Originally Posted:Publish0x
The United States government has become one of the largest holders of bitcoin, the most popular and valuable cryptocurrency in the world. According to public data from various sources, Washington is known to have confiscated at least more than 200,000 Bitcoins, equivalent to about $6,785,200,000 (current BTC price: $33,926) through operations against cybercrime and dark markets. However, the fate of these digital assets is uncertain, since the government has not made public any clear plan on how it intends to manage or liquidate them.
It is worth clarifying that the Bitcoins seized by the government come from various sources, such as the Silk Road drug trafficking network, its founder James Zhong, and the hackers who attacked the Bitfinex exchange in 2016. These assets are stored safely on encrypted devices offline, controlled by various federal agencies, such as the Department of Justice and the Internal Revenue Service (IRS).
It must be taken into account that the legal process to confiscate and manage these assets can last several years, which implies great uncertainty about their value and their impact on the market. In the worst case, this delay will benefit the government, as the price of bitcoin will increase significantly over time. For example, when the Bitfinex exchange was hacked in 2016, bitcoin was trading around $600. By the time those responsible for the attack were arrested in 2022, and the Department of Justice announced its largest financial seizure of about 95,000 Bitcoins, the value of the token had risen to $44,000.
However, the US government does not seem to be in a hurry to "move" its Bitcoins. This conservative attitude contrasts with that of other countries that have chosen to quickly dispose of seized Bitcoins. For example, Bulgaria sold about 200,000 Bitcoins in 2018, when its value was around $18,000, and China has also auctioned thousands of confiscated Bitcoins at below-market prices.
The reason why the United States government does not sell its Bitcoins could range from hidden intentions (making us paranoid and conspiratorial) to simply bureaucratic inertia or a lack of interest in the crypto sector. Jarod Koopman, the executive director of the IRS's cyber and forensic services section, told the Wall Street Journal some time ago that the government does not actively trade or try to stay ahead of the market and instead its actions are dictated by the timing of the legal process.
However, we can ask ourselves some questions: What motivations does the United States government have for keeping its Bitcoins "frozen?" What are the implications of having so many Bitcoins? What could it do with them? What risks and opportunities do they represent? for the market and the economy?
Let's stop here to make a brief clarification. A hypothesis is a statement made about something that could be true or false, but has not yet been proven. It is based on clues, facts or assumptions that suggest a possible explanation or relationship between things. It can be tested by observation, experimentation or argument, to see if it is confirmed or rejected. It is a starting point for research, since it poses a question or problem that you want to solve. It is not a proven fact, but rather a conjecture or speculation that requires evidence to be validated. That said, let's look at some possible hypotheses:
📌 One of the advantages of bitcoin is that it offers a high degree of anonymity and privacy, which makes it attractive for illicit or clandestine activities. The US government could take advantage of this feature to finance secret or illegal operations, such as espionage, sabotage, terrorism or cyber warfare. In this way, it could avoid public scrutiny and parliamentary control, as well as international sanctions. This hypothesis is plausible, as the government is known to have used hidden or diverted funds to finance covert operations in the past. Those who are a little older will remember the Iran-Contra scandal or the dirty war in Latin America, a list that has no end.
📌 Another possibility is that the government decides to sell its Bitcoins on the market, either gradually or en masse, to influence the price and demand of the cryptocurrency. By doing so, it could achieve several objectives, such as generating tax revenue, compensating victims of cybercrime, discouraging investment in bitcoin, weakening its competitors or rivals who use or accumulate bitcoin, or causing a crisis of confidence in the crypto system. This hypothesis is feasible, since it has been seen that the government has intervened in financial markets to manipulate exchange rates or interest rates.
📌 A third option is for the government to recognize the value and potential of bitcoin as a complementary or alternative currency to the dollar. In this case, you could use your Bitcoins to diversify your monetary reserves, facilitate international trade, foster technological innovation, drive financial inclusion, or prepare for a possible transition to a multipolar monetary system. This hypothesis is unlikely, since it would imply a radical change in the government's monetary and fiscal policy, as well as a loss of power and influence of the dollar as a world reserve currency.
These are just some of the hypotheses that could be raised about the use or misuse that the United States government may make with its seized Bitcoins. Of course, there are many other possibilities and combinations that could be explored. The truth is that we do not know for sure what the government will do with its bitcoin holdings, nor what consequences it will have for the market and the global economy. The only certain thing is that this situation, if it continues, could generate a lot of uncertainty and expectation among investors, analysts and bitcoin enthusiasts. What do you think? What do you think the US government will do with its Bitcoins? I would appreciate your opinion in the comments.
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Author's Note: The opinion expressed here is not investment advice, is provided for informational purposes only, and reflects the opinion of the author only. I do not promote, endorse or recommend any particular investment. Investments may not be right for everyone. Every investment in the market and every trade you make involves risk, so you should always do your own research before making any decision. I do not recommend investing money that you cannot afford to chair, as you could lose the entire amount invested.
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