Bill Dudley on Bitcoin Reserves

Bill Dudley, former chairman of the New York Federal Reserve, has expressed concerns about including Bitcoin in the United States' national reserves.

The idea of a national Bitcoin reserve has gained traction this year among some policymakers and crypto enthusiasts, arguing it could hedge against inflation and diversify U.S. financial assets.

While Dudley acknowledges that crypto technology could enhance the financial system and that a Bitcoin reserve might boost BTC prices, he believes it may not be beneficial overall.

At the time of writing, BTC was trading down 4.31% in the last 24 hours to $98,854, having previously reached an all-time high of $104,000 during the previous trading session.

Bitcoin Reserve Might Send BTC Price Soaring

In a Bloomberg opinion article, Dudley elaborates on why a Bitcoin reserve could be ill-advised. He argues that it might worsen government finances due to inflation, leaving the government with volatile tokens that yield no income.

Dudley contends that Bitcoin barely qualifies as money, criticizing its volatility as unsuitable for a medium of exchange. He notes that people are not required in most nations to accept Bitcoin as money:
> "Transactions are slow and expensive, requiring significant computing power and energy to validate each one."

Despite his reservations, Dudley recognizes some positive attributes of Bitcoin:
– Portability: Millions of dollars can be stored on a thumb drive.
– Semi-anonymity: Holders are identified only by a public alphanumeric key.
– Transferability: It can be moved globally without relying on traditional financial intermediaries.

If enacted, Dudley believes a Bitcoin reserve would likely lead to a spike in BTC prices as investors rush in, yet it could simultaneously fuel inflation.

This article was originally published on U.Today