Former President and Republican presidential candidate Donald Trump recently floated the idea of using bitcoin to pay down the country’s national debt. This move, some experts argued, could have wide-ranging implications for your wallet.
“Who knows? Maybe we’ll pay off our $35 trillion, hand them a little crypto check, right? We’ll hand them a little bitcoin and wipe out our $35 trillion,” Trump, who started calling himself the “crypto president,” said in a Fox interview.
Many detractors were quick to respond. Economist Justin Wolfers said in an Aug. 3 post on X (formerly Twitter) that this is “not how debt works; it’s not how crypto works; and it’s not how economics works.”
Beyond the hypothetical feasibility of this plan, using bitcoin in that manner also could have some implications on your wallet.
Also, would Trump really be the “crypto president,” if elected?
Good for Your Wallet
Some experts noted to reach a total value of $35 trillion, the price of bitcoin would have to rise from the current (approximate) $60,000 to $2.1 million.
That said, they also argued that Trump is right about the importance of bitcoin.
“Making it easier to develop and run bitcoin and other cryptocurrency projects in the U.S. will be good for the economy and for ordinary citizens who will see new and better ways to manage their assets and their payments,” said Paul Mueller, senior research fellow at the American Institute for Economic Research.
Other experts also noted that using bitcoin to wipe off the national debt could be a very beneficial idea in the long run for consumers.
“Citizens would of course benefit from this in the long term because the overall national finances would be less strained, meaning that their pocketbooks would be less stressed,” said Markus Levin, co-founder of XYO Network.
It Hurts Crypto Prices
On the other hand, bitcoin and other cryptos plummeted following Trump’s remarks. As Newsweek reported, the price of bitcoin fell 12%, while the price of ethereum dropped 21% in the subsequent 24 hours. As of Aug. 7, bitcoin is at $57,200, up 96.2% in the past year and 0.2% in the past month, according to CoinGecko.
It Could Destabilize the Dollar — and Hurt Your Finances
Additional implications of such a move are that not only it could trigger a lot of volatility in cryptocurrency markets, which could lead to significant fluctuations in the value of your investments, but it could also destabilize the U.S. dollar.
This, in turn, could potentially lead to higher inflation and increased costs for everyday goods and services, said Robert Hodgins, founder at Sand Hill Road Technologies Fund.
Hodgins also noted that tax laws around cryptocurrency might also change, affecting how your holdings are taxed.
“Overall, such a plan could introduce economic uncertainty, influencing everything from job security to how you manage your budget,” he added.
It’s the Thought That Counts — and That Thought Will Boost Your Wallet
Whether paying down the national debt with crypto is feasible or not is not really at the crux of the matter, some experts said. Bringing crypto to the forefront of the conversation in a presidential election year is what matters and what will make a difference for wallets.
Matt Webb, co-founder at wevr.ai, noted that Trump’s overall positive stance on crypto is what could influence wallets, noting that less strict regulation would bring more blockchain and cryptocurrency jobs back to America.
“This will lead to cryptocurrencies becoming more mainstream and help both our crypto wallets and our real wallets,” he added.
Brian Estes, creator of the new documentary “God Bless Bitcoin” and CIO of Off the Chain Capital, echoed the sentiment, noting that Trump simply talking about the crypto industry sends a strong message to politicians on either side of the partisan divide.
“It might help turn the tide in terms of persuading all lawmakers to take a more constructive approach to the industry,” Estes said.
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