The Material Paradox of a Strategic Bitcoin Reserve
David M. Berry
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| Roosevelt's 1953 gold revaluation (see Kelton 2025). |
The Trump administration has recently published a proposal to establish a strategic bitcoin reserve (The White House 2025). Here, I aim to explore this plan as a contradictory media-technical mediation of sovereign value and how it is stored, transmitted, and processed. With this proposal, Trump has requested, by Executive Order, "the creation of a digital asset working group on Thursday which, among other things, would be tasked with exploring a U.S. cryptocurrency stockpile" (Chavez-Dreyfuss and Mattackal 2025, The White House 2025). A strategic reserve is,
a stock of a critical resource that can be released at times of crisis or supply disruptions. The best-known example is the U.S. Strategic Petroleum Reserve, the world's largest supply of emergency crude oil, which was created by an act of Congress in 1975 after a 1973-74 Arab oil embargo throttled the U.S. economy (Chavez-Dreyfuss and Mattackal 2025).
Within this framework of strategic reserves, which are typically composed of physical commodities with clear use cases during crises, Trump has explained that this reserve would contain "XRP [Ripple], SOL [Solana], and ADA [Cardano]" as well as "obviously, BTC and ETH, as other valuable Cryptocurrencies" (White 2025). Drawing on Kittler's (2009) media materialism and Golumbia's (2016) political analysis of bitcoin, this article examines how the materiality of bitcoin as a digital medium may alter what a financial reserve is, shifting from the physical constraints of, for example, gold bars in Fort Knox, to the distributed computational infrastructure of cryptographic networks, whilst simultaneously encoding specific political ideologies.[1] This brings to mind a key question I aim to explore: is a bitcoin reserve more like a gold reserve or a portfolio of securities? Indeed, the Federal Reserve holds a large portfolio of securities, primarily US Treasury securities (government bonds) and, since the 2008 financial crisis, agency mortgage-backed securities. However, a portfolio of securities is not held to protect against supply shortages or disruptions and is actively managed as a monetary policy tool. Additionally, as White notes,
While cryptocurrencies were once viewed as a subversive financial instrument intended to be independent from governments, banks, or the traditional financial system, and although many in the industry still like to repeat that narrative when it suits them, it’s become clear that the crypto world is deeply dependent on outside forces propping it up (White 2025).
This dependence on external support systems highlights the fundamental ontological question at the heart of the Trump Executive Order. As Kittler argues, "being, whether natural or technical, has been thought for 2500 years... in the metaphysical terms of hereness and presence, entelécheia and ousÃa, not in their many opposites such as past and future, storage and transmission" (Kittler, 2009: 25). The strategic bitcoin reserve proposal reveals precisely this tension as the US governmental attempts to impose traditional metaphysical categories of presence and substance onto a technical medium whose very operation depends on absence, distribution, and algorithmic verification. This philosophical tension manifests in practical policy terms as well. When Secretary Bessent pledges to "monetise the asset side" of the federal balance sheet, he unwittingly exposes the category error at work by treating a computational process as if it were a physical commodity (Kelton 2025, Tankus 2025).
We should also note the "time-critical" nature of computational media. For Ernst, what differentiates technical media from traditional symbolic cultural technologies is their "time-criticality," and bitcoin exemplifies this principle. Its value and existence are continually regenerated through the time-based computational labour of mining and verification, creating a distinct "microtemporality" different from the static nature of gold reserves (Ernst 2016). While gold's materiality is relatively stable across historical time, bitcoin operates within what Ernst calls a "chronopoetics," the technology generates its own temporal regime through the rhythmic production of blocks at approximately ten-minute intervals (see Ernst 2016).
From Material Scarcity to Computational Architecture
Gold functions as a reserve by requiring little participation. Its material scarcity exists relatively independent of human systems, secured in the metallurgical properties of the material. Bitcoin, by contrast, operates through what we might term "algorithmic scarcity," having a limit of 21 million tokens which is not a property of physical nature but a parameter encoded in its software protocol (see Golumbia 2016, Galloway 2004). This software constraint is not politically neutral but encodes specific ideological assumptions. Bitcoin's cap on total supply directly emerges from right-wing economic theories, particularly the monetarist view of inflation associated with Milton Friedman and Austrian economics. The very architecture of bitcoin embodies the belief that central banks steal value through inflation and that government monetary policy is inherently authoritarian. These ideas, once confined to far-right groups like the John Birch Society and libertarian think tanks, have gained mainstream traction over the past twenty years and are directly implemented in bitcoin's technical design. As White observes, "Satoshi [the creator of bitcoin] inscribed into the first block of the bitcoin blockchain the text 'The Times 03/Jan/2009 Chancellor on brink of second bailout for banks'. This quote of that day’s Times headline has long been interpreted as a nod to bitcoin’s original ideology, and a rebuke of banks and government financial intervention" (White 2025).
