Episode Transcript
[00:00:00] Speaker A: In order for something to be used as ubiquitous money, the spender has to already have it and the recipient has to want to hold it.
Notably, people usually want to receive more of what they already have.
After all, if a potential recipient wanted to hold it, they likely would have already bought some.
So if a new type of ubiquitous money were to arise, the majority of people would likely first encounter it as an investment, acquire some because they view it as likely to appreciate in purchasing power, and then be willing to receive more of it as payment as well.
At that point, they don't need to be convinced to accept it as payment. They already like the asset. So whether they are buying more of it or people are giving it to them as a means of payment are nearly the same thing.
The best in Bitcoin made Audible I am Guy Swan, and this is Bitcoin Audible.
What is up, guys? Welcome back to Bitcoin Audible I am Guy Swan, the guy who has read more about bitcoin than anybody else. You know, and we are diving it. We have got a long one today. I almost broke this up into two parts, but I was getting through it a little bit quicker than I thought. I was like, all right, screw it, because I've got the Dahlias piece that we're going to be doing on the aggregate signatures. But someone pointed this out to me and I want to go ahead to get it out because I'm going to be really busy for like the next couple of days. So I just went ahead and smashed the whole thing out. So we have Lyn Alden's newest piece, the Rise of Bitcoin Stocks and Bonds.
And there is a ton of gold in this piece. Things that we've kind of covered in different respects, but then also things that I think she just does a really good job of clarifying or hitting, like, more concretely than, you know, than you can when you're coming at it from a million different directions, or it's just kind of coming up as a tangential related to, you know, some completely separate read or topic that we're discussing now. This show is brought to you by Based Getchroma Code. Blue light is literally killing you. You're going to die. You're going to. You're going to die from looking at that screen. You're looking at a screen right now. You're doomed. You're doomed. What you got to do right now is you got to get a red light. You actually got to get blue light blocking glasses. That's the first thing you got to get. Then you Got to get a red light and you got to put it right on your eyes. Actually don't do that. But for real, if you ever gone down this rabbit hole and actually thought very seriously and started controlling your light exposure during the day, it's gonna make a huge difference in your ability to recover in your energy levels and your mood. You need to be thinking about this and you can get a 10% discount from Chroma with code Bitcoinaudible. The Bitcoiners version of their website is right down in the show notes as well as my discount code. Next if you are following the Financial Freedom report by the HRF, January actually just integrated the Lightning Network into BTCPay server. I literally did not know this until today and then it was just like the last Financial Freedom that I found out that they have a big that ecash BTC pay server plugin. If you want to know about the tools for financial sovereignty, no matter where you are in the world, if you want to stay up on the politics and the news that is threatening it, that is the Financial Freedom Report. The HRF does an insane amount of work making it easy to digest and see. Get a big picture view of everything that's going on. Links and details right in the show notes. Then of course if you're a cypherpunk and you want to build something that's censorship resistant, what if you could use the BitTorrent network for your DNS? What if anybody could reach you no matter where it is that you put it on the web with just your key? If pub key isn't on your radar it needs to be. And they just launched their public beta for the the kind of social app just so you can kind of get a feel of what it would be like. And logging in with the pubkey ring, definitely recommend checking it out. Links and details are right down in the description of this show. Shout out to all of them for supporting this show. But it is time to get into our read with a hefty little guy's take to follow. This is going to be a great episode. I got really jazzed about this one and a shout out to whoever it was. I already forgot who tagged me but I and I'll say this again at the end but I just want to thank you guys for tagging me when you find a good read on nostr or or PubKey or Twitter because oftentimes those tags I find an article for the first time from those tags. So don't feel like you're bothering me when you do that if you have a read that you really would like to have an audio, that's what I'm here for, son. All right, no more time wasting. Let's get into today's read and it's titled the Rise of Bitcoin Stocks and Bonds by Lyn Alden during the past year or so, the bitcoin ecosystem has largely been led by the rise of corporate Bitcoin treasury strategies.
Although strategy pioneered the Trend Back in 2020, the follow on adoption by others was slow.
However, after yet another cycle of bear market and bull market activity, as well as a major 2023 FASPA update for how Bitcoin is accounted for on balance sheets, the years 2024 and 2025 have ushered in a new wave of companies adopting Bitcoin as a Treasury asset.
