Taiwan should reconsider adopting Bitcoin as a reserve asset to hedge against global turmoil and the risk of war, according to a research fellow at the Bitcoin Policy Institute.
In a report on Tuesday, Jacob Langenkamp said that should China pursue reunification with Taiwan by military force, either through a blockade or full invasion, Bitcoin (BTC) would be the only reserve asset that would remain fully accessible and spendable.
“Uniquely for Taiwan, Bitcoin provides geopolitical resilience: in a PRC blockade or invasion, gold is stranded or seized and USD reserves face potential restrictions, but Bitcoin remains fully accessible without physical transport,” he added.
Bitcoin is more resilient during turmoil than other alternatives. Source: Bitcoin Policy Institute
Nation-states have begun to explore the idea of launching strategic Bitcoin reserves, seen as a bullish signal for Bitcoin.
Last year, Taiwan’s central bank sought to investigate establishing a national Bitcoin reserve. However, the bank ruled it out in December, citing volatility, liquidity and custody concerns and instead identified the US dollar as a safer alternative.
US currency debasement is a risk to Taiwan: Langenkamp
Taiwan is heavily exposed to the risks of US dollar debasement, Langenkamp said, because its central bank reserves are at least 80% in USD-denominated assets, as is most of its trade.
Growing US debt, Federal Reserve monetary expansion, a potential AI market downturn and declining semiconductor revenues could also accelerate dollar debasement, he said.
Several factors could accelerate US dollar debasement. Source: Bitcoin Policy Institute
“Bitcoin can couple with gold to offer that hedge against USD debasement. It can provide another opportunity for the CBC to adopt a reserve asset before its peers and benefit the people of Taiwan with the subsequent price appreciation,” Langenkamp added.
“It can offer geopolitical insurance against scenarios that hopefully do not come to pass. It can open new methods of trade with less friction. Bitcoin can provide Taiwan with a great measure of monetary resilience.”
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