don't want China or anybody else not just China but others are embracing it and we want to be the head because Bitcoin is potentially a strategic Reserve asset

for the US government crypto Reserve but then last week we heard Vladimir Putin talking about it want to ensure that the US Remains the world's Global Reserve currency and if Bitcoin can be an adjacency to that and help support that proposition then you know I think there's a logic to that Michael novogratz head of the crypto investment firm Galaxy digital told Bloomberg that if the US does create such a stockpile the price could rise to half a million dollars per token his reasoning is that other nations will feel the need to create their own stockpiles

Fortune Magazine writes quote The Game Theory dynamics of nation state adoption would spark a digital Gold Rush slowing and even possibly reversing the flight to physical gold US policy makers could thereby use Bitcoin as a tool of economic statecraft counterbalancing China and Russia's attempts to move away from the dollar towards precious metals and which country's balance sheet would benefit the most in this scenario the United States end quote but in all of this you can see the conflict of interest here if someone holds a lot of Bitcoin they'd want this to go through so the

price can shoot up and they can cash out but regardless things seem to be moving ahead just as I was writing this Texas also announced a bill to use Bitcoin as a strategic reserve the US isn't the first to seriously look into Bitcoin as a national financial asset back in June of 2021 under President naib belli El Salvador approved a law to make Bitcoin legal tender alongside the US dollar to promote Bitcoin adoption amongst the masses citizens who downloaded the shivo wallet received $30 worth of bitcoin by February 22 a study from Yale reported that

68% of households were aware of the Shiva wallet and 78% of those had downloaded it the country now holds over 6,000 Bitcoins in its reserves that's around 1.6% of the nation's $36 billion GDP with El Salvador Russia and now the us either talking about or integrating Bitcoin into their financial systems are we seeing the start of something or is this all just hype seeing that the Bitcoin price is bullish right now it's going to be interesting to see how this plays out so how did the United States get to this point in the first place

well the Bitcoin bill was introduced by Senator Cynthia lumens on July 31st 2024 and since then it's gathered steam Cynthia purchased her first Bitcoin in 2013 after her son-in-law advised her to do so she became the first US senator to own cryptocurrency her enthusiasm for the technology led her to be known as congress's quote crypto Queen but the rabbit hole goes a bit deeper you see during the 2024 election the crypto industry was the biggest spender of any sector the industry donated a total of $200 million to both candidates so it's not a stretch to

say that their influence must have had a part to play in the positive reception of Bitcoin politically but as for the public things are a bit different platforms such as pump. fun which is a crypto website where anyone can make their own coin in second has seen viral scams like a little kid rug pulling $50,000 or the infamous hu T coin I don't have to tell you that the crypto industry doesn't have the best reputation right now as people often conflate crypto scams and rug pools with Bitcoin itself so we do have to ask ourselves

an important question at this point what is the function of Bitcoin is it a medium of exchange or a store of value it seems like in the past decade or so the consensus has set on it being a store of value compared to other forms of crypto out there the transactions are slow and compared to regular Bank transactions Bitcoin is expensive so it's not a very good medium of exchange but it has acted as a store of value over the long term in fact around 70% of Bitcoins have not moved in the last year so

most people are using them as a kind of savings and to top it off in early December Federal Reserve chair J pal noted that Bitcoin is not a competitor to the dollar it's a competitor for gold people use Bitcoin as a speculative asset right it's it's like gold it's just like gold only it's virtual it's digital people are not using it as a form of payment uh or as a store of value it's highly volatile it's it's it's not a competitor for the dollar it's really a competitor for gold now of course gold has industry

applications and others even outside of that but I guess just in the strict Financial sense you can see where it's coming from as Bitcoin was originally designed to mirror gold but there's a major glaring issue here Bitcoin is still a risk asset the price could go to zero anything is possible so is this a good idea for Bitcoin to be a financial reserve asset for the largest economy on Earth it has to stand the test of time is 16 years really enough Jennifer J schul director of financial regulation studies at Kato institute's research for monetary

and financial Alternatives tells Bloomberg quote it's still put government money on the line and Bitcoin has not shown itself to be a particularly stable asset the bill ask senators and members of Congress who may not understand crypto that well to make a much bigger leap of faith in terms of long-term viability end quote but let's take a step back a lot of you who have been following Bitcoin from the beginning may have some alarm Bells going off doesn't all of this go against the original tenants of Bitcoin Bitcoin was a response to the banking system

screw-ups and government bailouts of 2008 it was an alternative system to get away from the traditional banking system but now the government is using it as an asset doesn't this open the door to corruption in the future they could easily amend the Bitcoin Bill and print dollars to buy as much Bitcoin as they need could Bitcoin be captured we don't know but as for now it seems like the US government might be piggybacking off a novel financial asset that's already in use instead of building their own now there are some out there that say that

this is the precursor to the cbdc or Central Bank digital currency something that the Federal Reserve has been working on for a while but that's all a story for another day now this next statement is just my personal view as someone who's made their first Deep dive video into Bitcoin back in 2013 I think the intrinsic value of Bitcoin is virtually zero it is just a risk asset as it stands but that being said I think the real value of Bitcoin is the network that's the blockchain and its cryptographic distributed Nature has proved itself unhackable

and a totally trustless system I'm not talking about scammers using Bitcoin to commit fraud because scammers also use dollars to commit fraud I'm talking about the actual value of the underlying technology and the network effect of course because sure there's far better crypto tokens out there but does the average Joe know their name no but everyone knows [Music] Bitcoin so what's next Once the bill passes the Senate it's going to need support from the House of Representatives you could imagine how more Ling from the crypto industry could help you but interestingly there has been some

bipartisan support for example Democrat Rana has supported this bill in the past so is the Bitcoin Act of 2024 likely to fully pass well that's a question for the future but the betting odds on poly Market give it a 30% chance and that's the Crux there's a lot of hurdles with lawmakers regulations public distrust and opposition to jump over before this is a reality but with the right amount of of lobbying from the crypto industry it very well could we'll have to wait and see for both efforts on this both on the federal level and

what's happening in Texas so in conclusion is this Innovation or is this a sign of desperation for America instead of rebuilding manufacturing or making the economy more productive is America taking the easy way out and Manufacturing paper wealth creation through financial engineering or is this Innovation a digital currency is the future and America is just being smart by realizing its utility from where we stand in time today we can't truly answer that but one thing is for sure this is all very fascinating risky but fascinating and that's where we are with the Bitcoin Act of

2024 an America pledging to buy 1 million Bitcoins so what do you guys think do you think that this is a good idea or not I'll be interested to hear your thoughts in the comment section below so thanks for watching I hope you learned a thing or two or enjoyed that and if you're new to Cold Fusion feel free to subscribe there's plenty of interesting stuff on here on science technology and business so my name is to goo and I'll catch you again soon for the next episode cheers guys have a good one [Music] [Music]

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