Trump orders up a crypto reserve. This is OK.

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The first half of March found the stock market averages going down, kind of rapidly, before an uncertain bounce. You’ve always been told a diversified portfolio will help you through such troubled times. Is that true — will it? Maybe, maybe not, depends.

Bonds went up, but not as much as stocks went down. Gold outperformed stocks without really going up itself for much of the stretch. But you could’ve done very well for a while if you’d accidentally typed the symbol TLSA when you were trying to buy TSLA.

Cryptocurrency wouldn’t have helped you one bit. It was down like stocks, even though the president signed an executive order declaring that the U.S. will create a “Strategic Bitcoin Reserve,” alongside a separate stockpile of others in the digital-asset family.

But that’s only a month of price action. If you’d bought 10 years ago and held, Bitcoin — the best-known cryptocurrency — would have outperformed most asset classes. It’s just a wee bit volatile, is all.

At this point I must pause and ask, readers: How many of you really know what cryptocurrency is?

Hearing no response within the realm of the typewritten word, I’ll guess that the answer is roughly 37.14% and that it may help if I offer a very simplified explanation:

(Ahem.) A cryptocurrency is created with computer code. It isn’t a physical item, though it sometimes appears to be so in marketing materials, collectibles and situations where newspaper editors need a way to illustrate an article. Transactions are recorded on a decentralized ledger called a blockchain, meaning amounts are visible to all participants, though identities are usually masked. There are hundreds of cryptocurrencies, but only a few matter. None have been delivered by stork, though some have arrived by dork.

If you think that sounds odd, I’m here to tell you that a lot of the things that have counted as money over the course of human history are quite odd. Some you might have preferred not to handle physically. And you’d be surprised by how much of what’s traded even today is based on the value proposition of “just because.” Gold, for instance, is shiny and yellowish. It has relatively limited industrial application, yet it’s been a store of value for millennia. The U.S. maintains a reserve. Some of the remainder is wrapped around people’s grungy fingers, sometimes for years without removal, though of course with pride in its beauty and the meaningfulness of its acquisition.

Even the U.S. dollar is backed not by gold but by the full faith and credit of the U.S. government. Possible translation: “Spend all you want. We’ll make more.” That happens to be trustworthy, most of the world thinks at the moment.

Most cryptocurrency is designed to stay in relatively short supply, which in theory will make its value go up over time. But that depends on whether people want it. So far, enough do — not necessarily because they find it helpful in their daily lives but because they hope eventually to sell it to someone else at a higher price than they paid for it. That’s called the “greater fool theory,” but it’s smart if it works.

When President Donald Trump signed his order, it was subtler than people expected. The bulk is to be Bitcoin the government already possesses, confiscated by various agencies in criminal proceedings. The order also says that agencies are supposed to explore ways to add to the reserve over time, but only if it doesn’t cost taxpayers anything. Another way to say that is “somehow.”

The order also calls for a separate “U.S. Digital Asset Stockpile” of other cryptos to be acquired only through forfeitures.

The reaction to the news from good-governance and free-market types alike has been roundly negative, which brings out the contrarian in me.

There are really three questions in play:

1) Is cryptocurrency a good thing in general?

If you answered “yes” or “maybe,” advance to question 2.

If you answered “no” or “not on your life,” go to No. 2 anyway, because crypto will exist either way, and whether that’s good is as yet unknowable.

2) Do we need a national cryptocurrency reserve?

If you answered “yes,” then sorry, the answer is “no.”

If you answered “no,” or if the answer is “no” regardless of your opinion, advance to question 3.

3) But what’s really not to like?

One complaint is that amassing the currencies could reward early adopters, who may be People You Wouldn’t Like. (As always, you need money to make money, but that’s true of all forms of investment. I know some pretty average folks who dabble in crypto.)

Another gripe is that crypto is a grift. (Not as long as anyone who can afford to buy and sell can readily do so in a structured market. Generally, founders of cryptocurrencies intend them for the long haul, though it’s a Wild West environment and most won’t last. However, there’s one type of crypto, known as memecoins, that is quite like a legal grift, created expressly so early adopters can turn a quick profit off hype. Think Trumpcoin and Melaniacoin. Those might one day be memorabilia at best.)

Less-reflexive concerns are that, unlike gold and its proven staying power, crypto has only a brief history, and that letting the government muck around in it only invites chicanery. (Such an effort does need to be kept small, but heaven help us if we can’t try new things while monitoring for potential abuses.)

The president is attempting to diversify the nation’s reserves by positioning a portion of them speculatively. As always, if you were going to take such a risk, you might prefer not to partner with the Bank of Trump. The news last week that the president’s relatively new family crypto business is launching a so-called stablecoin represents a further sinking of conflict-of-interest claws into the endeavor. But to me, the crypto reserve concept itself remains one of the more innocuous things Trump is doing.

Will it ever make the nation richer?

Maybe, maybe not, depends.