This article explores that trend and examines whether it's good or bad for the bitcoin ecosystem as a whole. It also touches on the topic of Bitcoin as a medium of exchange versus a store of value, which in my view is commonly misunderstood from an economic perspective.
Main why Bitcoin Stocks and Bonds?
Do corporations help or hurt Bitcoin's mission and the risks and opportunities in the corporate era?
Why Bitcoin Stocks and bonds?
Back in August 2024, when this trend was pretty nascent, I wrote an article called A New look at Corporate Treasury Strategy that explained the usefulness of Bitcoin as a corporate treasury asset. Back then, only a handful of companies were making use of it at scale, and since then there's been a wave of new and existing companies adopting the strategy. And the ones that were doing it at scale back then, such as Strategy and Metaplanet, are up huge in terms of price and market capitalization.
That article explained why corporations should consider implementing the strategy. But what about investors? Why has this become so popular with them?
From an investor perspective, why not just buy Bitcoin?
There are a couple of primary reasons.
Capital with a Mandate There are trillions of dollars of managed capital and some of that has strict mandates associated with it. For example, there are stock funds where the portfolio manager can only buy stocks, he or she cannot buy bonds, ETFs, commodities or other things. Just stocks. Similarly, there are bond funds where the portfolio manager can only buy bonds. And of course there are more specific mandates like managers that can only buy healthcare stocks or non investment grade bonds, for example.
Some of those managers are bullish on bitcoin. In many cases they own some themselves, but they can't express that view by sticking Bitcoin in a stock fund or a bond fund since it goes against their mandate.
However, if someone creates a stock that has Bitcoin on the balance sheet or a convertible bond for a stock with Bitcoin on the balance sheet that they can buy, the portfolio manager can now express their bullish Bitcoin view within their fund for themselves and their investors.
That's a previously untapped market that is increasingly being tapped in the United States, Japan, United Kingdom, South Korea and elsewhere. I'll use myself as a tangible micro example of how a Bitcoin treasury company was useful for this purpose. I've been running a real Money model portfolio for my free public newsletter since 2018.
It lets readers keep track of my positions transparently.
In early 2020, I strongly recommended Bitcoin as an investment in my research service and bought some myself. By extension, I wanted to add Bitcoin exposure to my newsletter portfolio, but the brokerage I used for the portfolio offered no access to Bitcoin related securities at the time. I couldn't even buy the grayscale Bitcoin trust for the model portfolio back then because it traded over the counter rather than on a major exchange.
Fortunately, Strategy known as MicroStrategy at the time added Bitcoin to its balance sheet in August 2020. That stock traded on the Nasdaq and my model portfolio brokerage could buy it. So with my various constraints for that particular portfolio, I was happy to buy MicroStrategy for the growth Stock section to express my bullish view on Bitcoin. The portfolio has been long MSTR ever since and it's been a great decision for nearly five years now.
A chart comparing the S&P 500 ETF trust, the Bitcoin price and the strategy total return percent change S&P 500 over that same five year period has a 99% return, the Bitcoin price has a 816% return and the strategy price has a 2,850% return.
The brokerage eventually added GBTC as a viable security and of course eventually added the major spot Bitcoin ETFs when they became available. And yet I've continued to hold onto MicroStrategy in that portfolio as well for the upcoming second reason described below. In short, there are many funds due to mandates that can only own stocks or bonds with bitcoin exposure, not ETFs or similar securities.
Bitcoin treasury corporations give them access.
This is in addition to rather than mainly competing with Bitcoin as a bearer asset that individuals can custody themselves.
Reason 2 corporations have ideal leverage the basic strategy for a corporation to adopt Bitcoin as a Treasury asset is to just hold some Bitcoin instead of cash equivalents.
However, the earliest movers on this concept tend to have very high conviction about the idea. As a result, the trend has been not just to buy Bitcoin but to buy Bitcoin with leverage. And it happens to be the case that publicly traded operating corporations have access to better types of leverage than hedge funds and most other types of capital.
Specifically, they have the ability to issue corporate bonds.
Hedge funds and certain other pools of capital typically use margin loans. They borrow money and use it to buy more assets, but they risk having a margin call if the value of the assets drops too low relative to the amount of money borrowed. A margin call can force the hedge fund to sell assets if they dip too much in price, even when they have a strong conviction that those assets will recover to new highs. Having to liquidate a good asset at its lows is is a catastrophe. In contrast, corporations can issue bonds often with multi year durations. If they hold Bitcoin and the price dips, they don't have to sell prematurely. This gives them a better ability to weather periods of volatility than entities that rely on margin loans. There are still bearish scenarios that could force corporations to liquidate, but those scenarios would involve a much longer bear market occurring, thus making them less likely.