Senator Cynthia Lummis's BITCOIN Act of 2024, a bill to provide for the acquisition and storage of the cryptocurrency bitcoin by the U.S. government, reveals, therefore, a misunderstanding of the paradoxical materiality of digital assets. Bitcoin are simultaneously "immaterial" in their computational form yet dependent on highly material infrastructures of data centres, fibre-optic networks, and cryptographic keys. What appears as a simple equivalent to gold storage in placing bitcoin in cold storage is actually a fundamentally different technical operation. That is, as the secure maintenance of private keys that control transactions on a globally distributed public blockchain ledger.[2] This fundamental misunderstanding of bitcoin's design becomes even more problematic when examining the financial mechanisms proposed to establish the reserve.
I argue that when the Treasury proposes to move $800 billion into the Treasury General Account through gold certificate revaluation, and then use these funds to purchase bitcoin, it attempts to translate between two entirely different material-technical systems. Gold certificates can be understood to function as secondary signs, that is as paper representations of physical gold. Bitcoin, however, is not a representation of value but a computational process that is in itself value, that is it exists only as the ongoing calculation and verification of its own blockchain. This misalignment between traditional sovereign storage and computational networks demonstrates an ontological mismatch between gold reserves and these so-called Strategic Bitcoin Reserves.
Beyond these technical and ontological confusions, the announced Fort Knox visit by Trump and Musk might therefore be understood as a media event in the most literal sense, that is as a spectacle that attempts to render visible and present what is inherently distributed and computational. To understand the deeper implications of this proposal, we must first examine the historical and ideological origins of bitcoin itself.
Bitcoin's Cyberlibertarian Foundations
In light of this it is interesting to look at the history of bitcoin and its links to particular theories of money and economics. Golumbia (2016) argues that bitcoin emerged from and continues to propagate several intersecting cyberlibertarian communities with links to right-wing political movements (cf. Brunton 2019). These include cypherpunks, crypto-anarchists, and technological libertarians who reject central bank authority and governmental oversight. Their vision, shown in manifestos by figures like Timothy May and Eric Hughes, argue that computational technology is a means to escape state governance.
Cyberlibertarianism, as described by Winner (1997), "links ecstatic enthusiasm for electronically mediated forms of living with radical, right-wing libertarian ideas about the proper definition of freedom, social life, economics, and politics" (Winner, 1997: 14; but also see Barbrook and Cameron 1996). Crucially, cyberlibertarians redefine "freedom" not as something protected by democratic liberal institutions but as freedom from government, particularly freedom from government or regulatory oversight.
Bitcoin's core architecture reflects this political orientation by implementing key right-wing theories about central banking within its source code. The proposal to use the 200,000 bitcoins"seized through law enforcement actions" further illustrates this media-technical confusion (Chavez-Dreyfuss and Mattackal 2025). When the state seizes bitcoin, they do not physically capture the tokens, but rather gain control of the cryptographic keys that enable transactions on the network. This "seizure" is, therefore, actually a transfer of computational authority rather than physical possession. This reconceptualisation of possession raises fundamental questions about how bitcoin would function within traditional economic frameworks.
Digital Infrastructure and Value
Senator Lummis's claim that this proposal could "cut the US debt in half in 20 years" rests on a category error between physical and computational ontologies, and draws from what Golumbia describes as a conspiracy theory that national debt is an existential threat rather than a functional economic tool.[3] The notion that bitcoin would appreciate in value assumes its continued existence as a computational network, yet ironically its incorporation as a national reserve asset might alter the network dynamics that give it a purported value.
The paradox that the state accumulation of a medium designed explicitly to circumvent state control therefore represents not merely an ideological contradiction but a media-technical one. As Golumbia notes, "bitcoin and the blockchain themselves depend on right-wing assumptions, and help to spread those assumptions as if they could be separated from the context in which they were generated" (Golumbia, 2016: 41). While the economic contradictions of the proposal are substantial, equally challenging are the governance implications of attempting to incorporate an open-source technology into national financial infrastructure.
Open Source Governance and Sovereign Control
An important aspect of bitcoin's media-technical specificity lies in its open source development model (see Berry 2008). It can be argued that it has a governance structure largely incompatible with traditional sovereign control. Unlike gold bullion, whose physical form remain relatively stable without human intervention, bitcoin's technical protocols change through distributed consensus among developers, miners, and users. Additionally, the source code that defines bitcoin's operation exists outside any state's jurisdiction, maintained by a global network of contributors rather than by governmental power.
