What kind of Bitcoin strategic reserve should the United States implement?

The United States benefits from what economists call an “exorbitant privilege.” As the issuer of the world’s reserve currency, it can borrow in its own currency and support new spending. However, this does not mean it can simply print money — U.S. Treasuries still have to find buyers on the open market. Fortunately, U.S. debt is widely considered the safest asset in the world, ensuring strong demand, especially in times of crisis when investors scramble for safe assets.

Who benefits from this exorbitant privilege? First, U.S. policymakers, who gain extra flexibility in fiscal and monetary decisions. Second, banks — they are at the center of global financial flows, collecting fees and wielding influence. But who are the real winners? U.S. corporations and multinationals, who are able to conduct much of their business in their own currency and can issue bonds and borrow more cheaply than foreign competitors. And let’s not forget consumers, who enjoy greater purchasing power, lower borrowing costs, and more affordable mortgages and loans.

The result? The United States can borrow more cheaply, run larger deficits longer, and withstand economic shocks that would cripple other countries. Yet this exorbitant privilege is not a given—it must be earned. It depends on America’s economic, financial, and geopolitical power. Ultimately, the entire system depends on one key factor: trust. Trust in America’s institutions, governance, and military . Most importantly, trust that the dollar is ultimately still the safest place for global savings.

All of this has direct implications for the Trump administration’s proposed Bitcoin reserve plan. Supporters are not wrong about Bitcoin’s long-term strategic role—they’re just premature . Today, the real opportunity lies not in simply hoarding Bitcoin; it lies in intentionally shaping Bitcoin’s integration into the global financial system in a way that strengthens, not undermines, America’s economic leadership . That means using dollar stablecoins and Bitcoin to ensure that the next era of financial infrastructure is one in which America leads—not one in which America reacts.

Before discussing this issue, let us first analyze the role of reserve currencies and the countries that control them.

The rise and fall of reserve currencies

History is clear: Reserve currencies belong to the world’s economic and geopolitical leaders—until they no longer lead. At their peak, dominant countries dictate the rules of trade, finance, and military power, providing global credibility and trust for their currencies. From the Portuguese real in the 15th century to the U.S. dollar in the 20th century, reserve currency issuers shape the markets and institutions that other countries emulate.

But no currency can hold the throne forever. Overreaching—whether through war, expensive expansion, or unsustainable social promises—ultimately erodes credibility. The Spanish real, once backed by vast Latin American silver reserves, depreciated as Spain’s mounting debt and economic mismanagement undermined its dominance. The Dutch guilder also depreciated as relentless warfare drained the Netherlands’ resources. The French franc dominated in the 18th and early 19th centuries but depreciated under the weight of revolution, the Napoleonic wars, and financial mismanagement. And the pound, once a cornerstone of global finance, collapsed under the weight of postwar debt and the rise of American industrial dominance.

The lesson is simple: Economic and military might can create a reserve currency, but financial stability and institutional leadership are what sustain it. Lose that foundation, and the privilege disappears.

Is the dollar's reign coming to an end?

The answer to this question depends on where you start counting. The dollar solidified its position as the world’s reserve currency around World War II through the Bretton Woods Agreement, and even earlier, as the United States became the world’s leading creditor nation after World War I. In any case, the dollar has been dominant for more than 80 years. That’s a long time by historical standards, but not unprecedented—the British pound was dominant for about a century before declining.

Today, some argue that Pax Americana is unravelling. China’s rapid advances in artificial intelligence, robotics, electric vehicles, and advanced manufacturing portend a shift in power. Beyond that, China wields significant control over critical minerals necessary to shape our future. Other warning signs are emerging. Marc Andreessen called DeepSeek’s R1 launch America’s AI Sputnik moment—a reminder that America’s leadership in emerging technologies is no longer guaranteed. Meanwhile, China’s expanding military presence in the air, at sea, and in cyberspace, along with its growing economic influence, raises a pressing question: Is the dollar’s ​​dominance under threat ?

Debt as a percentage of GDP. Source: International Monetary Fund

The short answer: Not yet. Despite mounting debt and false propaganda predicting imminent collapse, the U.S. is not on the verge of a fiscal crisis. Yes, the debt-to-GDP ratio is high, especially after pandemic spending, but it’s still in line with other major economies. More importantly, global trade is still largely based in dollars. The renminbi is closing the gap with the euro in some international settlements, but it’s far from replacing the dollar.