This type of longer duration corporate leverage is also usually better in the long run than leveraged ETFs. Since leveraged ETFs don't use long term debt, their leverage resets daily and so volatility is often quite bad for them. Fidelity has a good article that breaks down the numbers with examples from that article. A useful chart shows what happens to a 2x leveraged ETF if the underlying asset alternates between plus 10% and minus 10% days.
Over time the leveraged product deteriorates relative to the index that it's leveraged to.
This is actually a pretty interesting table, but I'm not going to like read it out because it's kind of difficult to look at and see what's going on. But just to try to make sense of it is understand that 20% of 100 is more than 20% of 80 80. And so the same percentage loss from a high number is actually greater than the percent that same percentage gain from a low number. Which means that if you're leveraged 2x it shows a comparison of the market performance of plus 10% minus 10% on the Bitcoin price and then the 2x leverage of plus 20% and minus 20% on the ETF with just a constant back and forth following the bitcoin +10 +10 +10 +10 + 10 + 10 the -20% is always a bigger nominal number. So even though on this table bitcoin started at 100 and had the initial 10% increase to 110 while the ETF went from 100 to 120. After doing this bouncing back and forth 10 times, the ETF actually ends up being significantly underwater compared to just the price of Bitcoin. The link will be in the show notes if you want to look at that table just so you can kind of see it for yourself in practice, the 2x leveraged Bitcoin ETF BITU hasn't really outperformed Bitcoin since inception, despite Bitcoin having increased in price during that period.
You'd expect the 2x leveraged version to greatly outperform, but instead it mainly just added volatility without superior returns.
This chart goes back as far as BITU's inception and here we have another chart showing the strategy total return percent, the pro shares alter a Bitcoin ETF, the BitU total percent and the Bitcoin price and it shows that the Pro shares Bitcoin, Bitcoin ETF and Bitcoin essentially followed each other, except that the proshares Bitcoin ETF was actually more volatile. It just fell faster than Bitcoin and then rose faster than Bitcoin but has largely ended up in exactly the same place while MicroStrategy has outperformed both.
The same is true when you look at the long term histories of volatile equity sectors like the 2x leveraged versions of the financial sector or the energy sector. Over a choppy period they've greatly underperformed. She has a few charts here showing the same relationship with the energy and financial sector.
So daily leverage is pretty bad unless you're a short term trader.
Volatility hurts that type of leverage.
However, having longer duration debt attached to an asset doesn't generally lead to the same problem.
An appreciating asset with multi year duration debt attached to it is a powerful combination.
Therefore Bitcoin treasury companies are useful securities for high conviction Bitcoin bulls that want some reasonably safe leverage to juice the returns.
Not everyone should take on leverage, but those who do will naturally want to do it in the most optimal way. There are now all sorts of different Bitcoin treasury companies in terms of their risk profile, size, sector jurisdiction and so forth. It's a genuine market demand that is now being met over time.
Similarly, some of the securities offered by these corporations, such as the convertible debt or the preferred, can offer Bitcoin price exposure with less volatility.
While some investors may want that extra volatility, others may want less, and the range of available securities provide investors with the specific type of exposure they want.
Do corporations help or hurt Bitcoin's mission?
Now that we know why they exist and the niche they fill for investors, the next question to ask Are corporations good for the Bitcoin network as a whole?
Does their mere existence damage the value of Bitcoin as freedom money?
To have a view on whether corporations are good or bad for Bitcoin, one must have some sort of pathway in mind for how a decentralized money would theoretically catch on. If it were to do so, what steps would have to happen, and in roughly what order.
So this section will consist of two steps. The first will be an economic analysis of what it takes for a new form of money to catch on. That is an analysis of what a path towards success would even look like.
The second will be an analysis of whether corporations add or detract from that path.
Step 1 what would success look like?
What would it seem like if it did seem like a global, digital sound, open source, programmable money was monetizing from absolute zero?
Ludwig Wittgenstein once asked a friend, tell me, why do people say it is more natural to think that the sun rotates around the earth than that the Earth is rotating? The friend said, well, obviously because it just seems like the sun is going around the Earth. Wittgenstein replied, well, what would it seem like if it did seem like the Earth were rotating?