The history of Bitcoin forks is useful to show why this is important and demonstrates the inherent political tensions in this distributed governance model. For example, the Bitcoin Cash fork in August 2017 emerged from bitter debates over block size and scalability, resulting in a competing cryptocurrency with its own development community. Such forks reveal that bitcoin is not a stable technical object but a contested political project whose very technical features can be redefined through programmers and changed functioning of the source code.
This distributed governance therefore presents profound challenges for any nation-state attempting to incorporate bitcoin into its sovereign reserves. What happens if a future software update changes bitcoin's basic design? What if the majority of miners support a contentious "hard" fork that devalues the government's holdings? The Strategic Bitcoin Reserve would place billions of dollars of public assets at the mercy of open source governance processes explicitly designed to resist centralised control.
There exist few historical precedents for such a distributed control of a critical economic factor. The international gold standard, despite its multinational nature, still operated through sovereign control of physical reserves. Even the internet, while globally distributed, has critical infrastructure largely controlled by state and corporate actors. Perhaps the closest analogies lie in open source software projects like Linux that underpin critical infrastructure, yet even these lack the direct economic valuation that bitcoin possesses.
Given these unprecedented governance challenges for a potential reserve asset, the US government would face two difficult options. It could passively accept this distributed governance (compromising sovereign control), or it could attempt to influence bitcoin's development (potentially undermining the very network properties that give it value). Either approach reveals the contradiction in a state attempting to appropriate a technical medium explicitly designed to circumvent state authority.
As Kittler noted, "instead of still subjecting humans, beings, and machines to the dichotomy of form and matter, we could learn to spell out, at least for the time being, this new trinity made up of commands, addresses, and data" (Kittler, 2009: 30). If we apply this to the bitcoin network we can see that it operates precisely through this "trinity." It works by processing transactions (commands), locating specific coins through public keys (addresses), and maintaining the ledger of all transactions (data). As argued above, the Strategic Bitcoin Reserve proposal instead attempts to collapse this computational architecture back into the traditional form/matter distinction of gold reserves.
Beyond these philosophical contradictions, the proposal also reveals emerging power dynamics in the global digital economy. The geopolitical framing of the bitcoin reserve as a mechanism to help the U.S. dominate the global bitcoin market in the face of growing competition from China reveals a struggle not over resources but over technical media itself. This framing might help us understand that a form of "computational statism" is in development, whereby there is an extension of state logics into digital domains through the control of technical protocols and processing power.[4]
Moving from theoretical concerns to practical implementation challenges, implementing a bitcoin reserve reveal the differences between traditional sovereign wealth management and the technical specificity of computational networks. The question of how to securely store and manage the cryptographic keys controlling billions in bitcoin assets presents not merely a security challenge but also, I would argue, an ontological one. For example, what does it mean for a nation-state to "possess" cryptographic keys? Who has access to these keys, and under what protocols?
Beyond these theoretical concerns, the practical security implications further complicate the proposal. Golumbia's work helps us understand how bitcoin's inherent hostility to legal regulation creates a potential breeding ground for financial instability, fraud, and market manipulation. Despite claims that bitcoin would eliminate middlemen and reduce costs, ironically, bitcoin exchange fees typically mirror traditional transaction fees. The irreversibility of transactions, a feature specific to bitcoin blockchain, becomes a critical vulnerability when applied to national reserves, as evidenced by numerous bitcoin exchange collapses and thefts. Indeed, White documents such an attack on February 21 2025 when The Lazarus group "attackers stole more than 400,000 ETH (priced at around $1.5 billion) from one of the company’s [Bybit] so-called 'cold wallets'" (White 2025). She explains, North Korea’s state-sponsored "Lazarus group is an extremely sophisticated cybercrime group that has been responsible for many of the chart-topping attacks in the crypto world, including the previously record breaking thefts of $625 million from the Axie Infinity game in March 2022, and the the $300 million and $235 million hacks of the exchanges DMM and WazirX in May and July 2024" (White 2025).
Further, the proposal has a structural resemblance to a Ponzi scheme which reveals how digital media transforms traditional financial instruments through what Baudrillard termed "simulation," the generation of models without origin or reality. Using government funds to purchase bitcoin would potentially artificially inflate its price through a feedback loop and would effectively transfer wealth from the state to early bitcoin investors. As Mark Zandi, the chief economist at Moody’s Analytics, explains, “There’s just no discernible logic to do it... I get why the crypto investor would love it. Other than the crypto investor, I don’t see the value, particularly if taxpayers have to ante up” (Durkee 2025).
