Altcoins Talks - Cryptocurrency Forum
Cryptocurrency Ecosystem => Bitcoin Forum => Topic started by: slapper on May 04, 2025, 07:23:56 PM
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Alright, so Arizona almost became the first state to formally store Bitcoin in reserves using seized money, up to $3B. The bill passed, then got vetoed. Why? "Untested investment"
Now here is the real conversation I want to start:
Would you support or reject your state holding even 1% of its reserves in BTC, knowing it could increase long-term resilience, but also trigger audit chaos, credit risk, and public backlash if it tanks 40% in a year?
Is this the libertarian pipe dream of the younger generation or is it the creeping institutionalisation of belief-based monetary networks? Would the political elite ever view volatility the same way we do?
Should Bitcoin prove to be a failing state asset, does it harm BTC... or does it just expose the fragility of government trust?
Curious what you all think
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Should Bitcoin prove to be a failing state asset, does it harm BTC... or does it just expose the fragility of government trust?
Curious what you all think
Bitcoin over the years have proven its worth and it's ability to grow as an asset in the long term regardless of the short term price volatility and sort..
What sparked this whole debate about nations creating a bitcoin reserve in the first place? Isn't this because even those in the government have seen the potentials bitcoin possess as a long term investment, and many have even gone ahead to tag bitcoin as an "internet gold" or "digital gold" rather..
What I am saying in essence is that the government are same people like you and I, many of them are also individual investors like you and I as well, they all know the potentials in bitcoin, they understand it's volatility and all, all this can not be new to the government, so them deciding to hold bitcoin in reserve is definitely progress.
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Suicide would look like endlessly printing money and then giving it to the various banks so that they can keep opening credit cards for people who can't pay their bills.
We can't keep running on credit forever! That's why Satoshi created Bitcoin in the first place. But that doesn't mean that the government can keep running with a busted accelerator pad. It's gotta be slowed down or we are going to go bankrupt. No amount of debt ceiling raises and default extensions will fix that.
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Alright, so Arizona almost became the first state to formally store Bitcoin in reserves using seized money, up to $3B. The bill passed, then got vetoed. Why? "Untested investment"
Now here is the real conversation I want to start:
Would you support or reject your state holding even 1% of its reserves in BTC, knowing it could increase long-term resilience, but also trigger audit chaos, credit risk, and public backlash if it tanks 40% in a year?
Is this the libertarian pipe dream of the younger generation or is it the creeping institutionalisation of belief-based monetary networks? Would the political elite ever view volatility the same way we do?
Should Bitcoin prove to be a failing state asset, does it harm BTC... or does it just expose the fragility of government trust?
Curious what you all think
Whatever ways the government may view Bitcoin, it does not change the fact that it remains a decentralized blockchain networks, and i think that Bitcoin are viewed by the political elites as a volitile asset class just like we do. The volitile nature of bitcoin is well known by many that are involved on Bitcoin trading/investments.
In addition, Bitcoin on my view is not a proof of falling asset class, as normal, the market factors, like demands are bound to change overtimes which give rise to increase or decrease on price, it doe not harm Bitcoin, neither will it expose government trust, this are parts of the market conditions that happens at some intervals.
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It may or may not pose a risk for the government if they acquire it. In the short term, the price of BTC will be down or high. If the price is high, then everything is okay, but if the price is going down and all the tax funds are deposited in BTC, the government will face significant criticism, and the politicians' careers will be in trouble. That is why the Arizona government passed a bill with the agreement of all the members. I think if the government makes reserves in BTC, then the price will be very high, and things will become more complex. However, it will not happen soon because the government will buy it when they feel it is safer, and this will not happen soon as the price is changing.
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They have been manipulating their fiat and using inflation as an excuse. If it is just 1% of the reserve, why not? It will favour the government than the fiat they are holding. The real money are bitcoin, gold and other appreciating assets.
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They have been manipulating their fiat and using inflation as an excuse. If it is just 1% of the reserve, why not? It will favour the government than the fiat they are holding. The real money are bitcoin, gold and other appreciating assets.
This and as OP said, the question is whether we would vote in favor of Bitcoin even if we know it can tank 40%, which means if the 1% tank 40%, we are talking about an overall decrease in state reserves of 0.4%. I don't think can matter anymore than depreciating fiat reserves.