As Bitcoin begins its quadrennial bull run, we must brace ourselves for the wider world's sudden and ill informed interest.
A great many newcomers will arrive with an open mind, as we all did once. But so too will many representatives of the incumbents to this disruption emerge from the woodwork to insist that what we can see with our very own eyes isn't actually happening. Because according to their theory, it can't.
Bitcoin can't be a store of value because it has no intrinsic value.
It can be a unit of account because it is too volatile. It can't be a medium of exchange because it is not widely used to price goods and services.
These are the three properties of money. Therefore, Bitcoin cannot be money. But Bitcoin has no other basis for being valued. Therefore it is valueless. QED I call this argument semantics, therefore reality. What could possibly falsify this? It is at root a claim about the material world, about what will, or in this case won't happen in real life. And yet it looks rather like it relies entirely on the meanings of words. In discussing dollarization in Ecuador, the instructive process of an official money being spontaneously replaced by a simpler, superior money. Larry White says of those who deny by definition that such a thing can even happen, that they are only looking at the blackboard and not what is happening outside the window. This is a curious approach to understanding novel phenomena that in general, I would not recommend. Reality doesn't care how you describe it.
End quote Alan Farrington 2020 Wittgenstein's Money Bitcoin was launched in early 2009. Throughout 2009 and 2010, some enthusiasts mined it, collected it, tested it, speculated with it, or examined if they could contribute to it or improve it in some way.
They liked the idea of it. In 2010, Satoshi Nakamoto himself described on the Bitcointalk forum how the network might initially bootstrap some tiny initial value.
As a thought experiment, imagine there was a base metal as scarce as gold, but with the following boring gray in color not a good conductor of electricity, not particularly strong, but not ductile or easily malleable either, not useful for any practical or ornamental purpose and one special magical property can be transported over a communications channel. If it somehow acquired any value at all, for whatever reason, then anyone wanting to transfer wealth over a long distance could buy some, transmit it, and have the recipient sell it.
Satoshi Nakamoto, 2010 re Bitcoin does not violate Mises Regression theorem.
A year later, in 2011, Wences Caceres famously used it for that exact purpose. This is an Excerpt from episode 56 of Masters of Scale.
[00:21:16] Speaker B: We drive a bus from Buenos Aires around the world a week, a year.
Have a lot of fun. Just the guys get together and drink, mate and make many, many miles.
[00:21:32] Speaker C: That's Wences Cazares, serial startup founder from Argentina, and he's taking us with him on a yearly journey with a group of lifelong friends.
I want you to imagine this beloved bus.
It looks like the product of a school bus that got freaky with an RV and then spent its retirement in the apocalyptic world of Mad Max.
In the run up to one of their epic trips, Wences got word that the bus had broken down.
The repairs weren't difficult, but paying for them was, especially as Wences was living in California at the time, while the bus was in Argentina, we had to.
[00:22:19] Speaker B: Send some money for fixing some things in the bus. And Argentina had shut down Western Union, PayPal, everything. You could send money to the central bank, but it was cumbersome, expensive.
[00:22:32] Speaker C: It looked like their next trip would be stalled until the Argentinian financial system was sorted out. But that could be months, even years.
Then a friend made a suggestion.
[00:22:45] Speaker B: Have you looked into Bitcoin?
[00:22:48] Speaker C: Bitcoin?
This was 2011, just two years after, after the cyber currency had launched. And Wences was caught off guard.
[00:23:00] Speaker B: When I'm supposed to be a tech guy, I'm supposed to be a finance guy, and I had not heard about these things, so what is that?
And he says, well, it's a new currency that you can send money anywhere without third parties.
I was super skeptical and cynical.
[00:23:16] Speaker C: But that bus wasn't fixing itself and neither was the Argentinian financial system anytime soon.
So Wences decided to give Bitcoin a go.
It was the start of a mysterious journey.
[00:23:35] Speaker B: I found on Craigslist. An older man who was willing to sell me $2,000 worth of Bitcoin told me to meet at a cafe in Palo Alto.
A guy looked like Gandalf, and I gave him $2,000 in cash.
[00:23:49] Speaker C: Wences didn't exactly trust what Gandalf did next.
[00:23:54] Speaker B: He made me download some app and read some QR code and he sent me supposedly $2,000 worth of Bitcoin. I walked back to the office convinced I got scammed.
