Donald Trump recently announced on social media that the United States digital asset reserve will include not only BTC and ETH, but also SOL, ADA, and XRP.
This of course triggered a lot of Bitcoin maxis, and also caused the general crypto community to question the reasoning behind adding these particular coins to the national reserve.
XRP, ADA, and SOL
The first question that comes to mind is why are certain cryptocurrencies being added to the reserve and not others. Off the top of my head XMR, HBAR, and EGLD offer innovations such as privacy, DAG technology, and sharding. These are just a few examples of cryptocurrencies that have been innovating behind the scenes for years.
Perhaps the teams behind Ripple, Cardano, and Solana simply have more influence on the current administration, and have managed to convince the president that their projects are ahead of the pack. Of course, as time goes on, it's possible that we will see the government adding other cryptocurrencies to the reserve.
"US-Based" Cryptos
Apparently Trump and his team want to support "US-Based" projects in particular. This is a funny label though, because cryptocurrencies that are truly decentralized are not based in any single country, but are rather completely borderless. We will now see a lot of projects claiming to be US-Based, in order to get support from the government.
This is quite the compromise, however, and could put the project under US jurisdiction. Does that mean the team will then have to answer to the administration? Will validators be forced to censor transactions of the supposed enemies of the United States? Will the government now have some influence on the development of the project?
Nation State Crypto Reserves
Aside from the prospect of temporary profits, which could technically be used to fight inflation on behalf of the citizens, does it even make sense for a government to own cryptocurrency at all?
After all, one of the original purposes of Bitcoin was to eliminate intermediaries such as banks, so that everyone would be able to transact with one another on a peer-to-peer basis. If the government is holding crypto on behalf of the people, doesn't that defeat the purpose of bypassing these middle-men? From the Bitcoin whitepaper:
A purely peer-to-peer version of electronic cash would allow online
payments to be sent directly from one party to another without going through a financial institution.
A national crypto reserve seems more about propping up prices and reinforcing state control, rather than decentralizing power and encouraging citizens to manage their own money.
A Peer-to-Peer Utopia
The problem is that we are so accustomed to having banks and governments entrenched in our financial lives, that it will probably take a few generations for this technology to be fully adopted, and for a collective change of mindset to occur.
With true financial freedom comes great responsibility. Learning to manage private keys and seed phrases is no easy task, especially for the non-technical among us. Oftentimes it takes a careless mistake and financial loss for us to learn the importance of proper key management.
Until next time...
The new US administration has chosen to add XRP, ADA, and SOL to the national digital asset reserve. The reasons behind including those particular coins remains vague, and the possibility remains that more cryptos will be added in the future.
Considering that Bitcoin was invented to eliminate intermediaries from our transactions, the idea of a government owning crypto on behalf of the people doesn't make much sense. However, until the people learn to manage their own private keys, this may become a common practice.
If you learned something new from this article, be sure to check out my other posts on crypto and finance here on the Hive blockchain. You can also follow me on InLeo for more frequent updates.
Further Reading
- What percentage of the population will end up managing their own private keys?
- Inside the Minds Of No-Coiners, Bitcoin Maxis, and Shitcoiners