01-20-2025 
Trump’s inauguration, BTC Strategic Reserve, principles crisis
20 January, 2025
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As the debate over Bitcoin’s future rages on, and the executive orders of the Trump era are imminent, a troubling trend solidifies into what I think could be a horrible reality. The BTC maximalists call for a series of drastic measures that fundamentally contradict the ethos of the technology they claim to champion. This time, they’re not just betraying Bitcoin itself, but they’re also turning away from the principles they claimed to champion in the Bitcoin Civil War.
Like pure chameleons, in five years’ time, they have completely mutated away from advocating for self-custody, self-sovereignty and individual node operation to make sure the system remains decentralized. They have become advocates of the legal confiscation of seized coins to create a national reserve asset, and their vision is becoming increasingly indistinguishable from the centralized financial systems Bitcoin was designed to replace. This shift, trumpeted as strategic progress, threatens to undermine the principles of self-sovereignty, transparency, and decentralization that were foundational to Bitcoin’s creation.
These contradictions demand scrutiny. If we don’t address them now, Bitcoin’s promise of financial freedom may become another casualty of the power structures it sought to disrupt.
Confiscation and Contradiction: The case of Ross Ulbricht
The idea of rolling seized coins into a national Bitcoin reserve has gained considerable traction since Trump spoke at the Nashville BTC Conference in 2024. This proposal, which effectively turns government confiscation into a celebrated strategy among former libertarian activists, represents a chilling departure from Bitcoin’s roots. These same voices are currently advocating for the release of Ross Ulbricht, the infamous founder of the Silk Road marketplace. Yet, they paradoxically cheer for his seized coins to remain in government custody as part of a state-controlled BTC reserve.
This cognitive dissonance is staggering.
How can one simultaneously champion individual freedom while legitimizing state confiscation? It’s like there’s nothing but children in charge…
Not only is it insane to champion the release of a man in the same breath as you champion federalizing his property, but the precedent this sets is deeply troubling. If governments can seize coins and turn them into state assets with the blessing of BTC’s most vocal advocates, is there any violation of human rights that we can count on them to stand against?
Worse, it sends a message that BTC’s rules are malleable when the means serve the powerful. At least, and I say this with a terrible taste in my mouth, I have been predicting it would all end up this way with the purely Machiavellian vipers who hijacked Bitcoin between 2013 and 2017, running the Bitcoin experiment into the ground with their greed, hubris and outright malice.
Selling Gold for BTC: A new gold standard or madness?
Another proposal gaining traction among BTC maximalists is the idea of selling national gold reserves to buy more BTC. Advocates of this strategy argue that BTC’s superior properties make it the logical successor to gold as a reserve asset.
However, this suggestion ignores basic economic principles, most notably Gresham’s Law, which they often cite as a reason to hold BTC. Gresham’s Law posits that “bad money drives out good money.”
Well, with its proven utility and stability operating into the nethers of prehistory, gold embodies the “good money” in this equation. Bitcoin not only lacks the historical provenance to replace gold as a reserve asset, but it has shown that it cannot even resist controversial changes like the addition of RBF, Segwit and Taproot—something that a truly sound money would have been able to resist.
Gold’s “Lindy Effect”—the idea that the longer something has existed, the more likely it is to persist—also makes it an enduring cornerstone of the global financial system. To sell gold for BTC is to trade centuries of stability for the volatility and speculative nature of a still-maturing asset. It’s an irrational gamble that prioritizes ideology over sound economic policy. Bitcoin may have immense potential, but replacing gold with Bitcoin as a reserve asset before the latter has proven it has any resilience is reckless at best and catastrophic at worst.
Bitcoin’s self-custody crisis
At its core, Bitcoin was envisioned as a tool for global payments, data ownership and financial self-sovereignty. It was meant to replace banks, payment companies, big tech and perhaps even governments as intermediaries in our financial lives. Yet, the current push to position BTC as a national reserve asset contradicts this vision. Instead of empowering individuals to hold and control their wealth, the reserve asset model envisions governments and central banks as the primary custodians of BTC, replicating the same centralized structures that Bitcoin was created to dismantle.
Self-custody is one of Bitcoin’s key promises.
It represents freedom from intermediaries and the ability to transact without permission. Or at least, it used to… Turning Bitcoin into a government-controlled asset not only betrays this promise but also risks turning it into a tool for surveillance and control. Once governments control significant reserves of BTC, the line between financial freedom and financial oppression becomes dangerously thin.
