When former US president Donald Trump announced a plan to establish a national “bitcoin stockpile” if he is reelected, the crowd at the Bitcoin 2024 conference in Nashville, Tennessee, erupted into a fit of celebration. The frontrunner in the upcoming election was speaking their language.

“For too long, the government has violated the cardinal rule that every bitcoiner knows by heart: Never sell your bitcoin,” said Trump during his speech on Saturday, pausing briefly to bathe in the applause. “It will be the policy of my administration to keep 100 percent of all bitcoin the US government currently holds or acquires into the future.”

The US government is reportedly sitting on upwards of 210,000 bitcoin—worth around $14 billion—seized from hackers and through various law enforcement activity. That stash, said Trump, would become “the core of the strategic national bitcoin stockpile.” Republican senator Cynthia Lummis, of Wyoming, later proposed legislation that would see the US government amass 1 million bitcoin under Trump.

Any stockpiling plan would benefit bitcoin owners, if only because it would stop the US government depressing the price of the cryptocurrency by flooding the market with its coins in a sale. Trump implied that stockpiling bitcoin, an asset considered by its proponents to be anti-inflationary by virtue of its capped supply, would also help the government to “end the inflation nightmare that this administration [led by Joe Biden] has created.” Senator Lummis later spelled out his thinking, saying, “We need to create a brighter future for generations of Americans by diversifying into bitcoin.”

But stockpiling bitcoin has little merit, economists say. “I see no [economic benefit],” says James Angel, an economist at Georgetown University specializing in financial markets. “The tangible benefit is that it will get bitcoin maxis to vote for Trump. If you believe in Trumpism, that would be the benefit.”

The idea that an investment in bitcoin will offset losses in spending power to inflation is contingent, says Angel, on two shaky assumptions: that the price of bitcoin will rise and, second, that the government would be able to at some stage sell bitcoin back into US dollars without tipping the market into a nosedive. “The government will push the price up by buying bitcoin, so it will look like it has made a lot of money, but the minute it actually starts to sell the bitcoin to take profits, it will push the price right back down again,” says Angel.

Though Trump is initially proposing a moratorium on selling bitcoin already in the possession of the US government, he loosely implied the US would increase the size of its position over time, too. If Trump were to expand the bitcoin stockpile, he would need to locate funds with which to acquire the additional coins. But the readily available options—to increase taxes, take on debt, or print US dollars—are incompatible with the ambition to drive down inflation and national debt, or pledges made by Trump to reduce taxation. Senator Lummis is reportedly set to propose that purchases be funded partly using money that will be added to the US central bank’s balance sheet after the valuation of gold stores is updated to reflect the going market rate. “The money has to come from somewhere,” says Angel.

Even if Trump were to restrict the reserve to bitcoin seized through law enforcement activity, his administration must also weigh up the opportunity cost associated with holding onto bitcoin. Whereas some assets such as bonds generate a consistent income stream for holders, bitcoin does not, making it expensive to hold.

“The question comes down to what the government would get out of the hoards of bitcoin it would be holding,” says George Selgin, director emeritus for the Center for Monetary and Financial Alternatives at the Cato Institute, a US think tank that promotes libertarian principles. The US government has periodically auctioned off the bitcoin confiscated through law enforcement activity. But in choosing to sit on the bitcoin it possesses, “it is failing to realize the market value, which it could apply to any number of other uses, from writing down the federal debt, to paying for other government programs,” says Selgin.

Though Selgin is a proponent of bitcoin for its independence from state control, he opposes the US government speculating on its price on behalf of citizens. “Governments are not particularly astute investors,” says Selgin. “Having the government act on behalf of citizens as some kind of investment trust or mutual fund doesn’t make much sense.”

During his speech in Nashville, Trump namechecked a range of high-profile bitcoiners, including Cameron and Tyler Winklevoss, who founded crypto trading platform Gemini, thanking them for their guidance. Afterward, Tyler took to X to celebrate Trump’s plan and congratulate the organizer of the conference for having “orange-pilled” the former president.

But while it is popular with holders of large amounts of bitcoin and industry executives, the ambition to establish a bitcoin stockpile could come at a cost to most everyone else, particularly if the government were to expand its existing holdings, says Michael Green, chief strategist at asset management firm Simplify.

“The only possible way for the US government to buy bitcoin is from existing holders,” says Green. “But if the government uses tax revenues [or issues bonds] in order to buy bitcoin, it creates a situation in which the taxpayer is subsidizing an extraordinarily small subset. Ultimately, you’re talking about creating exit liquidity for a small subset of the population.” It would be like the US government promising to pay over the odds for real estate in California, says Green, but no other state. “This is not materially different,” he says.

The larger the government’s pot of bitcoin, meanwhile, the more beholden it would become to those who maintain the underlying network—the bitcoin mining companies—whose job is to process transactions and shield the network from attack. Effectively, the bitcoin mining industry would become “another special interest group,” says Green, “that the US government would have to step in and bail out” in the event that the sector—renowned for its sensitivity to various factors beyond its control—were to wobble.

Neither Trump nor Lummis responded to a request for comment on the criticisms made against the bitcoin stockpile plan.

Whether Trump intends to carry out the plan to establish a bitcoin stockpile is a separate question. “Trump is a master demagogue, appealing to the emotions of the crowd. It’s pure electioneering,” says Angel. “I think the plan will probably go the way of Trump Airline, Trump Casino, and Trump University.” That is to say, nowhere.

The members of the bitcoin industry were not blind to the fact that Trump was making a pitch for their vote. It is “historic” for Trump to consider bitcoin important enough to warrant campaigning around, says Jameson Lopp, an early bitcoiner and founder of crypto custody business Casa, who attended the conference. But “the way he spoke to us was pretty clearly pandering,” he says. “It felt like he was kind of speaking down.” Though Trump has previously dismissed bitcoin as a “scam,” he has now “realized that it can be beneficial to him,” says Lopp. “He can gain a new, potentially substantial bloc of single-issue voters.”

Trump was not the only person courting bitcoin fans with promises to take a semipermanent stake in the market. At the same conference, Robert F. Kennedy Jr., who is running against Trump in the election as an independent, presented a more gung-ho plan: The country would acquire 4 million coins—practically 20 percent of the total supply—if he were president.

In that context, the pledges in Nashville were of greater significance as a signal, says Selgin, than for their actual contents. After a period under the Biden administration in which crypto businesses have been targeted, they claim unfairly, by regulatory bodies in the US, the pitches by Trump and others were an attempt to send the general message, says Selgin, “that bitcoin is no longer the enemy.”