And then I sent my friend 200. That was my share of what I had to send. By the end of the day, my friend said, hey, once I got the bitcoin, I sold them for pesos.
We're good.
I'm like, what did just happen?
[00:24:17] Speaker C: Wences view of bitcoin was flipped and.
[00:24:20] Speaker B: I went in a rabbit hole. Like, lasted six months where I was first super cynical. But in six months I said, I want to dedicate the rest of my career to help this succeed. Because I think a world in which bitcoin succeeds for billions of people is more important than one in which the Internet succeeds.
[00:24:36] Speaker A: Soon after that, Casares convinced a lot of big investors to buy Bitcoin. His Wikipedia page currently describes it as widely known as patient zero. Quartz reported that Cazarez was the entrepreneur to convince Bill Gates, Reid Hoffman, Chamath Polihapitiya, Bill Miller, Mike Novogratz, Pete Brigger, and other tech veterans in Silicon Valley and Wall street to invest in bitcoin.
There are a lot more than that. I personally know Several people who were active in institutional finance that bought bitcoin early directly in response to Kazaris explaining the value of it to them were from talks he gave on the subject.
After some initial success, the challenge for bitcoin from there was that the network spawned a million competitors. Countless altcoins arose with similar capabilities, mainly that you could buy it, transfer it, and the recipient could sell it. And StableCoins introduced in 2014 let you do that with dollar collateralized tokens rather than free floating units, which helped strip out the volatility. In fact, the rise of competitors was the biggest reason why I didn't buy bitcoin at the time in the early 2010s. It wasn't that I was against the concept, quite the contrary, but I viewed the industry as 1 filled with speculative froth and 2 able to be copied into oblivion.
In other words, there might be a finite supply of bitcoin, but the idea is infinite.
But then in the later 2010s I noticed something Bitcoin's network effect was succeeding as portable capital.
It was breaking through that ceiling much like a communication protocol. Whether a spoken language, a written script, or a digital standard. Money as a concept greatly benefits from network effects. The more people that use it, the better it is for others to use as well, which is self reinforcing. And that's where wanting to hold it really matters.
That's where the network effect has to grow. To reach past this niche and crowded stage, we can categorize two types of money for this context.
The first type of money is situational money, which refers to money that can solve a specific problem that but that otherwise isn't of wide interest.
An asset that you can buy with your local money, transfer across points of high friction, capital controls payment, deplatforming, etc. And have the recipient sell or exchange it for their local money is a situational money. It has value, but being successful on that front does not necessarily lead to wider success.
The second type of money is ubiquitous money, which refers to money that within a given region or industry is is widely accepted as a matter of course and importantly, the recipient doesn't sell or exchange it. As soon as they get it, they hold it as a cash balance and then potentially re spend it elsewhere.
In order for something to be used as ubiquitous money, the spender has to already have it and the recipient has to want to hold it.
Notably, people usually want to receive more of what they already have.
After all, if a potential recipient wanted to hold it, they likely would have already bought Some.
So if a new type of ubiquitous money were to arise, the majority of people would likely first encounter it as an investment, acquire some because they view it as likely to appreciate in purchasing power and then be willing to receive more of it as payment as well. At that point, they don't need to be convinced to accept it as payment. They already like the asset. So whether they are buying more of it or people are directly giving it to them as a means of payment are nearly the same thing. Bitcoin's simple and secure design, proof of work, fixed supply, limited script complexity, modest node requirements, and a founder that disappeared, leaving decentralization in his wake and early mover advantage. Bootstrapping a network effect gave it the best liquidity and perception of soundness, and thus many people began wanting to buy it and hold it. And so far that's where Bitcoin has had a ton of success as a sound and portable store of value that gives the user the option to spend it or exchange it. A sound, liquid, fungible portable store of value sits in the intermediate zone between situational money and ubiquitous money.
Unlike situational money, it's increasingly perceived by people as a good thing to hold for the longer run, rather than just sell or exchange immediately if you receive some. But unlike ubiquitous money in most areas, it is not yet widely accepted because the number of people who have taken time to analyze it are still a small minority. It's a necessary step to bridge between those two types, and I would argue it's a very long process to go through.
The reason it takes a long time to go through that stage is due to volatility and due to the sheer size of the existing network effect. It is up against that people have their expenses and liabilities denominated in. If a new monetary network with its own unit that is not pegged to an existing currency as a credit rail on top of it, but rather a fully parallel system to central banks, is going to bootstrap from zero to massive. It requires upward volatility, and any appreciating asset with upward volatility will attract speculators and leverage, which inevitably leads to periods of downward volatility. In other words, it looks like this.
