Now when talkinng about about reserves, the first thing that should pop up in our minds is "stability." That’s why governments keep gold, and foreign currencies like dollars, and other assets that don’t easily swing in price. Now if a nation decides to bring Bitcoin as a national reserve it would immediately face some set of problems. One of which is "volatility," coz Bitcoin’s price tends to swing from time to time. Now Imagine government want to pay for foodstuff imports or maybe repay international loans, only to find that Bitcoin has dropped in price... That kind of shock could further bring about further crisis instead of solving one.
Gold is not a stable asset, the dollar is also not a stable currency and other currencies are even much worse than the dollar. What is your point here?
We also have the issue of "Liquidity" Indeed Bitcoin is a liquid asset, but I don't think that it is deep enough to support a government moving billions in and out without shaking the market. This is because that kind of government sized transaction could shake the market. In addition, Bitcoin is greatly influenced by global sentiment and series of of events that goes beyond the control of just a particular nation, which makes Bitcoin less predictable when compared to traditional reserves.
Bitcoin's liquidity is big enough to easily handle small reserves in the single digit billions. There is no problem relating to liquidity.
So therefore, integrating Bitcoin into a Nation's official reserves may be very difficult coz the risks of doing so could outweigh the benefits if not properly handled. Whaat do we think about this?
Incorrect, it is very easy. The problem lies in corrupt and vested interests that don't want to do this.