The increasing acceptance of Bitcoin as a national strategic reserve asset raises an important debate in the digital asset ecosystem. Should Bitcoin remain as a decentralized currency that individuals can freely access, or should it be a financial reserve tool under government control?

Developments suggesting that the US government is considering forming Bitcoin reserves have helped the leading cryptocurrency gain more recognition in the traditional finance world, but have also raised concerns about market accessibility. Bitcoin, which started its journey with Satoshi Nakamoto’s nine-page white paper, has now come under the radar of central banks. However, the accumulation of Bitcoin in cold wallets might make access to this asset harder for individual investors and potentially billions of future users. BITCOIN’S RESERVE STATUS ASCENSION Bitcoin’s elevation to the status of a national reserve asset could be a major turning point for the future of digital assets. With the approval of Bitcoin ETFs in early 2024, the integration of Bitcoin into the traditional financial system has gained momentum. Now, central banks considering including this digital asset in their reserves have the potential to elevate Bitcoin to the same level as strategic assets like gold and oil. In traditional financial systems, small businesses and individuals seeking credit often require physical collateral like real estate, whereas Bitcoin’s transparency of ownership, divisibility, and high liquidity make it one of the most efficient financial securities. Due to these features, the use of Bitcoin in national reserves is seen as a diversification strategy for central banks’ balance sheets and a hedge against global economic uncertainties. However, what does the integration of Bitcoin into government reserves mean for individual investors? Historically, governments’ tendency to control valuable assets can lead to restrictions on individual ownership. CAN BITCOIN BE LIKE GOLD? The inclusion of Bitcoin in national reserves evokes the process that gold experienced in the past. In the 19th century, gold was an asset held by both individuals and governments, but with Executive Order 6102 issued in the US in 1933, private ownership was restricted, and individuals were required to transfer gold assets exceeding $100 to the Federal Reserve. Although individual ownership of gold was re-allowed in 1974, during this period, as government gold accumulation increased, direct access to gold for individuals decreased. In a similar scenario, if central banks continue to increase their Bitcoin reserves, the circulating supply in the market may decrease and accessibility for individual investors may become more difficult. This situation could transform Bitcoin from being a freely traded asset on the open market to becoming a reserve tool controlled by governments. TRANSPARENT RESERVES OR CLOSED RESERVES? The future role of Bitcoin will hinge on whether it can maintain its dynamism in the free market. If Bitcoin is increasingly locked up in government-controlled reserves, its role in the financial ecosystem may become that of a static investment tool like gold. However, in order for Bitcoin to remain a decentralized asset accessible to everyone, more open and transparent reserves need to be created in the financial system. The decentralized finance (DeFi) ecosystem and Bitcoin financial protocols (BTCFi) can offer an alternative by increasing individual users’ access to Bitcoin. BTCFi is seen as a mechanism that can allow Bitcoin to reach a wider range of uses while also preventing monopolization by governments.