Trump creates a Strategic Bitcoin Reserve one day ahead of White House crypto summit

Ever since Donald Trump became the President of America, he has been making decisions one after the other. Many of them are shocking. Now by signing an executive order, Trump has announced the creation of a 'Strategic Bitcoin Reserve' in America.

Trump, who once described cryptocurrencies like Bitcoin as "scam-like", has embraced it today.

In this explainer, we will tell you in very simple words what is a 'Strategic Bitcoin Reserve'.

Let's start with the question, what is cryptocurrency?

What is cryptocurrency?

Cryptocurrency is a form of currency that is digital. It is not in your hand but is virtually present on the Internet or computer. It uses cryptography to secure transactions.

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Cryptocurrency is a digital payment system. It does not depend on banks to verify transactions. It is a peer-to-peer system that can enable anyone to send and receive payments anywhere.

You carry your notes withdrawn from the ATM here and there in the real world. This is not the case in cryptocurrency. In cryptocurrency, all this happens online, and your transaction exists as a digital entry in a database.

That is, when you transfer cryptocurrency, the transaction is recorded in a public ledger. Cryptocurrency is stored in a digital wallet.

Bitcoin is also a type of cryptocurrency. Established in 2009, Bitcoin was the first cryptocurrency and is still the most traded.

What is 'Strategic Bitcoin Reserve'?

Strategic Bitcoin Reserve'. Reserve means keeping something safe for future use for a specific purpose. Trump has passed his order and created a reserve of all the bitcoins held by the US government.

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Strategic reserves of any stock are created with the aim that whenever there is a lot of fluctuation in the supply of that stock, the stock can be taken out from that reserve and controlled.

The White House has said that bitcoins owned by the Treasury Department will be put in the Strategic Bitcoin Reserve. The US Treasury Department has deposited these bitcoins as part of its proceedings to seize criminal or civilian property.

It has been clearly stated that the US government will not sell the bitcoins deposited in this Strategic

Bitcoin Reserve. It will be maintained as a reserve of reserved assets.

According to White House crypto czar David Sachs, it is estimated that the US government has about 200,000 bitcoins. According to CoinMarketCap, the value of each bitcoin is currently around $87,000, making the estimated value of this reserve of America about $17.5 billion.

It is estimated that the US government has about 200,000 bitcoins

However, there has never been an audit to find out the exact number of bitcoins held by the government. The executive order passed by Trump includes instructions to do so. David Sachs has confirmed that this executive order also creates an American digital asset stockpile.

It includes all the cryptocurrencies or digital assets other than bitcoin seized by the government.

The Trump government has clearly stated that only those cryptocurrencies will be kept in these two reserves, which have been seized. This reserve will not depend on the tax money of the American public.

Why is Trump doing this?

The purpose of this move by Trump is to support the crypto industry, which supported him during his presidential election campaign. On the other hand, supporters of this idea like Trump consider cryptocurrency to be a national and economic security asset like oil or gold.

And therefore, are creating a reserve of it. The White House has said that President Trump is fulfilling his promise to establish America as a global leader in cryptocurrency.

He has already appointed a "crypto czar" and is hosting the first-ever crypto summit at the White House on March 7.

Is it just being supported?

No. According to Forbes report, the cryptocurrency industry has expressed happiness over the news of creation of a national reserve, but some economists have expressed concern over it.

Instability of cryptocurrency

Even though the Trump government has clearly said that it will not buy any bitcoin with taxpayers' money. It will create a reserve only with the cryptocurrencies found in seizures.

But critics fear that if Trump changes his order at any time and starts selling bitcoins, the price will go down and investors will suffer huge losses.