Topic: How would a government go about getting into BTC? (Read 302 times)

as government, maybe they need to provide various kinds of regulations regarding this, but as an individual, I think they also see the potential of bitcoin. well, of course I also think that they are using it, or working with several crypto companies to benefit from it. well, that happened in my country, it's just that the news isn't that big because there are people who don't understand cryptocurerncy besides bitcoin.

The law enforcement route could be possible.

If they were keeping the proceeds of what was sold of seized coins anyways, then if they ever wanted to get into investing in bitcoin as a reserve asset (maybe to replace gold as a reserve asset), they could theoretically just keep the coins for themselves instead of making a public auction.

They could also buy in the open market, but the volumes that they would require would quickly pump prices up in my opinion, so I don't think it's a feasible route. Perhaps OTC trading between large institutions as well as other countries central banks once more countries accept bitcoin as a reserve asset will be the way to go.

But either way, it's too early to say the method a country would use to acquire bitcoins for its reserves, when no one has actually done it yet. This can and will change in the future in my opinion, when more countries see how bitcoin can indeed offer a global store of value, just like gold, but much more convenient, portable, and liquid.

i would take that article with a grain of salt. it's just based on the speculations of some university lecturer. there's no evidence that putin is interested in bitcoin at all.

at this stage in the game, bitcoin isn't even useful to evade sanctions. bitcoin's economy is still utterly dependent on fiat exchanges. the USA can easily slam exchangers with secondary sanctions if they're known to be dealing with putin and his cronies. there's just no liquidity in the market to cover the hundreds of billions of dollars these russian entities need to move.

I've see some of these news recently:

https://bitcoinist.com/russia-ditch-usd-bitcoin-prof/

Apparently Putin is interested in Bitcoin to surpass US sanctions. It would be a great move, to use a neutral asset in order to stop the US government nonsense.

As far as an institution getting in, needless to say a mammoth like Russia, it would need huge liquidity. I don't see them going in some of these dumb exchanges, it must be something like Bakkt otherwise it's going to be a bit of mess. They can buy a tiny amount and drive the price to $100k next month.

I've always wondered how that works with exchanges. Beyond egregious screwups like that, there's the threat of inside jobs too. The Bitfinex hack always smelled like an inside job to me, as one example. Can you imagine how it might work at Coinbase, given their cold storage? No matter what, no matter how many signatures are required to spend from multi-sig addresses, it seems like insider collusion is always possible.

I assume that everything will be held in multi-sig wallets so that individual employees won't be able to have control over any funds themselves, especially when it comes to large amounts.

It wouldn't even surprise me if they make use of an external custodian to take care of storage. In all cases, governments and everything related to technology is a bit of a shaky combination.

I have seen myself how certain departments of the government here use windows XP, and that while you don't want them to take care of your information when they use such outdated operating systems.

there's always this approach: https://en.wikipedia.org/wiki/Executive_Order_6102


relative to the entire circulating supply, no, but how much gold do central banks own relative to the total supply?

it also depends how the fee market works out. during the 2017 hype, there was at least one occasion where block fees were greater than the 12.5 BTC subsidy.

First need to make that one guy with a small bussiness you know to accept bitcoin.

I agree re mining, but only small %% remain.
I remember that UK sold their last gold at $250/oz in 2000 or 2001.
This clearly indicates that they and US are not going to rush to bitcoin.
As far as which government would be first, I think that it would be Japan.

The Dutch government would probably lose an usb-stick with the private keys in a taxi at some point.

I'm curious how they would trust employees to keep funds safe.

I guess mining makes the most sense. It's the 'cleanest' method of obtaining coins. However there aren't all that many coins left to mine. Perhaps that was Satoshi's wee joke. By the time governments pondered making an entrance they'd be largely forced to buy it from the scum who've been mining or hoarding for years.

For sure mining. Because mining also secure network. Not to mention that they can get electricity cheaper.

Now I'm curious as to how much is 'too much' for the central banks. Of course they'd be hopping onto the bitcoin train once it reaches serious levels--levels that could compete with gold--and by then we would see how much does a single country  really have in their arsenal while everyone else is busy thinking that the governments don't want anything related to bitcoin. Most countries would surely want to get a 'head start' against other countries in talks of owning more coins in reserves, and we will see how aggressive policies will be on certain countries and confiscation of bitcoin assets would probably be rampant all over.

They could diversify their reserves by purchasing some? Mining would be having a State mining business, not unlike the oil ones in many countries.

They could amend their legislation for these choices. I think Russia and Paraguay are seriously planning to have a State (crypto) mining company. I remember reading something about a deal from Putin and Bitfury... And the Paraguay State dam getting a place ready for mining.

I'm not sure about the confiscated bitcoin. Aren't they forced to auction those?

Come to think of it, we might see governments confiscate Bitcoin from citizens and institutions. It happened with gold in the U.S. once.