Insert the logarithmic chart of Bitcoin's entire price history during its adoption phase, where it's going from worth nothing to worth the equivalent of trillions of dollars. It makes a rather flawed form of near term money. If you receive some Bitcoin and want to use it to pay your rent at the end of the month and you're on a pretty tight budget that is not swimming in excess cash.
Neither you nor your landlord can deal with it potentially going down by 20% within the span of a month. The landlord has expenses in the existing network effect of fiat currency. She needs to reliably know what her value in rent from the tenant will be. And you as a renter need to make sure that you can pay your rent at the end of the month with money that won't surprise you with a rapid loss of value.
The same is true for other costs of living in general, and so bitcoin is treated mainly as an investment during this era. Hardcore enthusiasts will be more likely to want to spend it. People with specific payment problems, capital controls, payment deplatforming and so forth are more likely to want to spend it as well, although they increasingly have similarly liquid options like stablecoins for that purpose. The fact that stablecoins are centralized doesn't matter much if you're primarily using them for a few days, weeks or months like a checking account.
There are some very well meaning bitcoin proponents trying to convince bitcoin holders to spend it more. I don't particularly view that as a sustainable practice. Bitcoin is not going to catch on as a charity in order for spending it to catch on persistently at scale that is not just billions of dollar equivalents in annual global medium of exchange volume, but trillions. It has to solve problems for spenders and or recipients that other solutions are not doing. And at this stage of adoption that's not necessarily the case, especially with capital gains taxes applicable to every single transaction and with options like stablecoins for near term spending needs where volatility needs to be low.
The best advice I can give to these proponents is that while educating people is good, keep it up.
It is important to manage expectations along the way and understand the economic path dependencies at play. This is where the topic of optionality is important and it's a topic I observe to be widely misunderstood or underappreciated.
Owning a sound, liquid, fungible, portable store of value that is going through its adoption phase gives the owner some perks or options that other assets do not.
Mainly, they can bring their store of value wherever they want in the world without relying on central counterparties and credit. It also allows them to make cross border payments, including to deplatformed recipients through substantial friction. Even if they are staying put where they are.
They might not be able to ubiquitously pay with it, but if need be they can find ways to convert it to local currency in most environments that they find themselves in, and in some cases can indeed pay with it directly. When analyzed through this lens, Bitcoin is incredibly successful.
To see why, first we have to understand how shockingly unsalable most monies are.
Imagine you are going to go to a random country where what money or other portable liquid fungible bearer asset can you bring with you to ensure that you have plenty of buying power without relying on a global chain of credit? In other words, even if all your credit cards shut off, how can you ensure that you could, with some annoyance and friction, still be able to transact?
The best answer currently is generally physical US Dollars. If you bring US dollars with you, then although you may have trouble directly spending them with many types of merchants, it's pretty easy to find someone willing to convert dollars to local currency at a reasonable rate and with sufficient liquidity.
The second, third and fourth best answers are probably gold and silver coins and euros. Once again, it's really not that hard to find brokers in most countries willing to take gold and silver or euros and give you fair local value in return.
After that, it starts to fall off pretty rapidly. Chinese Yuan, Japanese yen, British pounds and some others are in the top 10.
This is where there tends to be more frictions for conversion.
I would put bitcoin in the top 10 at this point, somewhere in the 5 to 10 range, particularly if the place you're going to is any sort of urban center. Most cities will have plenty of conversion options that you can seek out if need be.
That's remarkable considering that it's only 16 years old.
Below that is the long tail of 160 other fiat currencies. I often use the examples of Egyptian pounds and Norwegian kroner since I go to Egypt every year and Norway every couple of years and tend to have a bit of their paper money around. They're terrible money outside of their own countries, as are the vast majority of currencies.
Tweet from Len Alden it's harder for me to spend Egyptian pounds in New Jersey than it is to spend bitcoin. Same for the currencies of 100 other countries. It's arguably already one of the world's top 10 moneys in terms of international salability. Somewhere in the 5 to 10 range, most likely.
If you're not spending bitcoin, are you using it as money?
Yes.
Money gives you liquid optionality. Holding it is using it. Bitcoin is not ubiquitous money at this time, and so instead it serves those earlier parts of the path as money for enthusiasts, situational money and or portable capital.