The real question isn’t whether the dollar will collapse. It hasn’t collapsed yet. The real concern is whether the United States can maintain its lead in innovation and economic power. If trust in U.S. institutions declines or the United States loses its competitive edge in key industries, cracks in the dollar’s ​​dominance could begin to show. Those who are short the dollar are not just market speculators—they are geopolitical rivals of the United States.

This does not mean that fiscal discipline is unimportant. It is extremely important. Reducing spending and making government more efficient, either through a Department of Government Efficiency (DOGE) or otherwise, would be a welcome shift. Streamlining outdated bureaucracies, removing barriers to entrepreneurship, and promoting innovation and competition would not only reduce wasteful public spending; it would also strengthen the economy and the dollar.

Combined with continued U.S. breakthroughs in artificial intelligence, encryption, robotics, biotechnology, and defense technology, this approach could reflect how the United States regulates and commercializes the internet—driving a new wave of economic growth and ensuring that the dollar remains the world’s undisputed reserve currency.

Can Bitcoin Reserves Solidify America’s Financial Leadership?

Let’s discuss the idea of ​​a strategic reserve of Bitcoin. Unlike traditional reserve assets, Bitcoin lacks the historical backing of national institutions and geopolitical forces. But that’s exactly the point. It represents a new paradigm: no state sponsor, no single point of failure, fully globalized, and politically neutral. Bitcoin offers an alternative that is not constrained by the traditional financial system.

While many consider Bitcoin to be a breakthrough in computer science, its true innovation is much more profound: it redefines how economic activity is coordinated and how value moves across borders. The Bitcoin blockchain, operating as a decentralized, trustless system (and with a single anonymous creator who has no control), can serve as a neutral universal ledger - an independent framework for recording global credits and debits without relying on central banks, financial institutions, political unions, or other intermediaries. This is not only a technological advancement, but also a tectonic shift in the way global financial coordination works.

This neutrality makes Bitcoin uniquely resilient to the debt crises and political entanglements that have historically unravelled fiat currencies. Unlike traditional monetary systems, which are closely tied to national policies and geopolitical shifts, Bitcoin is not controlled by any single government. This also makes it possible to serve as a common economic language between countries that would otherwise resist financial integration or reject a unified ledger system altogether. For example, the United States and China are unlikely to trust each other’s payment channels — especially as financial sanctions become an increasingly powerful tool of economic warfare.

So how will these fragmented systems interact? Bitcoin can serve as a bridge: a global, trust-minimized settlement layer that connects otherwise competing economic sectors. When this reality becomes a reality, it would certainly make sense for the United States to hold a strategic Bitcoin reserve.

But we’re not there yet. For Bitcoin to move beyond an investment asset, critical infrastructure must be developed to ensure scalability, a modern compliance framework, and seamless integration with fiat currencies to achieve mainstream adoption.

Bitcoin reserve supporters weren’t wrong about its potential long-term strategic role. They were just premature. Let’s unpack why.

Why does a country need to maintain strategic reserves?

Countries stockpile strategic reserves for a simple reason: in a crisis, access is more important than price. Oil is the classic example — while futures markets allow price hedging, no amount of financial engineering can replace having physical reserves on hand when supply chains are disrupted by war, geopolitics or other disruptions.

The same logic applies to other essentials — natural gas, grains, medical supplies and, increasingly, raw materials. As the world transitions to battery-powered technology, governments have begun stockpiling lithium, nickel, cobalt and manganese to prepare for future shortages.

Then there’s currency. Countries with large foreign debts (often denominated in dollars) hold dollar reserves to facilitate the rollover of debt and guard against domestic currency crises. But here’s the key difference: no country currently has a large amount of debt in Bitcoin — at least not yet.

Bitcoin supporters argue that its long-term price action makes it an obvious reserve asset. If the U.S. buys now and continues to adopt, the investment value could multiply. However, this approach is more in line with the strategy of a sovereign wealth fund that focuses on capital returns rather than reserves that are critical to national security. It is more suitable for resource-rich but economically unbalanced countries seeking asymmetric financial windfalls, or countries with weak central banks that hope Bitcoin can stabilize their balance sheets.

