from Trey WalshCEO of Progressive Bitcoiner
I’ll start by saying that I have several reservations about the US seeking a strategic reserve of Bitcoin, with major plans I’ve observed including Legislation proposed by Senator Lummis And a Draft Executive Order from Bitcoin Policy Institute (This does not include those state-by-state proposals, which is a different and somewhat clearer focus since they hold some Bitcoin to diversify their assets.) My reservations include the timing, the (polarizing) political ramifications, the mechanics/cost of acquiring Bitcoin, why the US would follow suit as already leading the way as a global reserve currency, and greater government involvement in Bitcoin may lead to more involvement/influence in Bitcoin. Development and implications of Bitcoin as money for US citizens (will privacy, medium of exchange and self-custody be at greater risk?). I think Nick Carter He wrote an excellent article questioning the SBR and advocating that the United States not pursue this matter, and I highly encourage you to read it.
Although I’ve seen support for SBR from Bitcoin supporters, mostly GOP and Trump politicians (in fairness, Democratic Rep. Ro Khanna has said he’s supportive in theory I think), no attention has been paid to this in a positive way by progressives. In fact, really cash only. Although I have my reservations and criticisms because I clearly stated to be transparent here, I would like to focus on some of the ways in which the US Strategic Reserve Bitcoin could be a positive for Americans, from a progressive perspective and values focusing on social safety net spending. This has not yet been discussed on any scale, and I would like to offer some ideas, and some actual social benefits that this could bring beyond “strengthening the United States as a global power and strengthening the dollar.” Okay, but what would this do to actual everyday people in America? That’s what matters to me, and maybe you too.
This overwhelming photo was taken today from https://www.usdebtclock.org/. What the United States does not have a solid answer for is how we will pay for the vital services required and expected of citizens at this stage when we face debt and spending crises compared to our budget/tax revenues. Depending on who you ask and which economic theories you subscribe to, there are different ways to approach this — but the problem remains: The United States is falling behind on debt and spending and refuses to either raise taxes or cut spending dramatically and disastrously. I wanted to first set the stage, and then provide some strategic use cases for SBR toward social safety net spending, budget deficit spending, and government by the people, for people using Bitcoin.
1. Hedging against inflation to protect public programs
- Stable social spending: Inflation and currency depreciation erode the purchasing power of government budgets, reducing the effectiveness of social safety net programs. Bitcoin reserves, as a deflationary asset, could serve as a hedge against such economic risks, ensuring stable funding for programs such as Medicare, Medicaid, and Social Security. As things become more expensive in terms of fiat currencies (salaries, healthcare bills, critical hospital technology, drugs, treatments, etc.) they become cheaper in terms of Bitcoin.
- Benefits of future proofing: A limited supply of Bitcoin can protect against the depreciation of the fiat currency in the long term, ensuring that entitlement programs retain their value and benefit beneficiaries in the decades to come.
2. Generate revenue for safety nets
- Asset valuation:Bitcoin has shown significant price appreciation in the long term. The Bitcoin reserve held by the government can be tapped in times of financial need to generate additional revenue to fund social programs. The key here is the long-term view, not short-term trading.
- Controlled filtering: Under a progressive framework, the government could design strict protocols for selling portions of the reserve during economic downturns or crises to avoid undermining the reserve’s long-term value while supporting public welfare.
3. An alternative to taxpayer burden
- Reducing dependence on taxpayers: Traditionally, funding for social safety nets comes from taxes, which can disproportionately affect middle- and low-income families. Bitcoin reserves could provide an alternative funding source, reducing reliance on direct taxes for safety net programs.
- Reducing deficit spending: One of the main instances of inflation is leveraged spending through the money-printing mechanisms of the Federal Reserve, Treasury, and Congress, as they pass legislation that far exceeds our assets and tax receipts. The SBR can be used to help us become less dependent on money printing, which is responsible for the crushing inflation among the lower and middle classes and which is often used to fund our government programs and social safety nets. By including Bitcoin alongside traditional reserves such as gold, the government can enhance its financial capacity to support social welfare programs without relying on debt spending.
4. Emergency financial assistance
- Crisis relief fund: During financial crises, the government often has difficulty mobilizing resources quickly to expand safety nets. Because Bitcoin is highly liquid and globally accessible, it can serve as an emergency reserve for direct cash transfers or funding unemployment benefits in times of economic distress.
- Efficiency of global transfers: Bitcoin’s borderless nature can streamline the provision of international aid or remittances to support diaspora communities or vulnerable populations abroad, in keeping with progressive values of global justice.
5. Promoting financial inclusion for vulnerable populations
- Closing the wealth gap: A strategic Bitcoin reserve can be paired with policies that encourage public ownership of Bitcoin, providing individuals and communities with the ability to participate in a financial system that is less dependent on traditional banking structures. Look for programs like Alaska Permanent Fund Which pays dividends based on Alaska’s oil reserves and production
- Direct redistribution mechanisms: The government can use gains from Bitcoin reserves to fund Universal Basic Income (UBI) programs or targeted assistance to low-income households. Margot and I discussed this possibility with… Scott Santinsa leading expert on UBI on our website Podcast.
Although not directly connected to SBR, accepting Bitcoin at this point could open the door to more possibilities in terms of Bitcoin mining and the community.
6. Incentivize green Bitcoin mining in order to create jobs
- Jobs for at-risk communities: Bitcoin mining operations, if incentivized to use renewable energy, could create jobs in underserved areas, providing the dual benefit of economic revitalization and environmental progress.
- Revenues for local governments: Tax revenue generated from sustainable Bitcoin mining operations could be redirected to strengthen local safety nets, such as affordable housing or community healthcare initiatives.
7. Economic flexibility to finance long-term programs
- Buffer against economic crises: In times of economic recession or geopolitical instability, Bitcoin’s independence from fiat currency systems can provide a financial buffer. This can ensure that critical safety net programs continue to operate without interruption.
- Strengthening the social contract: By maintaining a reserve that protects national economic security, the government reinforces its commitment to protecting vulnerable populations, a fundamental progressive principle.
8. Enhancing public confidence in social programs
- Transparent financing mechanism: Bitcoin’s blockchain technology ensures a transparent ledger. Using Bitcoin reserves to partially fund social programs could increase public confidence in how resources are allocated and managed, reducing suspicions of government waste or corruption. Bitcoin SBR addresses will be made public (eg El Salvador does)
- Public ownership: Progressives could propose allocating a small portion of Bitcoin gains directly to citizens through rebates or credits tied to social programs, creating a tangible link between national reserves and public benefit. Again, back to the dividend or universal basic income approach
This is just the tip of the iceberg of how progressives theoretically treat Bitcoin’s strategic reserve. While this is an intellectual exercise at this point, and my focus remains on grassroots adoption of Bitcoin and how that can change the lives of individuals and communities around the world, it raises an important point – what social good can we imagine Bitcoin providing? In our evolving, changing and financially challenging world? Beyond just rising numbers, crypto traders, and Wall Street getting richer, what role can Bitcoin play in improving the lives of ordinary people on a deep, structural level? We will continue to explore these questions here at The Progressive Bitcoiner.
This is a guest post by Trey Walsh. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.