The necessary “Evil” of Digital Asset Recovery
On top of cheering for the absorption of confiscated bitcoins, another thing complicating this issue is the role of tools like Digital Asset Recovery (DAR) and Network Access Rules (NAR). These protocols, developed for Bitcoin by the BSV Association, introduce mechanisms for rightful owners of lost or stolen assets, a process by which they can be recovered. DAR and NAR are controversial for some—raising questions about whether they compromise Bitcoin’s principles of finality and its status as a pure bearer asset. However, they also address a practical barrier to using Bitcoin as more than a self-custodied tool for commerce.
In this case, they address BTC’s weaknesses as a reserve asset.
Reserve assets, particularly those underpinning tokenized derivatives, require mechanisms for recovery in cases of accidental loss or theft. Without such tools, Bitcoin cannot comply with the stringent asset control regulations that govern financial systems. DAR/NAR ensures that assets can be recovered legally and transparently, making Bitcoin viable for large-scale institutional and governmental use.
However, these tools come with risks. By enabling courts and other agencies to recover assets without private keys, they introduce a potential avenue for abuse. The very infrastructure that makes Bitcoin compliant with existing systems could also turn it into a tool of control, undermining the autonomy of its users.
So, how does DAR/NAR work on BTC?
There are four parts. The System Arbiter, The Alert System, Network Access Rules and Digital Asset Recovery.
The Alert System (AS), managed by the System Arbiter, is a modern reimplementation of Satoshi Nakamoto’s original Alert Key concept whereby people like Bitcoin’s Founder Satoshi Nakamoto or Mt Gox CEO Mark Karpeles could issue directives to the whole of the Bitcoin network in an emergency.
The modern iteration of AS enables the network to receive critical notifications or legal directives directly at the mining node level. Through a consensus-driven process involving at least five alert key holders, the system ensures transparency and accountability. Alerts can range from simple software updates to complex directives such as freezing, unfreezing, or reassigning coins, all in compliance with legal rulings and the Network Access Rules (NAR). Freezes are enacted instantly and globally, ensuring the rapid containment of malicious activity or disputed assets. Reassignments (Digital Asset Recovery or “DAR”), however, follow a more deliberate process: once an order is issued, there is an acceptance and clarification period—1000 blocks or about a week—during which nodes coordinate and deliberate on the order’s validity and alignment with their local laws before finalizing their response.
DAR builds on this system, introducing a structured framework to address disputes and correct errors, such as lost or misdirected coins. DAR enables actions like reassigning transaction outputs to rightful owners or enforcing court orders, ensuring property rights are upheld. These actions are guided by stringent rules and oversight, balancing compliance with decentralization while reinforcing trust in the system.
Together, NAR, AS, and DAR address one of Bitcoin’s critical challenges: adapting to large-scale, legally compliant use cases such as reserve asset management. By allowing nodes to process lawful directives while providing time for clarification and adherence to jurisdictional requirements, the system ensures that Bitcoin can meet modern regulatory and financial demands. Though some, like myself, question its implications for self-sovereignty, these tools are essential for bridging the gap between ideological purity and practical utility, enabling Bitcoin to function as a sound and adaptable global financial system.
A brave new world or a betrayal of principles?
Under the guise of victory, BTC maximalists are celebrating the very forces Bitcoin was created to resist. By advocating for government custody, they introduce the need for asset recovery protocols and even asset confiscation. This is the process by which they will likely have turned BTC into a tool of centralized power rather than an instrument of individual freedom.
The irony is glaring. Bitcoin’s proponents claim to be building a future of financial freedom, yet their strategies echo the oppressive systems they claim to despise.
I firmly believe that if Bitcoin had been used primarily as cash since the beginning, it would be regulated like cash, taxed like cash and would not be at any risk of the “controversial” changes mentioned in this article. The transformation of BTC primarily into a store of value, or an investment asset, has turned into something regulated and taxed like property, and it appears it will soon become a government-controlled reserve asset, complete with recovery mechanisms and state confiscations.
This raises the question: Is this truly a brave new world, or are we losing the plot entirely?
Does anyone care? Or are all just content to pump and dump $Trump on Solana now?
The path forward
If Bitcoin is to fulfill its potential as a transformative force in global finance, it must resist the temptation to replicate the systems it was designed to replace. We may be too far down that road already, but perhaps we can return to the first principles: self-sovereignty, decentralization, and transparency on a network designed primarily to give the world the utility of frictionless payments and unmatched levels of data integrity.
While NAR/DAR may be necessary for BTC’s new use cases, their implementation must be carefully limited to prevent abuse. Governments and institutions probably should not hold the keys to Bitcoin’s future—individuals should, but that’s a choice we probably had to have made more soundly a decade ago.
The stakes are high. Bitcoin can either remain a tool of liberation or become another instrument of control. The choice lies in whether its community prioritizes principles over short-term gains and is willing to challenge those who would turn Bitcoin into something it was designed to oppose.
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