So where does this leave the US? The US does not yet need Bitcoin to run its economy , and despite President Trump’s recent announcement of a sovereign wealth fund, cryptocurrency investment may still (rightly) be left primarily to private markets for efficient allocation. The strongest case for a Bitcoin reserve is not economic need, but strategic positioning. Holding reserves may indicate that the US is determined to lead in crypto, establish a clear regulatory framework, and position itself as the global center of DeFi, just as it has dominated traditional finance for decades. However, at this stage, the costs of such a move may outweigh the benefits.

Why Bitcoin Reserves Might Backfire

Beyond the logistical challenges of accumulating and securing a reserve of Bitcoin, the bigger problem is one of perception, and the costs could be high. At worst, it could signal a lack of confidence in the U.S. government’s ability to sustain its debt, a strategic misstep that hands victory to geopolitical rivals like Russia and China, both of which have long sought to weaken the dollar.

Russia is not only pushing for de-dollarization abroad, its state-backed media has for years promoted a narrative that questions the stability of the dollar and predicts its imminent devaluation. Meanwhile, China has taken a more direct approach, expanding the reach of the yuan and digital payment infrastructure—including through a domestically focused digital yuan—to challenge the U.S.-dominated financial system, especially in cross-border trade and payments. In global finance, perceptions matter. Expectations not only reflect reality, they help shape it.

If the U.S. government begins hoarding Bitcoin on a large scale, the market may interpret it as a hedge against the dollar. This perception alone could trigger investors to sell dollars or reallocate capital, undermining the position the U.S. wants to protect. In global finance, beliefs drive behavior. If enough investors begin to doubt the stability of the dollar, their collective actions will turn that doubt into reality.

U.S. monetary policy relies on the Fed’s ability to manage interest rates and inflation. Holding Bitcoin reserves could send a conflicting message: If the government has confidence in its own economic tools, why store assets that the Fed can’t control?

Could Bitcoin reserves alone trigger a dollar crisis? Very unlikely. But it also probably wouldn’t strengthen the system — and in geopolitics and finance, unforced errors are often the most costly.

Leading with strategy, not speculation

The best way for the U.S. to reduce its debt-to-GDP ratio is not through speculation, but through fiscal discipline and economic growth. History shows that reserve currencies do not last forever, and those that do depreciate do so due to economic mismanagement and overextension. To avoid following the path of the Spanish real, Dutch guilder, French livre, and pound sterling, the U.S. must focus on sustainable economic strength rather than risky financial bets.

The United States has the most to lose if Bitcoin becomes the global reserve currency. The transition from the dominance of the US dollar to a Bitcoin-based system will not be smooth. Some believe that the appreciation of Bitcoin can help the United States "pay off" its debts, but the reality is much more cruel. This transition will make it more difficult for the United States to finance its debts and maintain its economic influence.

While many believe that Bitcoin cannot possibly become a true medium of exchange and unit of account, history suggests otherwise. Gold and silver are valuable not only because of their scarcity, but also because they are divisible, durable, and portable, making them effective money—even without sovereign backing or issuance, as Bitcoin is today. Similarly, China’s early paper currency was not a government-mandated medium of exchange. It evolved from commercial promissory notes and certificates of deposit (representing an already trusted store of value) before becoming widely accepted as a medium of exchange.

Fiat currencies are often seen as an exception to this pattern - after being declared legal tender by a government, they immediately become a medium of exchange and subsequently a store of value. But this oversimplifies reality. Fiat currencies have power not just because of legal decree, but because of the government's ability to enforce taxes and debt obligations through that power. Currency backed by a country with a strong tax base has inherent demand because businesses and individuals need it to pay their debts. This power to tax allows fiat currencies to retain value even without direct commodity backing.

But even fiat money systems aren’t built from scratch. Historically, their credibility has been backed by commodities that people already trust, most notably gold. Paper money gained acceptance precisely because it was once redeemable for gold or silver. Only after that trust had been reinforced for decades did the transition to pure fiat money become feasible.

Bitcoin is on a similar trajectory. Today, it is primarily viewed as a store of value—volatile but increasingly viewed as digital gold. However, as adoption expands and financial infrastructure matures, its role as a medium of exchange may follow. History shows that once an asset is widely recognized as a reliable store of value, the transition to effective currency is a natural progression.

This is a major challenge for the United States. Although there are some policy levers, Bitcoin operates largely outside the traditional control of currencies by countries. If it becomes a global medium of exchange, the United States will face a harsh reality - reserve currency status will not be easily given up or shared.

