The upcoming US “Gold Standard Restoration Act” and Bitcoin
- Three US congressmen have presented the US “Gold Standard Restoration Act,” restructuring of the USD peg system.
- The USD is supposed to be pegged to gold.
The Gold Standard Bill was introduced to revive the US dollar from its worst position in 80 years. Can It Help Bitcoin? Three congressmen, Andy Biggs, Alex Mooney and Paul Gosar, introduced a bill on April 4, 2023, which introduced “Golden Standard Restoration Act,” (HR 2435) which proposes that the USD be pegged to a fixed weight of gold.
The “Gold Standard Restoration Act” – Explained
The official document noted that the US dollar had lost its purchasing power by nearly 40% since 2000 and around 97% since the Federal Reserve Act was enacted in 1913. The bill aims to implement the convertibility of the dollar with a fixed amount of gold. This scenario would allow the US gold reserve and the US Treasury to back the Federal Reserve banks as guarantors.
If passed, the bill would give the Federal Reserve and the US Treasury 24 months to make public all gold holdings and transactions. The USD will officially be pegged to a fixed weight of gold at the current market price.
This monetary system places a standard economic unit on the same pedestal as a fixed amount of gold. It was actually the international monetary system from the 1870s to the 1920s until 1932, when the Nixon administration ended the practice.
With this bill, US lawmakers are trying to recreate the gold standard era. Moreover, if the results are good, many countries may adopt the mechanism.
The global economy is struggling amid geopolitical tensions and increasing climate resource constraints. Inflation has hit the roof in several countries since covid-19. The countries of the free tried to cross swords with the situation by printing more cash, thus reducing the USD’s purchasing power considerably.
Likely Impact on Bitcoin
The recent state of the US economy has prompted former President Donald Trump to state that the US fiat currency may lose its status as the world’s reserve currency. The statement attracted a lot of unwanted attention around the world. However, many believe this “Gold Standard Restoration Act” is a better system than today’s.
Bitcoin is expected to profit from this exchange. Primarily, the bill would prevent irresponsible spending and the government would not be able to print the money out of thin air.
If the bill goes further, economies would control prices, not bureaucrats, and American families, businesses, and the American economy would not have to rely solely on the mercy of the Federal Reserve. The much-needed stability would be in the system if the bill could deliver what is promised.
Microstrategy’s Michael Saylor said that while this system appears to be a solution for now, he argues that Bitcoin, with its technological advances and inherent features, could also serve as the world’s reserve currency.
For now, the gold standard is not positively affecting the Bitcoin price, but it certainly has the potential to drive the rally in a long-term scenario.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while graduating. A keen observer of detail, he shares his passion for writing alongside being a developer. His backend knowledge of blockchain helps him bring a unique perspective to his writing
