According to Zhizhong Finance APP, after the incoming USA President Trump reiterated the plan to establish a USA Bitcoin Global Strategy Reserve, Bitcoin set a new historical high of over $107,000 on Monday, igniting the enthusiasm of cryptocurrency bulls.

So how does the plan actually work.

What is a Global Strategy Reserve.

A Global Strategy Reserve is a stockpile of critical resources that can be released during a crisis or supply disruption. The most famous example is the USA Strategic Petroleum Reserve, which is the world's largest emergency crude oil supply, created by an act of Congress in 1975 after the 1973-74 Arab oil embargo crippled the USA economy. USA Presidents have tapped into the reserve during times of war or when hurricanes hit the oil infrastructure along the Gulf Coast of the USA to stabilize the oil market.

Canada has the world's only maple syrup Global Strategy Reserve, while China has Global Strategy Reserves of metal, grains, and even Pork products.

How will the USA Global Strategy Bitcoin Reserve operate.

Analysts and legal experts disagree on whether Trump can use his executive power to establish reserves or if a congressional bill is needed. Some believe that Trump can create reserves through an executive order directing the USA Treasury's Forex Stabilization Fund, which can be used to buy or sell foreign currencies and can also be used to Hold Bitcoin.

These reserves may include Bitcoins seized by the government from criminals. According to bitcoinreasuries.net, this is about 0.2 million tokens, valued at approximately 21 billion dollars at the current price. In a speech revealing the Bitcoin reserve plan in July, Trump noted that this reserve could be a starting point, although it is currently unclear what the legal process is for transferring it out of the USA Department of Justice.

Trump has not indicated whether the government will increase this reserve by purchasing more Bitcoin on the open market. To do this, the government may have to issue Bonds, although some supporters of the Bitcoin reserve suggest that the USA could sell part of its Gold reserves and use the proceeds to purchase Bitcoin.

Currently, the most specific Bitcoin reserve proposal circulating in Washington comes from cryptocurrency-supporting Republican Senator Cynthia Lummis, who stated last month that she personally Holds 5 Bitcoins. In July, she proposed a bill that has not yet gained support, which would establish a reserve managed by the USA Treasury.

The bill envisions that the USA Treasury will devise a plan to purchase 0.2 million Bitcoins each year over five years until the inventory reaches 1 million. This would account for about 5% of the global total supply of around 21 million Bitcoins. The USA Treasury would fund the purchases using profits from Federal Reserve bank deposits and Gold reserves.

Subsequently, the Bitcoin reserve would be maintained for at least 20 years.

What are the benefits of the Bitcoin reserve?

In a speech in July, Trump stated that in the face of increasing competition from other countries, the Bitcoin reserve would help the USA dominate the Global Bitcoin market.

Other supporters believe that Bitcoin may continue to appreciate in the long run. By holding Bitcoin reserves, the USA could reduce its deficits without raising taxes, thereby strengthening the dollar.

In November last year, Lummis stated that her plan would halve the USA's debt within 20 years. She pointed out, "This helps us withstand the effects of inflation and protects the dollar's position on the world stage."

Supporters say that a strong dollar, in turn, will give the USA greater influence over foreign adversaries such as Russia.

What are the risks?

Cryptocurrency skeptics argue that unlike most other CSI Commodity Equity Index, Bitcoin has no intrinsic use and is not essential to the operation of the USA economy.

They also believe that Bitcoin, created in 2008, is still too young and too volatile to assume that its value will continue to rise in the long run, and that cryptocurrency wallets remain very vulnerable to cyberattacks. Given Bitcoin's volatility, any government buying or selling could have a huge impact on Bitcoin's price.

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