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Should A Country Hold Cryptocurrency Reserves?

  • Thread starter Thread starter Good-Person
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Good-Person

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El Salvador is a country that planned to invest money in cryptocurrencies like Bitcoin. It had to pay a heavy price for that. Having said that, there are many countries that might be interested in cryptocurrencies as well. So, do you think that countries should also start holding cryptocurrency reserves as well along with fiat currency reserves?
 
Well, this is an interesting question, I think that in the future they will have it, countries like the United States have, for example, all those that were seized, like in the case of silkroad, but if little by little it becomes a real refuge value, they could arrive to have just as they have oil or gold or other raw materials.
 
With the unregulated and volatile nature of cryptocurrency, it is not economically right for a country to hold cryptocurrency reserve. Added to the fact that cryptocurrency is yet to be accepted as a mainstream store of value, it doesn't make sense for any country to hold reserves in cryptocurrency. But I believe it would be feasible in the future.
 
Yes, I believe countries should hold Crypto currency reserves, but it should not be very much because of the unstable nature of Crypto currency and its high volatility. They don't need to ditch the Fiat reserve.
 
Good-Person said:
El Salvador is a country that planned to invest money in cryptocurrencies like Bitcoin. It had to pay a heavy price for that. Having said that, there are many countries that might be interested in cryptocurrencies as well. So, do you think that countries should also start holding cryptocurrency reserves as well along with fiat currency reserves?
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I do not think that countries should start holding cryptocurrency reserves as well along with fiat currency reserves. This is because cry pro currencies is unregulated and volatile.
 
Good-Person said:
El Salvador is a country that planned to invest money in cryptocurrencies like Bitcoin. It had to pay a heavy price for that. Having said that, there are many countries that might be interested in cryptocurrencies as well. So, do you think that countries should also start holding cryptocurrency reserves as well along with fiat currency reserves?
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I heard that El Salvador is in a big loss right now. At the same time, investing in Bitcoin is good but it is not very advisable for a whole country so depending on a currency that is volatile
 
The decision of whether a country should hold cryptocurrency reserves is a complex one, and there are arguments both in favor and against it. The decision to hold cryptocurrency reserves should be based on a careful assessment of a country's specific circumstances, risk tolerance, and long-term objectives.
 
Cryptocurrency especially Bitcoin isn't something even a country should decide to use it's budget to invest in having a reserve because it's a highly volatile assest. It's like what happens when you're trading GOLD on Forex. There are better project a country can invest in to have a reserve in and not Bitcoin.
 
Crypto, especially Bitcoin is often called Digital Gold. Gold is one of the most used reserves in many countries. Foreign currencies, especially USD is also commonly used as a reserve. However, the price of Gold and USD are somewhat stable compared to crypto. Therefore, I believe having crypto reserves can be risky for a country
 
The volatility of cryptocurrency is always going to make it something challenging for countries to manage when it comes to having a big reserve in them which is why you find it very difficult to see many country that is willing to embrace investing in cryptocurrency as a foreign reserve.
 
Heatman said:
The volatility of cryptocurrency is always going to make it something challenging for countries to manage when it comes to having a big reserve in them which is why you find it very difficult to see many country that is willing to embrace investing in cryptocurrency as a foreign reserve.
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I do think that it can be managed, but the country will be afraid of what is going to happen with their stance on limiting crypto currency transactions in their country because you can't have a particular policy made for the people and decide to go ahead to invest in it.
 
Henrywrites said:
I do think that it can be managed, but the country will be afraid of what is going to happen with their stance on limiting crypto currency transactions in their country because you can't have a particular policy made for the people and decide to go ahead to invest in it.
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What I would say in this situation is that they shouldn't invest more than they are willing to lose as a reserve in cryptocurrency. Also, they shouldn't gamble with any useless cryptocurrency. It should be either Bitcoin, Ethereum or any other strong coin they should hold cryptocurrency on.
 
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