Musk, Trump, and Crypto: The Future of America's Money?

It's no secret that President Donald Trump and his close advisor, multi-billionaire Elon Musk, are big fans of cryptocurrency. Could their pro-crypto approach to this emerging financial technology actually transform the monetary system of the United States? What would that mean for the bank accounts of American citizens?

Cryptocurrencies have been seen as an alternative to the U.S. dollar and traditional banking.

Governments Are Joining the Crypto Game

There is a prevalent idea that cryptocurrencies such as Bitcoin offer an off-ramp out of the existing financial system. They are supposed to be a pathway toward a more independent and decentralized form of money. In essence, crypto has always been touted as a rejection of government-issued fiat currency. Governments (understandably) don't tend to like that!

Now, however, governments are increasingly talking about holding their own cryptocurrency reserves. I suppose it's a case of "if you can't beat 'em, join 'em!" The most prominent example of a government doing this is in El Salvador, which has been stockpiling Bitcoin and even made it legal tender for a brief time. Similarly, the Czech Republic also moved to exempt cryptocurrencies from capital gains tax, treating them more like money.

Soon, we may be able to add the United States to this growing list. Among other ideas, such as eliminating the federal income tax or scrapping the IRS altogether, President Trump has also proposed removing any capital gains on cryptocurrencies. Trump recently hinted at the possibility of the U.S. government accumulating an official strategic Bitcoin reserve.

Meanwhile the Pennsylvania legislature is considering a bill to establish its own BTC reserve. Even the Secretary of Commerce, Howard Lutnick, has openly supported the idea that the federal government should be more involved in the crypto sector. A "crypto summit" of sorts is planned at the White House on March 7th.

Both Trump and Musk are Cryptocurrency Advocates

Image credit: Gage Skidmore

It's become very clear that President Trump and Elon Musk enjoy a close relationship. Both of them have advocated for certain cryptocurrencies: the president advertised his own token, TrumpCoin, during the election campaign; and Musk has famously been an advocate of DogeCoin. In fact, the name of this joke meme coin is what inspired Musk to name his cost-cutting take force the "Department of Government Efficiency," or D.O.G.E. for short.

It's also worth pointing out that in the past Trump has dabbled in releasing non-fungible tokens (NFTs), which are essentially digital collectibles.

Given their obvious affinity for bringing cryptocurrencies to the mainstream, the Trump administration and D.O.G.E. are very likely to push for the American government to implement a crypto version of of the U.S. dollar—all in the name of greater efficiency, of course.

The Dangerous Road Toward Digital Money

Despite the fact that government adoption of cryptos would seem to contradict their entire purpose, hodlers and crypto traders have been cheering the recent developments in Washington. This is mainly because, at least in the short run, it promises to "pump their bags"—in other words, to make the prices of the cryptocurrencies they own go up.

But the bigger question is about how this might fundamentally alter our system of money. The current trend is undeniably moving in a direct toward purely digital money, such as a central bank digital currency (CBDC). In such a scenario, the government would be the one issuing and managing the supply of the digital tokens that we earn, save, and spend. You would have zero privacy and zero control of how your "dollars" are stored.

Paying in cash will become a thing of the past if the U.S. government moves toward a "digital dollar."

In this increasingly imminent future, your money would be under centralized control with total surveillance. None of your financial transactions would be private from federal regulators. How would you be able to "withdraw" money from the bank if physical cash doesn't exist? Would you really trust the banks and government with this expansive power?

Cynthia Lummis, a U.S. Senator from Wyoming and co-sponsor of numerous bills regarding cryptocurrency regulation, is skeptical that this policy change will happen quickly. But it's still something coming on the horizon that everyone should be prepared for. Especially if physical cash is eliminated or demonetized, you need a backup plan for storing some of your wealth outside of the blockchain. Gold and silver bullion are the ideal forms of money for doing so.

Not only do gold and silver hold their purchasing power over decades and centuries, but they are also valued all over the world. No matter what the banking industry—or the government, in this case—tells you, silver and gold will always be money. Best of all, physical precious metals aren't anyone else's liability or obligation once you hold them. There is no counterparty risk to worry about.

As we creep closer and closer to fully digitized money becoming a reality, it's never been a more important time to protect your financial future with precious metals! Follow the links to buy gold and buy silver at Gainesville Coins.

Read more about cryptocurrencies and how they relate to precious metals:

What Is a CBDC? Explaining Central Bank Digital Currencies

Gold vs. Bitcoin: Why You Should Buy Both

Bitcoin vs. Gold: 10 Crystal-Clear Comparisons

Cryptocurrencies (Part 2): Understanding the Landscape

Facebook's Libra Cryptocurrency: What's the Big Deal?

CBDCs: The Risks and Benefits of Central Bank Digital Currencies