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100 sats \ 1 reply \ @grayruby 24 Nov \ on: Where does the Bitcoin go when it is used to pay off the debt? crypto
The debt will not be paid off. Even if the US was able to buy 1M bitcoin.
The debt is currently 35T. There is no way it isn't significantly higher in 20 years. Probably close to 100T if there has not been a complete collapse of fiat.
Bitcoin would have to have a 2.1 Quadrillion market cap to pay off the debt with 1M bitcoin. That would be equivalent to around $100M USD per bitcoin. Sat per dollar parity.
While I don't think that is impossible in 50 or 100 years if fiat persists and money supply hyperinflates, it seems highly unlikely in 20 years.
More likely they will use some of the Bitcoin stash to pay off some of the debt to get debt to gdp to a more reasonable level.
The debt cannot be paid off because retiring debt destroys money is our current system. If the $35T in debt was paid off, there would be literally no money left in circulation.....as in a .01 penny would have staggeringly insane purchasing power.
Secondly, selling BTC would be a really ineffective way to manage the debt....(once its sold your trick is done).
They will do what what MSTR currently does (and what most companies will do), Bitcoin will become a Balance Sheet asset and higher bitcoin prices will enable higher debt levels. (ie. $4M bitcoin price X 1M BTC = $4T balance sheet asset so that could be leveraged up to say 40-200T additional currency issuance/debt).
This is how Gold was supposed to function to Fed Reserve, but congress / great depression derailed that....
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