Leaders promising crypto as a means for debt repayment is not new. However, a US presidential candidate saying that they could pay a $35 trillion debt with crypto is definitely surprising and unprecedented.
Before we get to any comparisons and data driven analytics in our attempt to see how – or if at all – it is possible for a country to pay its debt with crypto, here’s what happened.
Former US president at an event said that crypto has a great future and that he thinks that the US can pay off the “$35 trillion” with crypto.
While the former president is already becoming the poster boy of pro-crypto voters, the question is how do we dissect this latest statement from Trump?
Anything close to what Trump mentioned is Venezuela’s president Maduro making similar promises. Maduro was ahead of time; at least ahead of Donald Trump in realising the true potential of crypto.
Back in 2018, Maduro though controversial but as a head of a sovereign state announced the launch of Petro cryptocurrency – a unique crypto currency to be backed by oil. The master plan was to push the country’s oil economy by circumventing the US and western sanctions and thus minimising debt accumulation.
Maduro’s decision and launch of Petro made headlines all over. Petro’s whitepaper was unique as it was released by a Head of State. But, as of today when at Bankless Times we tried to retrieve the oil-backed crypto’s whitepaper which was available at http://www.elpetro.gob.ve/Whitepaper_Petro_en.pdf, it looks like it has been deleted.
It is not surprising. The project failed and it was later revealed that Venezuela’s Petro was not really oil-backed.
Now, fast forward to 2024, Donald Trump has challenged big banks and said that he will promote crypto and make the US the crypto capital of the world. The Republican presidential candidate has also launched a crypto project by the name of World Liberty Financial.
The now deleted white paper of Petro may not seem too uncanny if pitched against Trump’s WLFI white paper released last month – both of them lack clarity.
Is It Possible to Pay $35 Trillion With Crypto?
Well, after facing a beating BTC for two consecutive weeks BTC has managed to recover and trade above the $63k levels over the last 72 hours.
Currently, the overall crypto market cap is under $2.22 trillion. You may do the maths. To make a $35 trillion debt payment with crypto, even if the US manages to get hold of all the crypto in the world today, it will still need to wait for at least the overall crypto market to grow by at least 15 times.
The next thing is the road map. How would you plan to acquire such amounts of crypto and then liquidate it to pay debts? As China is amongst the biggest buyers of the US debt, will they accept crypto?
There are many questions around the actual plan to create $35 trillion in crypto. And, if not all of it, even the 50% of it. These questions may sound as bogus as a former president’s shot in the air without an aim.
Now that Vice President Kamala Harris has also jumped in to court crypto voters, it would not be surprising if we see more of these from Donald Trump until the presidential elections.
However, coming to real terms, Donald Trump must avoid such hyperbolic statements to lull crypto voters – it might backfire. He would not want his campaign to meet the same fate as Maduro’s Petro.
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