Beef, Apples, or Bitcoin? Why SA Reserve Bank Governor’s Reserve Asset Roast Misses the Mark

Here’s what’s going on in the world of cryptocurrency. First off, the biggest crypto asset -Bitcoin – continues to hit new highs with each passing month. Here’s Bitcoin’s all-time price chart:

This is not the kind of graph you typically see for any asset. If you bought Bitcoin worth $100 in 2018, soon after Vene won their first election, that investment would be worth just over $3000. You don’t see that kind of growth anywhere else.

However, these crypto assets are volatile. It might look good in the long term but in the short term it can be nerve-wracking holding on to them. Which means they might not be suitable if you would want the ability to liquidate at any moment.

That said, I love that crypto assets are an option. If its too risky for you, you don’t have to participate. Those that do can see crazy gains or face financial ruin whilst you watch on.

That was then, though. The landscape could be about to change. Or more accurately, there are some efforts to bring you into the crypto game whether you want to or not.

The US govt is flirting with crypto

Lobbyists in the USA have influenced the government’s consideration of holding crypto assets and regulating them.

Through campaign contributions and lobbying, the crypto industry has gained the attention of lawmakers. This has yielded a bill like the Lummis-Gillibrand Responsible Financial Innovation Act, which aims to establish a regulatory framework for digital assets.

On top of that, the lobbying has contributed to discussions about the potential benefits and risks of cryptocurrencies, including their use as a reserve asset for the government.

Yes, you heard that right, there are talks of the whether the U.S. government should consider holding crypto in addition to gold and foreign currencies as government savings (reserves).

South Africa Reserve Bank not a fan

At a Davos panel, South Africa’s central bank governor, Lesetja Kganyago, criticized the cryptocurrency industry’s lobbying efforts in the U.S., arguing that bitcoin is no more suitable as a reserve asset than commodities like beef or apples. Said he,

There is a history to gold. There was once a gold standard… If we now say ok, bitcoins. What about platinum? What about coal? Why don’t we hold strategic beef reserves, or mutton reserves, or apple reserves? Why Bitcoin?

He is worried about the lobbying influence and the risk of “regulatory capture.” He points to crypto firms, such as Coinbase and Ripple, which spent over $119 million backing pro-crypto U.S. lawmakers.

On the other hand, other panelists, including Coinbase CEO Brian Armstrong, praised the opportunities under Donald Trump’s presidency. He believes Trump’s pro-crypto stance could drive significant investment in the sector.

Armstrong highlighted Trump’s plans for a U.S. government bitcoin stockpile as huge and unparalleled. Kganyago opposed the idea, questioning why bitcoin should be favored over other assets like gold or platinum.

What a shocker! Crypto company CEOs support the move whilst governments and traditional bankers whose fiat currency world would be rocked by crypto do not.

Kganyago’s comments not as clever as he believes

His dismissive comments aim to show how ridiculous it is to hold Bitcoin as a reserve asset. Drawing a parallel to apples and beef to drive the point home.

He misses the point in trying to make that snide little comment. I started this article by showing how Bitcoin has appreciated in value since its inception. That’s the biggest reason it is being considered a suitable reserve asset.

Bitcoin has consistently shown the ability to appreciate rapidly over the years, going from around $0.06 in at inception in 2010 to over $100,000 recently. This growth reflects its status as a digital asset with finite supply (21 million coins) and increasing demand, which supports its consideration as a reserve asset.

This same growth is why some are considering Bitcoin over platinum or coal. Those minerals have not seen growth anywhere close to Bitcoin’s in that time period.

Just so some are not swayed by his comments, let’s take them seriously and show how stupid they can look if analysed.

Unlike beef or apples, which are perishable commodities subject to spoilage, Bitcoin is a durable digital asset. Its scarcity (capped supply) ensures long-term value preservation, whereas commodities like beef or apples are only scarce in my fridge. So, Mr Kganyago, this is why some are considering Bitcoin and not apples and beef.

Then there is the global adoption of Bitcoin that central bankers like him like to pretend doesn’t exist. Bitcoin is increasingly adopted by individuals, institutions, and even governments like El Salvador’s as a store of value and medium of exchange. This growing acceptance enhances its credibility compared to traditional or unconventional reserve assets like platinum, coal, beef and apples.

Here in Zimbabwe, many are using Bitcoin as a hedge against inflation. Most people hold foreign currencies (mostly the USD) to preserve value like governments do. Some have been holding Bitcoin which has tended to not only preserve value but also increase it.

Not saying its a fool-proof idea

I’m not saying governments holding crypto assets will work out 100% of the time. I’m saying it should be a consideration and some countries would do well to go down that route.

If Vene and his government took $100 million and held Bitcoin as a reserve just after he got into power in 2018, those reserves would be worth over $3 billion today. Instead we spent probably more than that to buy cars and give other perks to various people.

Can one really argue that Zimbabwe would not have been better off buying Bitcoin and going to sleep whilst the investment grew. It could have gone south but that’s a hypothetical, it did not.

That’s just me though. I’m sure many disagree with me here but I stand by what I said. Governments absolutely should consider crypto assets.