Reject the Strategic Beanie Baby Reserve
On greater fool theory, Hummel figurines, and the people trying hard to rip off the American taxpayer
People whose bread is buttered by the exchange of cryptocurrency have come out in favor of a "strategic Bitcoin reserve", which might be the most transparently self-interested proposal imaginable.
■ Even in the most favorable of interpretations, cryptocurrency is an extremely speculative asset: Something that Party A purchases strictly in the hope that Party B will purchase it later for a higher price. The greater the speculative excitement, the better for Party A -- because there is no true underlying value to the asset.
■ It's not an enterprise that produces an ongoing stream of valuable output, like farmland or a share in a productive business. It's not an investment in future returns, like a college education. It's not even like a pile of gold bars, which, even if they had no exchange value, could at least be melted down to make dental fillings.
■ Cryptocurrency, at least as an "investment", is entirely a gamble that a greater fool can be found. Anyone proposing that the government should purchase lots of cryptocurrency isn't seriously arguing that there is a "strategic" reason for so doing. They're doing it to get the government to take a pile of their asset class out of the marketplace in order to artificially drive up the market price that the next fool might be willing to pay.
■ It's not one iota different from collectors of any other "asset" -- like Beanie Babies, Hummel figurines, or baseball cards -- proposing that the government needs a strategic reserve of their plush toys, porcelain statuettes, or cardboard-backed photos. And in the case of those other assets, the producers at least knew enough to limit total production. Whole new cryptocurrencies are still being invented, and even the biggest names (like Bitcoin) aren't promising to stop producing new "assets" until 115 years from now.
■ Can cryptocurrencies be used to store value? Potentially -- just as value can be stored in the form of fur coats or antique paperback books. But the government doesn't need any such store of value when it's got the U.S. Treasury Department. A "strategic Bitcoin reserve" is nothing more than a proposal to enrich a handful of speculators at the expense of every taxpayer. Its proponents should be laughed out of the public square.
