Washington D. C. remains an ideal breeding ground for bad ideas. One of the most absurd and dangerous is the idea of exchanging U.S. gold reserves for bitcoin.
To be fair, we should first mention that we are encouraged by the growing acceptance by a handful of policymakers of alternative, non-governmental forms of currency.
U.S. Senator Cynthia Lummis of Wyoming began advocating the exchange of U.S. gold for bitcoin shortly after Donald Trump won the election last fall. It was music to the ears of several young cryptocurrency enthusiasts who, in their overflowing enthusiasm, have tried to position Bitcoin as a superior alternative to gold.
Bitcoin and gold may share some of the honest money zealots, but those are the only similarities . One is tangible and time-tested. The other is completely digital and relatively new. Both assets have their own strengths and weaknesses.
However, it's a little strange to see people touting Bitcoin as a replacement for gold, and it's a little suspicious.
Why so much effort to convince gold investors that Bitcoin is better and divide the honest money community? Shouldn't the focus instead be on attracting new people to the movement: the vast majority of those who own neither gold nor Bitcoin?
Bitcoin was designed as an alternative to fiat money, not gold. The creator of the project, known by the pseudonym Satoshi Nakamoto, sought a currency that was universal and outside the control of Wall Street banks, central banks and governments.
Instead of pushing for Satoshi's vision, people like Senator Lummis want the federal government to simply exchange gold for bitcoin. But it should consider whether making it a "reserve" asset in any way benefits the cryptocurrency or its constituents.