Reserve Bitcoin: A Betrayal of Satoshi’s Vision

Despite the ideals of thinkers like Mises, Hayek, and Friedman, reserve assets encourage hoarding, creating barriers to circulation—leading to stagnation

Bitcoin, cryptocurrency, Web3

Throughout history, reserve assets have played a pivotal role in shaping monetary systems. From gold bullion sitting in the vaults of the Bank of England (BoE) to the U.S. dollar’s post-Bretton Woods hegemony, the concept of a reserve asset has always carried a double-edged sword. On one side lies the promise of stability and trust while empowering the empire with the most liquid assets; on the other, the creeping specter of corruption, inflation, and economic inefficiency.

This was the brilliance of Keynes. He gets rightfully criticized for devaluing the purchasing power of the fiat unit, but few understand that Keynes knew this would be the case. His goal was for the British pound to simply outperform other fiat currencies and drive economic growth in the belief that economic growth would also outpace the devaluation of spending power in the United Kingdom. With few exceptions, he was right. This economic philosophy was transplanted onto the U.S. monetary system with some updates in sophistication, leading to similar outcomes: incredible creation of wealth for people in the U.S., despite the fact that purchasing power of the currency was constantly eroding.

Sounds like I’m a Keynesian, huh? I’m not. The system still has major flaws, but we must at least understand their ideas before we deconstruct them.

As a staunch advocate of sound money and the principles behind the gold standard, I deeply respect systems that prioritize accountability, scarcity, and real economic balance. I’m essentially a classic Austrian on the topic of monetary economics, but the idea has always had a practical limitation of trust in reserve assets for full reserve banking and lending. Essentially, it’s near impossible to trust that the circulating supply of money is always redeemable 1:1 for the reserve asset, and even if you could redeem, why would you want to be illiquid? So we are stuck with trusting the banks, and their incentives tell them to act like Keynesians, even if they are philosophically Austrians.

Reserve assets, in practice, are antithetical to Austrian ideals. Despite the ideals of thinkers like Mises, Hayek, and Friedman, reserve assets encourage hoarding, creating barriers to circulation—leading to stagnation, which then greases the wheels of fractional reserve lending—turning what should be a stable foundation for commerce into an inflationary house of cards.

Satoshi Nakamoto didn’t simply design a digital asset; he engineered a solution to the inherent corruption of opaque reserve systems. Bitcoin offers the sound money properties of gold, the practical accounting style of cash, and the reduced friction of a global, decentralized payment network. When circulated, Bitcoin balances economic incentives naturally. It’s money in its purest form: not a symbol of value trapped in vaults, but value in motion, fueling commerce and productivity, and it can natively be the reserve asset underlying real-world asset tokens—if the network is implemented for scalability that is…

Unfortunately, a well-connected cabal of small block “Bitcoin” influencers—led by figures like Samson Mow and Adam Back—are attempting to twist Bitcoin’s original vision. They propose a dystopian system in which Bitcoin becomes a digital reserve asset, akin to gold bars locked away, while a secondary system of fiat inflation, fractional lending, and speculative debt takes place on another network where it is more difficult to audit. Under their scheme, Bitcoin wouldn’t be the revolutionary tool for peer-to-peer commerce Satoshi envisioned but a static asset backing an opaque, centralized financial apparatus, a more technocratic version of the central banking system that we already have.

This isn’t a theoretical danger; it’s happening right now.

And it’s not just happening in the U.S. Argentina is mining bitcoin, El Salvador, and now Poland looks to be joining the chorus of lambs to the slaughter of the Tetheral Reserve! Oh wait… I haven’t mentioned Tether yet in this article.

Consider the role of Tether (USDT), the shadowy stablecoin issued by iFinex. The BTC-as-a-reserve-asset model is at the core of their operation. BTC backs the issuance of Tether, which is then fractionally lent out to traders and leveraged to inflate the value of cryptocurrencies on exchanges and fiat-like derivatives. This creates an endless boom-and-bust cycle, where those closest to the issuance—“early adopters” or whales—can front-run the economy with insiders from the exchanges while everyone else struggles to catch up.

Sound familiar? It should. This is precisely how the central banking system has functioned for over a century. While Samson Mow and his ilk claim to despise central banking, they’re replicating it—just with fewer regulations and even less transparency. The result is not a system of freedom or economic justice, but a hyper-fiat, digital plantation economy where power is concentrated in the hands of a few.

The sad part is that the idea of the Bitcoin reserve asset