To fully understand the economic risks inherent in this proposal, we can draw on established financial theories that analyse stability and collapse. I find Hyman Minsky's Financial Instability Hypothesis particularly useful for understanding this proposal's possible implications (see Minsky 1992). In Minsky's taxonomy of finance, the proposed bitcoin reserve seems to have some worrying similarities to "Ponzi" schemes. This is a situation where cash flows in are insufficient to fulfil cash flows out, requiring either asset sales or increased borrowing just to maintain existing positions. The key insight from Minsky's work that I want to emphasise is that such arrangements inevitably collapse once the flow of new money slows or asset values fail to appreciate at accelerating rates. What makes the Bitcoin Strategic Reserve particularly concerning, in my view, is that rather than being contained within private markets, it might institutionalise Ponzi finance at the governmental level, with the state itself becoming what Minsky might characterise as a speculative unit gambling on asset appreciation rather than productive investment. What emerges is perhaps best described as a government-enabled wealth transfer mechanism that shares worrying structural characteristics with Ponzi schemes whilst enjoying the legitimacy conferred by state power. This seems like a particularly dangerous combination for public finances. Having examined the ontological, political, governance, and economic dimensions of the proposed Strategic Bitcoin Reserve, I argue that we can now assess its broader implications for the future of state financial sovereignty.
Conclusion
Much remains speculative about the proposed Strategic Bitcoin Reserve but it appears to represent a media-technical change in how value is stored, transmitted, and processed at the sovereign level. The open source governance of bitcoin introduces a radical departure from previous reserve assets by placing a critical component of national wealth under distributed technical control. Rather than accepting the computational financialisation of public assets, we should question whether traditional concepts of reserve have any coherent meaning in relation to computational forms that exist through continuous global networked operation rather than physical presence.
The dialectical tensions explored throughout this analysis reveal how the bitcoin reserve proposal demonstrates contradictions in how computation and sovereignty might interact. For example, between decentralisation and state control, algorithmic and physical scarcity, and between distributed networks and centralised reserves. What is presented as technological progress hides a possible remediation of existing power structures through computational means, yet this remediation necessarily transforms the very nature of power it seeks to preserve. As Tankus notes, "whatever your thoughts about the merits of bitcoin, what is so striking about this proposal—and its popularity among so many bitcoin supporters—is that it fully turns the original motivation of bitcoin on its head" (Tankus 2025). The ultimate irony lies in using state power, the very thing bitcoin was designed to circumvent, to guarantee a system originally conceived in opposition to such state intervention.
The future of national reserves in the twenty-first century might well include computational media so we need to question whether the traditional concept of a "reserve" has any coherent meaning in a computational context. This bitcoin proposal shows the tensions in a computational form that exists only through its continuous global operation rather than a physical presence in any sovereign vault. I therefore argue that monetary innovation using computation would need to recognise that there is a material specificity of computation rather than attempting to force new computational architectures into traditional frameworks of sovereign wealth (See Berry 2014).
Notes
[1] The United States Bullion Depository at Fort Knox, holds approximately 147.3 million troy ounces of gold bullion (approximately 4,581 metric tons) (Reynolds 2025). Contrary to common misconception, this gold is not on the Federal Reserve's balance sheet. Rather, the physical gold is owned by the U.S. Treasury Department and appears on the Treasury's balance sheet as "gold certificates" issued by the Treasury to the Federal Reserve. These certificates are valued at a statutory rate of $42.22 per troy ounce (significantly below market value) and represent a claim on the Treasury's gold rather than the physical gold itself. This accounting arrangement dates back to the Gold Reserve Act of 1934. Unlike stockpiles such as the Strategic Petroleum Reserve, which are designed for release during supply disruptions or crisis, the gold at Fort Knox serves primarily a symbolic and legacy function. These reserves are not a "strategic stockpile" in the conventional sense as they are not intended for market intervention or consumption. The primary functions of the gold reserves today are to serve as a historical asset for the nation, largely for tradition and confidence, but also to provide a symbolic but still material "anchor" for the financial system, though without direct "connection," and also to represent what we might call a contingency asset that could theoretically be mobilised in extreme financial crisis. Since the end of the gold standard in 1971, these reserves have remained largely dormant from a policy perspective (Reynolds 2025). The gold revaluation mechanism (changing the statutory price of gold certificates) has been used historically as a bookkeeping device to increase the Treasury's spending capacity, but this mechanism is rarely employed in modern monetary operations (Kelton 2025). There is, therefore, an important distinction between physical gold reserves (Treasury asset) and gold certificates (Federal Reserve asset), a relationship different from the proposed direct holding of bitcoin in a strategic reserve.
