Why the U.S. Needs a Strategic Bitcoin Reserve NOW

Summary

In this insightful conversation, CJ discusses his journey with Bitcoin, explaining how he used his holdings to buy a home in 2019, and the lessons learned about leveraging Bitcoin for loans rather than selling it. He touches on the growing interest in Bitcoin from global governments, particularly in the Middle East, and the shift away from US treasuries towards strategic Bitcoin reserves. CJ also highlights the increasing political support for Bitcoin in Florida, with state officials pushing for a Bitcoin reserve. His company, operating in stealth mode, is focused on building products that empower individuals, without relying on traditional marketing.

Takeaways

• 😀 Bitcoin's cyclical nature is critical for understanding market timing and investment decisions, but personal needs can still dictate timing, as seen with the speaker's decision to sell in 2019 for a family home purchase.
• 😀 Borrowing against Bitcoin rather than selling it outright allows individuals to access cash flow while retaining ownership of the asset and benefiting from its long-term growth potential.
• 😀 The Middle East is actively buying Bitcoin in large, consistent blocks to diversify away from traditional investments like U.S. Treasury bonds, driven by trade surpluses and dissatisfaction with negative real interest rates on fiat investments.
• 😀 The growing interest in Bitcoin as a strategic reserve asset by governments reflects a broader shift away from holding traditional currencies or government bonds in the face of global financial instability.
• 😀 Florida's emerging Bitcoin initiatives, including the strategic Bitcoin reserve, are gaining momentum, with political support increasingly aligning in favor of Bitcoin adoption.
• 😀 The efforts of organizations like the Watchman Action Group and Florida Bitcoin Blockchain Association are pivotal in advancing the regulatory and legislative landscape for Bitcoin, both at the state and federal levels.
• 😀 More politicians are becoming eager to learn about Bitcoin and its potential, signaling a shift in the political landscape towards understanding and supporting cryptocurrency-driven solutions.
• 😀 People’s Reserve is building a product in stealth mode, focusing on solving real problems for Bitcoin holders without relying on traditional marketing or advertising strategies.
• 😀 The philosophy behind People’s Reserve is to build effective products that work so well that they don’t need extensive marketing campaigns—word-of-mouth will drive adoption.
• 😀 Bitcoin’s ability to empower individuals and preserve wealth for future generations is emphasized, with the speaker advising against selling Bitcoin in favor of borrowing against it, a strategy that keeps assets intact while meeting immediate financial needs.

Q & A

Why did CJ sell his Bitcoin in 2019 instead of waiting for 2021?

CJ sold his Bitcoin in 2019 because his wife was pregnant with their second child, and they needed to buy a bigger house. Despite understanding Bitcoin cycles, the decision was based on personal circumstances. However, he doesn't regret the choice as it allowed him to improve his family's living situation, even though he now recommends borrowing against Bitcoin rather than selling it outright.

What is a 'self-repairing mortgage' and how does it work?

A self-repairing mortgage is a financial product developed by CJ's company, People's Reserve, where Bitcoin is used as collateral. If Bitcoin's price fluctuates, the mortgage adjusts its interest rates accordingly, helping borrowers maintain the value of their collateral without liquidating it. This offers a dynamic way to borrow against Bitcoin and avoid selling it to access liquidity.

What does CJ mean when he says 'Bitcoin was engineered to leverage the natural laws of economics'?

CJ is referring to Bitcoin's design, which aligns with natural economic principles like commodity cycles and price discovery. Unlike fiat currencies, which are often manipulated by governments, Bitcoin's scarcity and predictable supply make it a sound store of value, empowering individuals and offering a hedge against inflation.

How does the People's Reserve aim to empower Bitcoin holders?

People's Reserve aims to empower Bitcoin holders by providing them with financial tools that allow them to borrow against their Bitcoin holdings instead of selling them. By doing so, individuals can access liquidity for expenses like buying homes, while still maintaining their Bitcoin exposure, thus benefiting from its potential long-term growth.

What role do institutional players like BlackRock play in the growing interest in Bitcoin?

Institutional players like BlackRock are significant because their involvement signals growing confidence in Bitcoin as an asset class. These players are interested in creating financial products that provide exposure to Bitcoin, making it more accessible to a wider range of investors and further legitimizing Bitcoin as a serious store of value.

What is the significance of Middle Eastern countries buying Bitcoin, according to CJ?

CJ highlights that Middle Eastern countries are diversifying their reserves into Bitcoin as part of a broader strategy to move away from traditional assets like U.S. Treasuries. This is happening in response to trade deficits and negative real interest rates, with countries like those in the Middle East building strategic Bitcoin reserves to hedge against inflation and maintain financial sovereignty.

What does CJ mean when he says 'we are building in stealth'?

CJ is referring to the development approach of People's Reserve. They are working quietly behind the scenes without a heavy marketing campaign. Their focus is on building functional products that solve real problems, and they plan to reveal these products when they're ready, relying on word-of-mouth rather than traditional advertising.

Why does CJ discourage people from selling their Bitcoin?

CJ believes that Bitcoin is a long-term store of value, and selling it can be detrimental to one’s financial future. Instead of selling, he encourages people to borrow against their Bitcoin to access liquidity without giving up their holdings, allowing them to benefit from Bitcoin’s potential price appreciation over time.

What does CJ see as the future of Bitcoin's role in global finance?

CJ envisions Bitcoin becoming a key part of global finance, particularly in helping countries and individuals escape the volatility and manipulation of fiat currencies. He sees Bitcoin as a tool for economic empowerment and financial independence, with decentralized finance (DeFi) offering new ways for people to manage wealth, especially in places where traditional banking systems are less accessible or trustworthy.

How does CJ view the political climate regarding Bitcoin and crypto regulation?

CJ believes that the political climate around Bitcoin and cryptocurrency is improving. While there was initially resistance, now more politicians are eager to learn about crypto’s benefits, and bipartisan support is growing. He sees this as a sign that progress in crypto-related regulations and adoption will happen faster than expected, especially at the state and local levels in places like Florida.