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Coincidentally, it is rumored that Satoshi holds a little over a million Bitcoin that has never moved, from the project's early days when it was worth a fraction of a cent and he was the only one mining it, earning 50 worthless BTC every 10 minutes. It's been widely assumed that those early Bitcoin wallets are lost. But what if they're not? Someone is sitting on billions of dollars, but can't sell, because that valuation is based, in part, on those particular assets being lost.
The article is right that this is all about banking out the largest BTC investors, because they can't just go to the markets and dump thousands of BTC at once. But they can sell that BTC directly to the Government, bypassing the markets entirely. The same government who can keep the BTC on the balance sheet, and print dollars in exchange. Just like Tether does, only legally this time. And if Satoshi (or his heirs) still have access to that early BTC, the Government is perhaps the only entity they can sell it to that won't cause a massive panic the minute those coins are moved on the blockchain.
But the article notes that Bitcoin was born out of a distrust of central banking and the Government in general. If this is the plan, I am sure that Satoshi is spinning in Hal Finney's grave over it.
Here's the thing ... if there aren't buyers enough to maintain the price, the paper value isn't correct. This is an artifical scarcity, and this bill would be a bail out to the rich and leave the US taxpayers holding the bag when the market crashes. The US taxpayers would then own all this bitcoin with no way to sell without crashing the market so it's just a direct transfer of wealth to the current holders.
Bitcoin does have artificial scarcity, though. There can only ever be 21 million in existence under the current protocol. Nearly 20 million have been released through mining, so there are only a little over 1 million left to mine. (There's that number again....)
Yes, Bitcoin is an open-source project and anyone can modify the code, but the network operates based on all the mining nodes accepting the same rules. If I were to run a node that changes the rules to mine more BTC out of thin air than the protocol allows, other nodes would just reject it. Changing the 21 million limit would involve getting all these miners to decide to change that code, and why would they do that, when it would dilute the coins they have already mined?
I agree with you, though, that it is too risky for the US Government to keep BTC in reserve. It's price widely fluctuates, it has reached $100k but is probably going to be valued at less then $50k at some point in Trump's term. It will also be valued at more than $200k at some point during Trump's term. Speculators are betting on which will come first. The US Government shouldn't be involved at all.
There is no such thing as a "correct" value. That's just market ideology - believing that there's some "objective" price that will eventually prevail.
If everybody sold their stock in any company at the same time, the market would collapse. The price at exchanges just represent how much people are willing to buy/sell at the current time. This is constantly changing based on endless, objective and subjective factors.
Ok if someone tried to sell hundreds of billions at once. But somebody could sell maybe a million here and there over a long period of time. That hasn't happened in the case of these "Satoshi" bitcoins.
The Satoshi coins are special, because even though they exist and are part of the calculated BTC "market cap", everyone assumes the keys are lost and factors that into the scarcity price. So if those coins move for any reason it proves that someone still has the keys, then at best the market takes an immediate 5% haircut to account for the increased supply. But since so much of the story around Bitcoin is about it's mysterious anonymous creator, it could cause more of a dump as people think that if Satoshi is bailing on the project, it is probably over for good.
But if those coins go to a wallet publically associated with the US Government, with a pledge to hold on to them as a reserve, that sends a different statement, that those coins are controlled but can still be counted on not to move....
.... as long as Government policy doesn't change. So now Democrats come to a reckoning on crypto. Because if Bitcoin becomes Officially Endorsed by the US Government, all the Crypto Bros now have even more reason to sell 100 of their BTC every four years to put their thumb on the election. And if Democrats take over and put the screws to Crypto causing a meltdown, it now puts a big hole in the US balance sheet.