30s Summary
The Bitcoin Policy Institute has published a paper suggesting that central banks could use Bitcoin as a safety net against various financial risks including inflation, political instability, and government debt. The paper’s author, Matthew Ferranti, noted Bitcoin’s minimal ties to other financial tools, which makes it a reliable option to diversify investments. He added that while Bitcoin may not solve all problems for central banks, it could act as a buffer like gold. There are growing calls in the US to recognize Bitcoin as a strategic reserve asset. However, some experts warn of potential interference from state actors.
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The Bitcoin Policy Institute recently published a paper suggesting central banks should consider using Bitcoin as a safety net. The paper, written by economist Matthew Ferranti, said Bitcoin could serve as protection against things like rising inflation, political turbulence, restrictions on money movement, government debt issues, bank problems, and international penalties set by the U.S. government.
Ferranti explained that Bitcoin doesn’t have strong ties to other financial tools, making it a good option to diversify investments. The digital asset also comes without the risks typically associated with other parties, which can be particularly helpful in situations of government debt defaults.
Further, Ferranti highlighted that Bitcoin might not be the golden ticket for all central banks, but it certainly can offer a buffer similar to what gold provides, especially when it comes to protecting against quick money value losses.
There have also been calls in the U.S. for Bitcoin to be recognized as a strategic reserve asset by the Treasury Department. Wyoming Senator Cynthia Lummis has already proposed the Bitcoin Strategic Reserve Bill in the Senate, an ambitious initiative to acquire 5% of all Bitcoin over time. Even former President Trump suggested Bitcoin could be used to pay off the national debt.
Microstrategy CEO Michael Saylor applauded the idea, likening it to the Louisiana Purchase. However, not everyone shares this optimism. Cardano founder Charles Hoskinson fears that if Bitcoin is adopted as a strategic reserve asset, it could allow state actors to interfere with the Bitcoin network.
Source: Cointelegraph