And while we are still close to the peak in gold price, there is no guarantee that gold can't lose double digit percentage points pretty quickly. Calling something an "untested investment" is empty words. Gold tanked from 2011 to 2015 by a lot. I wonder how Bitcoin is not a tested investment as it is the one asset that can 100% be verified in real time.
@slapper what do you mean by "audit chaos"? Fiat money and gold, those cause audit chaos. How in the world would a state reliably prove that they possess what they claim to possess in terms of any asset other than Bitcoin?
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This can be a big move for Arizona and since it is starting its Bitcoin reserve with the seized assets then certainly there is nothing for Arizona to lose here but many things to gain. I am just wondering why the said law was vetoed by the Governor - maybe he does not believe in Bitcoin at all or very much risk-averse! Talking on suicide, maybe we should look at El Salvador and so far nobody is really complaining with their Bitcoin reserve as they are now on the profit mode if they would decide to sell (hope they won't). But anyway, this is the problem when we are dealing with the government...its own mindset is quite different from ordinary guys like you and me. And yeah if Arizona is not sure of what it is doing on Bitcoin then maybe it is not yet the best time to get into it so they should contact a buyer for OTC sale of the Bitcoin they got rather than be a participant in the marketplace but not sure of what to do or why they are doing it. Either stay or just go away, Arizona.
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Bitcoin was created with the intention of it being used a method of P2P payment, it was not intended to be used by countries (or local states within a country) to buy and hold. If it was vetoed, maybe it will set a precedent for others to follow.
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Is this the libertarian pipe dream of the younger generation or is it the creeping institutionalisation of belief-based monetary networks?
AFAIK government adding Bitcoin into their reserve have nothing to do with libertarian. It's different case if we talk about law which allow people to use Bitcoin as payment method without invasive privacy regulation and strict blacklisted coin.
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Bitcoin was created with the intention of it being used a method of P2P payment, it was not intended to be used by countries (or local states within a country) to buy and hold. If it was vetoed, maybe it will set a precedent for others to follow.
In my opinion this can end up as a deeply philosophical topic because coming up with a decentralized innovation and then argue what purpose it is supposed to serve, carries some contradiction in itself. It was once labeled as "A Peer-to-Peer Electronic Cash System", but the word "peer" has not been more concisely defined. We can derive from the message in the genesis block what the initial was, but if you throughly think about all the characteristics that make Bitcoin so valuable, then there is no point in arguing that it was never intended to be used by a certain class of peers.
The point against holding Bitcoin instead of spending makes no economic sense because increasing adoption of a network with a fixed unit supply automatically leads to the network value to increase. When something increases in value, or put differently, is expected to further increase in value over time, holding is the preferred action to take.
Last but not least, if something turns out to be highly valuable for individuals, how would it not be of interest for state actors or organizations? They have tried to stop it, but once they realized they can't, they now decide to embrace it, which is the right thing to do from their perspective.
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@slapper what do you mean by "audit chaos"? Fiat money and gold, those cause audit chaos. How in the world would a state reliably prove that they possess what they claim to possess in terms of any asset other than Bitcoin?
“audit chaos” - it’s less about Bitcoin’s traceability, more about the clash between traditional accounting frameworks (GASB, fiduciary protocols) and self-custody, volatility disclosure, rebalancing strategy, etc. It’s not chaos in the tech, rather chaos in the legacy bureaucracy trying to keep up. Glad you joined in. This is the level of nuance we need
This can be a big move for Arizona and since it is starting its Bitcoin reserve with the seized assets then certainly there is nothing for Arizona to lose here but many things to gain. I am just wondering why the said law was vetoed by the Governor - maybe he does not believe in Bitcoin at all or very much risk-averse! Talking on suicide, maybe we should look at El Salvador and so far nobody is really complaining with their Bitcoin reserve as they are now on the profit mode if they would decide to sell (hope they won't). But anyway, this is the problem when we are dealing with the government...its own mindset is quite different from ordinary guys like you and me. And yeah if Arizona is not sure of what it is doing on Bitcoin then maybe it is not yet the best time to get into it so they should contact a buyer for OTC sale of the Bitcoin they got rather than be a participant in the marketplace but not sure of what to do or why they are doing it. Either stay or just go away, Arizona.
