US debt crisis solved by BTC? Expert: Overhyping BTC, budget reform is the solution

Senator proposes establishment of BTC reserves, sparking heated debate

The U.S. Treasuries have ballooned to about $35 trillion (about NT$1,050 trillion), and U.S. Senator Cynthia Lummis of Wyoming has proposed a plan to build strategic BTC reserves to help eliminate the federal debt. She introduced the BTC Bill in July, recommending that the government buy 1 million BTC, about 5% of the total BTC supply, and hold it for at least 20 years. In addition, she called on the US Treasury to convert part of its gold reserves (about 8,000 tons, worth about $448 billion) into BTC.

Experts question whether BTC can solve debt problems.

However, Avik Roy, President of the non-profit think tank Foundation for Research on Equal Opportunity, expressed doubt about this. He pointed out at the 2024 North American Blockchain Summit held in Dallas, Texas on November 20 that this idea exaggerates the role of Bitcoin. He said:

“Senator Cynthia Lummis mentioned that BTC reserves could help us eliminate federal debt, which is overselling what BTC can do.”

Image source: Avik Roy (left) speaks at the 2024 NAB Summit on November 20, as reported by Cointelegraph.

Roy explained that even if the United States bought a large amount of BTC and expected its value to rise, it still couldn’t keep up with the 35.46 trillion US dollars in debt that has grown almost exponentially since the 1980s. He emphasized:

“BTC reserves are good, but they can’t solve the problem. We still need to reform the budget to get rid of the $2 trillion federal deficit every year.”

BTC reserves may help alleviate pressure on the bond market

Despite doubts about whether BTC can solve the debt problem, Roy said that BTC reserves could help alleviate the tension in the bond market. He said, ‘We have the ability to support some US dollars with BTC, so that the bond market feels that the United States will not go bankrupt.’ However, he is also concerned that the government may erode BTC reserves, just as it did with gold reserves in the 1970s.

According to data from the US Treasury Department, since 1981, US national debt has increased from $3.81 trillion to $35.46 trillion at a compound annual growth rate of 5.3%. Roy emphasized that relying solely on BTC reserves cannot reverse this trend and practical budget reform measures must be taken.

Source: U.S. Department of the Treasury The Changes of U.S. National Debt in the Past 100 Years

Experts urge rational view of the role of BTC

Overall, experts believe that BTC, as an emerging digital asset, has potential financial innovation value. However, it is undoubtedly an exaggeration to see it as a panacea for solving the enormous debt of the United States. Roy suggests that the government should focus on substantive fiscal reforms instead of relying on digital assets such as BTC to fill fiscal gaps. He urges, ‘We need real budget reform to get rid of the $2 trillion federal deficit each year.’

While the rise in the price of Bitcoin has attracted the attention of global investors, experts remind us to take a rational view of Bitcoin’s role in national finance, avoiding excessive reliance or high expectations.

[Disclaimer] There are risks in the market, and investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their specific situation. Invest at your own risk.

“US debt crisis solved by BTC? Expert: Over-hyped BTC, budget reform is the solution” This article was first published in “encryption city”