Bitcoin Forum

By simply storing their existing wealth into BTC by converting it. Will also mean their wealth is more secure and hyperinflation doesn't hurt them?

Also, how would something like this affect price.

I am sure some are already doing it, I am also believing North Korea is mining Bitcoin.

However in most cases that would not affect the price much considering they are somehow poor.

I mean like what would happen if a major government was to start doing it?

A government in crisis doesn't have much wealth left. And the cash that they have is worthless, because of the massive printing of money. Actually printing more money is the only way they can postpone the crisis from exploding in their face.

Generally dictators of little countries in crisis have a big reserve of dollars, and that would seem very possible for me to see them put convert a part of it in bitcoins to make it leave the country more easily.

When a country's government implements a capital control policy, it will limit the amount of money that can flow outside their borders, while also limiting the amount of foreign currency coming into the local economy. In other words, the government will control the outflow of currency from that country to another country and vice versa.

This is one of the points of capital control policy but when we talk about bitcoins, it actually does not belong to any country; it is not the currency of a particular nation or location. So if a specific government decides to store their cash for their betterment, then I think they can do that but do not know the reaction of other governments.

I don't think our govement can do it now, it'll cost a lot of time to complete all the policy.

I don't think so. If the government is experiencing a financial crisis, I doubt that they will store the cash in Bitcoin because they cannot afford the risk. I think the steps they will do is either store their money inthe banks or put it in a short term profitable business. Or they might consider borrowing money in the World Bank.

No government will do that especially now that Bitcoin is globally accepted and lacks any form of control. They'd rather invest into creating their own Altcoins so that they will control it by extension and have their citizens use them.

Thinking about the Venezuelan Crisis, it is the people who should start buying and using Bitcoins among themselves. If you compare it to their country's falling currency, Bitcoin's value is still rising, protecting their wealth from inflation and devaluation against the US Dollar and other foreign currencies.

A government in crisis can buy and store Bitcoins, but that surely would not be enough to fix their greed and any political and economic crisis.

that is right, the government will use their money to prevent the crisis and if the citizen using bitcoin to protect their money then I think some people can pass the crisis. maybe using bitcoin can help one country from crisis but its too risk for the government because bitcoin price now is still volatile and can not predicted. if bitcoin price is fall then the country will be fall too because they risk their money in bitcoin.

I don't think any government will have that kind of idea because bitcoin is not really secure for a long term investment especially if they are really in crisis. Bitcoin is unpredictable and very volatile I think it’s more better if they buy gold instead of bitcoin, we cannot sure the stability of bitcoin though we are all hoping that it will continue to appreciate in the coming years.

No, if a government would start doing moves like that during a crisis, it will only make things worse, because people will see it as a weakness and start panicking. So, governments would need to stock Bitcoins long before the start of the crisis, but Bitcoin is still too small for it - its marketcap is only 70 billions, so any big buying would be suspicious. Also there are much more risks than with traditional investments like gold, so Bitcoin as hedge is used only in small amounts.

the economy is usually backed by things that are more reliable and stable than bitcoin. things such as precious materials like gold. and this won't change for years. something like gold will have small swings because of how the market of it works but meanwhile bitcoin price can go up and down big time, has swings as big as 10% a day or even more and that is a huge amount of money on a large investment.

For them Bitcoin is still a very speculative asset. Once it becomes clear that Bitcoin is much more than an asset, it is a currency with a bright future, we might see some of these governments including Bitcoin in their economic strategies.

I'd agree that no nation would convert their financial backing entirely to bitcoin, but not necessarily because of the lack of control and decentralization. I would say no nation would risk something as big as having their economy backed by an extremely volatile asset over something more stable such as gold. the market cap of bitcoin and the nation / state's ability to acquire that much bitcoin is questionable as well.

Nope, they don't know about bitcoin that's why they don't any care about care. All they want to do is to stop the war and back to their normal life and environment.

Governments might not do this, because by doing this, they would admit to their own failure to protect their own financial economy and reserve currency. The citizens on the other hand will do this as we have seen with people from Greece and also Venezuela.

The citizens wants to protect the value of their wealth against the poor decisions that are made by their governments, which has an affect on their pockets and the value of their local currency. < depreciating value of local currencies >

The main reason that gold was/is so valuable is basically just because it was an interesting asset with physical scarcity and governments could therefore use it to back fiat money (which of course they no longer do).

While I find it hard to believe that the whole global economy would switch over to a new asset, so I don't think this scenario would ever happen, it's important to recognise that volatility is not an inherent feature of BTC - it's just the situation which it is currently in.

Err, how do you think that buying billions and billions of dollars worth of BTC would theoretically affect the price?

That's not necessarily true. Look at the Chinese government stockpiling gold. All major governments have gold reserves, even if it has no relation to the value of fiat money. Governments necessarily diversify to hedge national/government assets against economic turmoil and inflation.

I don't see central banks advocating for it, though. :P

Government in crisis, bitcoin would be the least of their problems because a stable country is one that can think of development or any research in new areas what will be on their mind is survival which is about getting support from outside country to take them out of the situation it is after they sort themselves out, they can start thinking of the opportunity bitcoin is offering which they can then consider whether to keep their funds.

not sure about that, but if the government still has the wealth and to avoid a possible crisis, the government may save some of its wealth on bitcoin. the big investors that have entered in bitcoin will have a big influence on the local government.

You are making me feel like we are talking about a new born baby, not the political world of cunning people. There is no way that governments are still not aware of it. Those people first priority is they themselves. However, any government collecting BTCs will have an upper hand at the time of world crisis.