Totally feel you on that. Although the "seized funds = nothing to lose" frame is emotionally intuitive, politically and structurally it gets complex here. From a state’s POV, even seized property is part of public fiduciary responsibility. That means the governor's office burns regardless of where the money came from if BTC declines 70% and local press broadcasts a "Arizona gambled with criminal money" headline. It is about audit trails and optics, not about belief
Also on El Salvador: they are in profit now, yes, but it took two full years of international doubt, IMF warnings, and complete internal political control to ride it out. Try using it on a state in the U.S. with checks, balances, and public reporting obligations. Said another way, Arizona shouldn't enter halfway if it doesn't know its intention. Either create a significant crypto reserve structure or leave till the institutional brain catches up
We're not lacking tools. We’re lacking clarity of intent
Bitcoin was created with the intention of it being used a method of P2P payment, it was not intended to be used by countries (or local states within a country) to buy and hold. If it was vetoed, maybe it will set a precedent for others to follow.
Because what something "was" created for rarely defines what it becomes. Money itself became fiat under central banks, it was not born as fiat. The internet wasn’t made for memes or markets, yet here we are. Indeed, Bitcoin was designed for p2p transactions. But intention doesn’t limit evolution. The veto might set a precedent, but precedent for what? For caution? For institutional delay? For freezing a tool designed to adjust more quickly than legal standards?
The issue is not if Bitcoin fits state behaviour. It's whether states can structurally handle trustless systems at all. And in a society headed towards programmable scarcity and post-nation economic flows, do they become less relevant if they cannot? That is why the "was" matters. But what it is becoming might be even more uncomfortable for institutions to face
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I don't blame the government in been cautious no matter how we want to put is their reason.
Let's face it, Bitcoin as a reserve is a new territory they are exploring
So it has to be slow and steady to prevent sinking.
Keeping constant that politicians are doing their job, It is easier to invest with your money than that of others.
The point against holding Bitcoin instead of spending makes no economic sense because increasing adoption of a network with a fixed unit supply automatically leads to the network value to increase. When something increases in value, or put differently, is expected to further increase in value over time, holding is the preferred action to take.
in an extreme case it does. If everybody or majority chooses to hold Bitcoin rather than spend it, it would affect the returns of miners and many wouldn't be able to to keep up.
And we know how that would pan out for Bitcoin.
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They have been manipulating their fiat and using inflation as an excuse. If it is just 1% of the reserve, why not? It will favour the government than the fiat they are holding. The real money are bitcoin, gold and other appreciating assets.
They didn't test their ways with BTC, that's all, just like it's said in the conclusion of the case ;)
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I will support my state or local government if they have a few percentage of Bitcoin reserves. This adds up the confidence of many citizens that are not yet into it. The main concern is about trust and confidence of those no coiners that have been looking up to investing on it. And for the growth of the market, this gives also the help to make the adoption rate higher. If some state vetoes the adoption or the Bitcoin reserve that has been once approved. It's okay, the leadership of governor or whoever is in that city or state is important to the people.
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The point against holding Bitcoin instead of spending makes no economic sense because increasing adoption of a network with a fixed unit supply automatically leads to the network value to increase. When something increases in value, or put differently, is expected to further increase in value over time, holding is the preferred action to take.
in an extreme case it does. If everybody or majority chooses to hold Bitcoin rather than spend it, it would affect the returns of miners and many wouldn't be able to to keep up.
And we know how that would pan out for Bitcoin.
Your set of assumptions falls short of grasping the full complexity of "skin in the game" in the Bitcoin network. What I described is not an extreme case, it is standard economics. But that principle doesn't imply "everybody" will hold, it implies that more Bitcoin will be held or bought than sold. it is not like transactions would dump to zero. But assuming transactions drop drastically and along with that miner rewards, then you will either see mining operations shift to places where energy is less expensive, or hash rate to drop, network security to drop and now price expectations will adjust and more people decide to liquidate or spend their Bitcoin, increased number of transactions leads to increases mining rewards, more miners will start operating again. Even my summary is just a very rough, incomplete summary.
Since you probably suggested that Bitcoin will crash into oblivion when you said
And we know how that would pan out for Bitcoin.
it is not going to happen for that reason. This doesn't mean that limited intentions to spend or transact Bitcoin could somehow be a bottleneck for network expansion, but it will neither mean the end of Bitcoin. One counter example is gold: nobody uses gold to pay anything, people hoard it and while gold is not dependent on a security algorithm being held up by miners, it is a weakness at the same time for gold as there is no verifiability, no mobility and many other aspects that make Bitcoin strong.
Ultimately, Bitcoin would still be doing well even if the hash rate drops by a bit.