This doesn’t mean the U.S. should crack down on or ignore Bitcoin—if anything, it should actively engage with and shape its role in the financial system. But buying and holding Bitcoin simply for appreciation isn’t the answer either. The real opportunity is greater—but more challenging: promoting Bitcoin’s integration into the global financial system in a way that strengthens, not undermines, America’s economic leadership .

Bitcoin Platform for the United States

Bitcoin is the most established cryptocurrency with an unrivaled record of security and decentralization. This makes it the strongest candidate for mainstream adoption, first as a store of value and eventually as a medium of exchange.

For many, the appeal of Bitcoin lies in its decentralization and scarcity—factors that drive its price higher as adoption increases. But that’s a narrow view. While Bitcoin’s value will continue to rise as it becomes more popular, the real long-term opportunity for the United States lies not only in holding Bitcoin, but in actively shaping its integration into the global financial system and establishing itself as an international center for Bitcoin finance.

Simply buying and holding Bitcoin is a perfectly viable strategy for all countries outside the United States—both accelerating adoption and capturing financial upside. But the United States faces greater risks and must do more. It needs to take a different approach—not only to maintain its status as the issuer of the world’s reserve currency, but also to drive massive financial innovation on the dollar’s ​​“platform.”

The key precedent here is the Internet, which transformed the economy by moving information exchange from proprietary to open networks. Today, as financial rails shift to a more open and decentralized infrastructure, the U.S. government faces a similar choice to the incumbent governments that existed before the Internet. Just as companies that embraced the Internet’s open architecture flourished and those that resisted eventually became irrelevant, the United States’ attitude toward this shift will determine whether it can maintain its global financial influence or cede ground to other countries.

The first pillar of a more ambitious, future-oriented strategy is to treat Bitcoin as a network, not just an asset. As open, permissionless networks drive new financial infrastructure, incumbents must be willing to give up some control. However, by doing so, the United States can unlock significant new opportunities. History shows that those who adapt to disruptive technologies strengthen their position, while those who resist disruptive technologies ultimately fail.

The second key pillar of Bitcoin is to accelerate the adoption of dollar stablecoins. With proper regulation, stablecoins can strengthen the public-private partnership that has underpinned U.S. financial dominance for more than a century. Far from undermining the dollar’s ​​hegemony, stablecoins will strengthen it , extend the dollar’s ​​influence, enhance its utility, and ensure its relevance in the digital economy. Moreover, they offer a more agile and flexible solution than slow-moving, bureaucratic central bank digital currencies or ill-defined unified ledger schemes such as the Bank for International Settlements’ “Internet of Finance.”

But not every country is willing to adopt a dollar stablecoin or operate entirely within the U.S. regulatory framework. Bitcoin plays a key strategic role here—acting as a bridge between the core dollar platform and non-geopolitically aligned economies. In this context, Bitcoin can act as a neutral network and asset, facilitating the flow of funds while strengthening the U.S.’s central position in global finance, thereby preventing it from ceding ground to alternative currencies such as the renminbi. Even if it becomes a pressure release valve for countries seeking alternatives to dollar hegemony, Bitcoin’s decentralized, open nature ensures that it is closer to the economic and social values ​​of the United States than to those of authoritarian regimes.

If the United States succeeds in this strategy, it will become the epicenter of Bitcoin financial activity and have greater influence to shape these flows in line with American interests and principles.

This is a subtle but viable strategy that, if implemented effectively, will allow the dollar’s ​​influence to persist for decades to come. Rather than simply hoarding Bitcoin reserves (which could indicate concerns about the dollar’s ​​stability), Bitcoin could be strategically integrated into the financial system, driving the development of the dollar and dollar stablecoins on the network, so that the U.S. government becomes an active manager rather than a passive bystander.

The benefit? A more open financial infrastructure, while the U.S. still controls the “killer app” — the dollar. This approach mirrors that of companies like Meta and DeepSeek, which are setting industry standards by open-sourcing AI models while monetizing them elsewhere. For the U.S., this means expanding the dollar platform to make it interoperable with Bitcoin, ensuring continued relevance in a future where cryptocurrencies play a central role.

Of course, like any strategy to resist disruptive innovation, this one has risks. But the cost of resisting innovation is obsolescence. If any administration can do that, it’s the current one — one with deep expertise in platform wars and a clear understanding that staying ahead is not about controlling an entire ecosystem but about shaping how value is captured within it.