When will its usage take off as a medium of exchange?
Likely not until it's an order of magnitude larger and less volatile.
Only a small percentage of people understand it and hold it as a store of value. It's a tiny percentage of global assets in the ballpark of 0.2%. It can rise 100% plus in a year or fall by 50% or more during that same time frame. And since a ubiquitous money is one that you're happy to hold after you receive it rather than sell or exchange it quickly like a situational money store of value, usage at scale tends to precede medium of exchange. Usage at scale the medium of exchange market is very competitive. Stablecoins that tie into existing fiat currencies are the best positioned for that at scale over the next several years.
Where stablecoins fall short is when someone wants to hold them for more than a few months. They get debased and can be censored or confiscated by the issuer or by an authority that has influence over the issuer. Whereas no central authority has that power over Bitcoin.
Isn't Bitcoin too volatile to be money?
Yes and no. Volatility is not an inherent part of Bitcoin, like would be the case if its various qualities were erratic and frequently changing.
Its qualities are quite persistent and sound. The volatility aspect is something that the rest of the world gives it as they explore it and adopt it.
Since the network is bootstrapping from zero into a large global ocean of capital, it needs upward volatility to grow. And with sustained upward volatility comes periods of euphoria and leverage followed by painful pullbacks and deleveraging events. That's why in this stage it's often treated as a long term investment.
Unlike other investment, it also gives the investor monetary abilities via liquidity, portability and divisibility. That is, it is a monetary type of asset. If it were to become far larger and more widely held, its volatility would diminish both to the upside and the downside.
How can Bitcoin be its own asset if it's priced in dollars? Isn't it just a dollar derivative?
Bitcoin is an asset that can be priced in anything. It can be priced in any currency or in goods and services.
There's nothing in the code itself that refers to dollars. It is often priced in other currencies, on foreign exchanges and is traded peer to peer in other currencies. Dollars are the most liquid money in the world Today, smaller and less liquid assets are almost always priced in larger and more liquid assets rather than the other way around. The larger and more liquid monetary network is what people use as their unit of account and have most of their liabilities denominated in so that is their reference point.
A long time ago, dollars were defined by a certain amount of gold. Eventually the dollar network became larger and more ubiquitous than gold and the situation flipped. Now gold is primarily priced in dollars in the long arc of time. Bitcoin could flip the dollar in this way, but it's not anywhere near that level yet. It doesn't matter what bitcoin is priced in along the way. It's a bearer asset that can be priced in whatever the largest and most liquid money is, and if it one day becomes the largest and most liquid money, then other things would routinely be priced in it as a matter of course.
While people are free to mentally price things in whatever they want, it's unreasonable to expect most people to price things in Bitcoin anytime soon. And it doesn't make sense for critics to describe this as a flaw of Bitcoin. There's no other path that a new decentralized monetary asset can bootstrap through than to be routinely priced in the existing currencies while it is small and growing.
Step 2 How corporations fit in Back in 2014, Pierre Richard wrote a prescient article called speculative attack.
A speculative attack in FX markets refers to borrowing a weak currency to buy more of a strong currency or other superior assets. It's one of the reasons why central banks raise rates to strengthen their currencies.
It helps disincentivize them from being borrowed too rapidly relative to other currencies. If that proves insufficient, some countries will turn to outright capital controls to prevent entities from arbitraging their mismanaged currency. And those capital controls themselves come at economic costs as who wants to do business in a country with tightening capital controls if there are better options elsewhere?
Wikipedia provides a useful definition.
In economics, a speculative attack is a precipitous selling of untrustworthy assets by previously inactive speculators and the corresponding acquisition of some valuable assets, currencies or Gold. Wikipedia, July 2025 Speculative attack well, in Richard's article, he described that eventually, due to Bitcoin's appreciating nature, various entities will end up borrowing currencies to buy more bitcoin.
Bitcoin was a bit over $600 at the time, with a market capitalization of a bit over 8 billion at first. Borrowing to buy Bitcoin was just around the margins. But now that the bitcoin network is highly liquid and has a 2 trillion dollar market capitalization, it has entered mainstream capital markets at scale with billions of dollars of corporate bonds outstanding for the specific purpose of buying more bitcoin here in the present, 11 years later, where it's routinely happening. Is this good or bad for bitcoin as a network?