Why do governments have gold reserves? For that matter, why do they hold bonds issued by other governments? They have no control over the gold market. They have no control over whether other countries might default in the future.

It's not about control as much as hedging against currency collapses.

A government is very unlikely to be involved with any crypto which they have absolutely zero control over. The most possible choice is bitcoin, but still it is very unlikely. (*I'll get back to this) They will rather prefer to create their own crypto which is not going to solve any problems they've been experiencing anyway.

The most sensible choice there is bitcoin because it is deflationary, it is decentralized.

Why wouldn't a government want bitcoin then? What's the problem? The government won't be able to rip you off by printing money if they move to bitcoin. That's why it is very unlikely.

It is proven many times.

Governments  suck at regulating money.

Every FIAT monetary system there is/was collapsed and will collapse. It is just a matter of time for the USD.

Till Bretton Woods,  Gold was the only real money. Gold is still fine but it has its limitations. (you can't send it fast enough)

It is a very complex paradox actually. Very funny in a way.

Bitcoin solves all the problems we have now but to solve them for real, first bitcoin needs to kill all the fucking FIAT there is and to kill the FIAT, bitcoin needs to kill the governments.

I mean Bitcoin has to kill those for their (and ours) own good. There will be a time in the future, those governments will accept this fate willingly because it will be impossible to print more money anymore. They won't even fight against Bitcoin when the time comes.

Not now.

Reserves.

Unless they were aiming towards integrating bitcoin in to their economy and being open about that then you'd think they'd choose the OTC route. They can keep their transactions unknown and hold the coins in secret. I don't see much reason for a government to do that however. I don't really see any ever trying to buy BTC themselves.

Depends on what you mean by "getting into". Do you mean how they could tax it? Than all you have to do is make a law stating any exchange based on your country have to share the crypto assets of their users with the tax office and whoever buys or sells (makes profit) have to pay their taxes since they already automated the process of checking who made how much with the exchange law.

When exchanges give all the info to government to be legal than you have no way of running with your crypto without paying your taxes. However, if you mean having some sort of crypto currency back up like how countries have dollars and euores and so forth on their treasury, than all they have to do is buy some and keep it on a secure wallet however I doubt countries would be willing to risk billions of dollars into crypto.

I do not think that any government (certainly not officially)  will admit to owning Bitcoin. In the past, all Bitcoin over taken by federal (government) services were transferred to auction and sold. I think that until everything is clearly legally and tax-regulated, they will not want to get mixed up in crypto.

maybe it's still premature, but i honestly think it's an eventuality. i'm not talking about putting entire government reserves into buttcoin or anything (), but if the bitcoin market really does take a bite out of gold's store-of-value market share, it's only logical for central banks to own some from a hedging perspective.

Maybe they are going to acquire some bitcoin from mining companies or buying them from the whales in secret. Government may not going to place a trade in any exchange but buy from big guys in secret. However I could have like them to buy from the market so that that can pump the market up.

This is certainly not a question of whether they actually have. I think it's largely a ludicrous idea apart from the odd criminal actor like NK. It's purely about the process they'd choose if they were to do so.

Well, since there are no established facts of governments buying Bitcoin, we can either assume that they never did, or that they did it quietly. For the sake of argument, lets agree on the latter.


Seized coins - seems very unreliable. The US and some other government auction seized coins from time to time. Although the story about Bularia's 200,000 coins is pretty interesting.

Mining - needs very cheap electricity to work in the long run, so not all countries can afford it. Also it's hard to hide.

Buy through intermediaries - yeah, OTC buying would be my first choice.

I think authoritarian and corrupt governments have more chances to get into Bitcoin, because it's harder to hide anything in democratic government where parties watch each other and the government changes every 4-5 years. There are rumors that North Korea was behind some exchange hacks and now has a bit of coins.

I think at this time the government still feels impressed to experience a delay in entering bitcoin. some countries even forbid the use of bitcoin because such conditions assume that bitcoin can create economic chaos in the country. but actually there are many benefits that are owned by bitcoin, in calculation, speed, security and flexibility are the main points that are owned by bitcoin. the government must be more open and they should be more cultured to advance technology in life for example in the financial system.

They're unlikely to collude. Governments are always in constant competition, which is actually one of the reasons Bitcoin has such a bright future: cooperating on a global ban is impossible.

They'll accumulate quietly like institutions do. They'll stop auctioning off seized coins too. Who knows, maybe state-backed mining will even become a thing after everything is out in the open.

So there's been some Russian no mark dribbling on about his government getting on Yobit and spunking their reserves on Bitcoin in the next few weeks.

Of course, dear.

But on a purely practical level if a government were serious about acquiring some, how do you think they would go about it?

Would they keep the stuff nicked by law enforcement? Look into mining? Buy through intermediaries? Be open about it or do it on the sly to make sure us scum didn't pump to rinse them? Would they collude with other governments or establish a position in secret before anyone else?