Nowadays, many countries around the world have made announcements that they are building strategic Bitcoin reserves. Therefore, it is important to know what Strategic Bitcoin reserve is and why there is a race towards it.
Strategic Bitcoin Reserves
It simply means that a government buys Bitcoins at a lower price and stores it for an extended period that can last upto 5 or 10 years. With a presumtion that the coin will increase in price during that time, increasing their reserves as well. Their holding of Bitcoin for such a long-term is done for a number of reasons.
Reasons of Holding Bitcoin
It preserves a government's wealth in place of traditional gold reserves.
It prevents depreciation of cash reserves.
It ensures financial sovereingty of a country.
It can increase geopolitical importance of a country in case Bitcoin, as a digital currency, gets wider adoption.
Example
The USA, as an influencer of world's economy, has announced to keep strategic Bitcoin reserves after signing of an excutive order by President Donald Trump who himself is a great supporter of cryptocurrency.