[2] Cold Storage is a cryptocurrency security practice wherein private keys (the cryptographic credentials that control access to digital assets) are kept entirely offline, physically isolated from internet-connected systems. Unlike "hot storage" methods where keys remain connected to the internet through online exchanges or software wallets, cold storage significantly reduces vulnerability to remote hacking attempts, malware infections, and other cybersecurity threats. The term derives from traditional banking's "cold storage" for seldom-accessed items in secure vaults. In cryptocurrency contexts, cold storage is typically implemented through "cold wallets" which are physical devices or methods such as purpose-built hardware wallets (e.g., Ledger, Trezor), paper wallets (private keys printed on physical media), or air-gapped computers (systems never connected to the internet). As White (2025) notes, "crypto exchanges often store substantial quantities of assets in cold wallets, transferring smaller amounts as needed to online “hot wallets” to satisfy withdrawals and purchases. However, any time these transfers happen, there’s some degree of vulnerability." The National Strategic Bitcoin Reserve would need to employ sophisticated cold storage, potentially involving multi-signature authentication, geographically distributed key fragments, and other methods developed for institutional holdings. It is interesting to observe that these very security measures would introduce new vulnerabilities unlike those associated with traditional physical reserves like gold.
[3] This Bitcoin reserve proposal can be read as not merely a media-technical shift but also a change in theoretical economic paradigm. Modern Monetary Theory (MMT), associated with economists like Stephanie Kelton, challenges the Austrian/monetarist perspectives implemented in bitcoin's technical architecture. While bitcoin's design reflects a belief that government debt and currency creation are inherently inflationary and destructive of value, MMT argues that monetarily sovereign governments issuing their own currency cannot "run out of money" and that public debt is not analogous to household debt. From an MMT perspective, the proposed Bitcoin reserve misunderstands the function of sovereign debt and fiscal tools. The gold certificate revaluation mechanism referenced above is a good example of how a sovereign currency issuer can expand its fiscal space through monetary operations, which is a point that directly contradicts the deflationary, fixed-supply logic of bitcoin.
[4] The contradictions inherent in a sovereign bitcoin reserve appear even more pronounced when compared with Central Bank Digital Currencies (CBDCs) currently under development in numerous countries including China, the European Union, and the United States. CBDCs represent an alternative approach to state policy with regard to digital currency technologies that preserves rather than compromises sovereign monetary control (see BIS 2021, Prasad 2021). Unlike bitcoin's distributed governance model and fixed supply algorithm, CBDCs are explicitly designed to extend central bank sovereignty into digital currencies while maintaining traditional monetary policy mechanisms, including interest rate adjustments and elastic money supply. CBDCs attempt to incorporate the efficiency benefits of blockchain technology while rejecting its libertarian political foundations. Projects like China's digital yuan (e-CNY) or the European Central Bank's digital euro explicitly aim to counter private cryptocurrencies by offering the technological innovations of digital currency without ceding policy control to distributed networks (ECB 2024). The Trump administration's proposal to accumulate Bitcoin rather, and to cancel the Federal Reserve CBDC development, represents a significant strategic change from the approach of other major economies, which have chosen to develop sovereign digital currencies rather than accumulate existing cryptocurrencies. This also highlights that innovations in currency technologies can be implemented without necessarily adopting a cyberlibertarian framework.
Bibliography
Baudrillard, J. (1981) Simulacra and Simulation. Ann Arbor: University of Michigan Press.
Barbrook, R. and Cameron, A. (1996) The Californian Ideology, Science as Culture 6(1): 44–72.
Minsky, H. (1992) The Financial Instability Hypothesis, The Jerome Levy Economics Institute, Working Paper, no. 74. https://www.levyinstitute.org/pubs/wp74.pdf
Kelton, S. (2025) The Real Reason Trump and Musk are Planning to Visit Fort Knox, The Lens, 24 February. https://stephaniekelton.substack.com/p/the-real-reason-trump-and-musk-are
The White House (2025) Fact Sheet: Executive Order to Establish United States Leadership in Digital Financial Technology, The White House. https://www.whitehouse.gov/fact-sheets/2025/01/fact-sheet-executive-order-to-establish-united-states-leadership-in-digital-financial-technology/
White, M. (2025) President on brink of bailout for bitcoin, Citation Needed. https://www.citationneeded.news/issue-78/ (Accessed: 3 March 2025).
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