The Bitcoin Reserve Plan: A $100 Billion Gamble with Your Future

By Valarie R. Austin, December 11th, 2024, 8:00 PM EDT

(Previously Published on LinkedIn)

Cryptocurrency's powerful appeal to young adults is undeniable. A Pew Research Center study reveals that 42% of men aged 18 to 29 have invested in, traded, or used cryptocurrency—more than double the engagement rate of women in the same age range. For many, crypto represents a path to quick wealth, fueled by stories of meteoric gains. However, this allure masks significant risks that could devastate personal finances and, potentially, the entire U.S. economy.

Like student loans, which can burden young people with decades of debt, heavy cryptocurrency investments can lead to severe financial strain. The crucial difference? While student loans fund education that typically increases earning potential, cryptocurrency speculation offers no such guaranteed return. The Federal Trade Commission reports billions lost annually to crypto scams, with young investors particularly vulnerable to the market's extreme volatility and widespread fraudulent activities.

Following the Money: A Dangerous Political Gambit

Senator Cynthia Lummis's proposal for a U.S. Treasury Bitcoin Reserve would allocate $100 billion over five years to acquire one million bitcoins, which cannot be sold for 20 years. Advocates compare this to building a modern gold reserve—a dangerous oversimplification that ignores bitcoin's inherently speculative nature. While bitcoin recently surpassed $100,000 per coin, this milestone reflects speculative trading rather than intrinsic value.

President-Elect Trump's involvement in cryptocurrency through his family-backed firm, World Liberty Financial, launched in October 2024, raises serious concerns. His advocacy at the Bitcoin 2024 conference for government bitcoin purchases presents a clear conflict of interest, potentially benefiting his personal investments and those of allies such as Vivek Ramaswamy and Elon Musk. This intertwining of personal profit and public policy exemplifies the troubling direction of cryptocurrency legislation.

The risks of this taxpayer-funded venture are severe:

1. Market volatility could trigger massive losses in a price crash
2. Bitcoin's limited market cannot reliably handle large-scale government transactions
3. Artificially inflated prices could worsen inflation while enriching wealthy investors
4. Taxpayers would bear the full burden of any losses
5. Government investment could legitimize a market rife with fraud


Political Influence: Following the Money Trail

The cryptocurrency industry's influence on policy has reached unprecedented levels. During the 2024 election cycle, crypto firms spent over $120 million in campaign contributions, effectively purchasing bipartisan support for deregulation. This financial pressure produced immediate results in both chambers of Congress.

A stark example is the targeting of Senate Banking Committee Chair Sherrod Brown, who faced more than $40 million in opposition spending from crypto-affiliated super PACs—a clear message to any legislator considering stronger oversight. Even Senate Majority Leader Chuck Schumer has embraced the industry, declaring "Crypto is here to stay no matter what," demonstrating how campaign contributions can sway even the most powerful legislators.

The House passage of the Financial Innovation and Technology for the 21st Century Act further illustrates this influence. The legislation, supported by 70 Democrats including former Speaker Nancy Pelosi, weakens regulatory oversight by shifting jurisdiction to the more permissive Commodity Futures Trading Commission. This bipartisan support reveals how thoroughly corporate interests have hijacked the legislative process.

Protecting Your Future: A Call to Action

The proposed Bitcoin Reserve represents an egregious gamble with taxpayer money. Rather than allocating $100 billion to a speculative asset, these taxpayer funds could address critical issues such as a federal minimum wage increase, homelessness, child poverty, housing affordability, or universal healthcare. This misallocation of resources reflects a disturbing shift in governmental priorities—from serving citizens' needs to satisfying wealthy donors' expectations.

Young investors must recognize that bitcoin's appeal stems more from hype than sustainable value. The government's potential entry into cryptocurrency markets does not validate bitcoin as a safe investment; instead, it exposes taxpayers to unnecessary risk while benefiting wealthy insiders and corporate interests.

Citizens, especially voters, must demand accountability and reject policies that gamble public funds for private profit. Take action by contacting your congressional representatives to investigate the Bitcoin Reserve proposal and voice your concerns about using $100 billion in taxpayer money to fund it. Join or create discussion groups focused on responsible investing in your workplace or professional networks. Use social media platforms to raise awareness about cryptocurrency risks and demand greater transparency from political leaders about their crypto investments. This is not just about preventing financial risk—it is about preserving the integrity of American governance and ensuring public funds serve the public good, not private interests.

 

Valarie R. Austin is the author of The Student’s Comprehensive Guide for College & Other Life Lessons. She has a wealth of knowledge on the subjects of career and college preparation. She also conducts career and college readiness workshops for high school students, parents and transitioning military members. Check out her author’s pages on https://www.linkedin/in/valarie-r-austin, https://www.goodreads.com/valarie_r_austin and https://www.amazon.com/author/valarie_r_austin. A Youtube.com review of her book can found at https://youtu.be/xy_GSHlJsa0. Copyright 2024, Vauboix Publishing LLC. (Article 1 of 2, winter 2024)