Here is Why Bitcoin Could Solve the U.S. Debt Problem

A bold proposal to address the U.S. national debt has emerged, suggesting that the country could build a Bitcoin reserve to help reduce its staggering $36 trillion debt.

This idea, supported by Senator Cynthia Lummis, has raised both interest and skepticism, with Lummis outlining a plan for the U.S. government to accumulate 1 million BTC  over the next five years. The aim would be to strategically hold these assets for 20 years, hoping to leverage Bitcoin’s potential growth to reduce the debt burden for future generations.

Lummis’ bill, which has sparked debate, posits that a portion of Bitcoin’s gains could go toward paying down government debt. She envisions a future where Americans are free from debt they never incurred or benefited from. The strategy focuses not on immediate debt repayment but on long-term growth, with the Bitcoin reserve serving as a store of value.

Analysts like Matthew Sigel from VanEck have explored this idea, hypothesizing that the U.S. Treasury could invest in Bitcoin at current prices, expecting significant appreciation over time. According to Sigel’s calculations, this reserve could potentially cover as much as 36% of the national debt by 2050.

While the concept has caught attention, especially in light of similar proposals from European lawmakers, there are concerns about Bitcoin’s volatility. CryptoQuant CEO Ki Young Ju has pointed out that Bitcoin’s price fluctuations could make such a reserve risky. However, he suggests that the long-term upward trajectory of Bitcoin’s value might outweigh these risks, especially if it gains broader acceptance as a global asset like gold.

While the proposal has its challenges, it presents an innovative way to address one of the most pressing issues facing the U.S. economy. The idea of using Bitcoin to reduce national debt is still in the early stages, but with the growing acceptance of cryptocurrency globally, this strategy could become more feasible in the years to come.