From what I have seen, there are two main types of critics that would say it is not good for the bitcoin network. The first type of critic are themselves a subset of bitcoin users. Many of them are in the cypherpunk camp or the self sovereignty camp. To hand over bitcoin to custodians seems dangerous or at least against the ethos of the network from many of their perspectives. A term I've seen used by some of them to refer to corporate Bitcoin treasury proponents is suit coiners, which I think is a great term. This bitcoin camp as a whole would much rather people hold their own private keys. Some of them go further and say that rehypothecation of major custodians could suppress the price or otherwise impair Bitcoin's ability to succeed as freedom money. While I like the values of this camp and am basically in it myself, some of them seem to hold utopian dreams where everyone becomes as interested in fully controlling their own money as they are.
The second type of critic are generally people that have stated a negative view of bitcoin in the past. They have questioned Bitcoin's ability to succeed over many years as it keeps rising to new heights as the best performing asset. Around many years and multiple cycles later, some of them have instead changed their view to something like Bitcoin may be going up in price, but it has been captured. I take this camp less seriously than the first camp and view it mostly as cope. It's similar to perma bears in equity markets that when their bearish thesis hasn't played out after a decade shift to saying something like the market is only up because the Fed printed so much money. My response to that would be well yeah, that's why you shouldn't have been bearish.
What I would say to both of those camps is to point out that just because some large pools of capital choose to hold bitcoin it does not mean that free range bitcoin is in any way impaired. It can be self custodied and sent peer to peer just like it always has been. And if anything, as many other types of entities hold it. It makes the network larger and less volatile, which improves its usefulness as peer to peer money as well.
It also potentially provides political cover to help normalize the asset relative to policymakers that want to cause it harm large pools of capital. Buying bitcoin was always going to happen if it reached this scale.
Tweet from Lyn Alden who says it's the cypherpunks and libertarians doing it. Several of those remain pseudonymous as they build privacy tools and such. Bitcoin with millions of users and has people of all sorts of interests and talents. Some have political and lobbying interests or talents to make sure politicians are protecting users from some of the most draconian things governments could do. Others ignore it and do their own work. That's the benefit of having a large network.
One of the COPE tendencies I've seen among bitcoin bears not putting you in this camp per se is that they say the state wouldn't allow it would shut it down as a justification for not being bullish years ago. Then as the network grew massively and a subset of politicians liked it either because they have anti big state views themselves or because money speaks, those bears shift to well, now it's lost its way. Now it is captured as a way to continue to be bearish on the idea even as the price soars and the network strengthens. Part of being bullish years ago was understanding this type of game theory. Bitcoin is a big tent. It's free range and cypherpunk and global. People can build on it permissionlessly and anonymously. Corps and governments can buy it and other people can lobby for legal protection, etc. As it reaches this scale, part of the adoption is having corporations and governments get in on the game. It seeps into places like a trojan horse. That was always the path once it gets big. Hal Finney was talking about bitcoin banks in 2010 for example. The best aspect of the network is that it brings all sorts of people to it and people can plug into the stack at whatever point works for them, whether it's a cypherpunk making code for Chomian mints or a suit stashing it into an etf, or a politician helping provide legal cover for the constituents so that they're not singled out and have to move. Bitcoin is for anyone is literal in tweet.
One of the skills that perma bears have regardless of the asset in question is to pivot the narrative whenever needed so that regardless of what's happening, they're right, and the asset is unsuccessful. For bitcoin, it means creating a narrative such that there is no conceivable path to success or any reasonable definition of what success looks like. If it's stuck at the niche retail level, then its price appreciation and ability to positively impact the world is impaired. See, it is failing. If it's adopted by large entities and governments and continues to grow massively, well then it's captured and lost its way. But if it's going to become large, widely accepted, and change the world in some way, how does that path not go through corporations and governments at some point? I'm somehow reminded of that scene from the Notebook where gosling keeps asking McAdams what she wants. The bulls are Gosling and the perma bears are McAdams. What do you want?
What do you want? It's not that simple. What do you want?
Bitcoin has gone through a few major eras in terms of who is moving the price and accumulating most rapidly. In era one people mined it on their computers where they sent money to a trading card exchange in Japan to buy some and other friction filled early adopter types of things.
This was the super early user era.
In era two, particularly after Mount Gox blew up, it became easier to buy and use. Onshore exchanges let people in many countries buy Bitcoin much more easily than before. The first hardware wallets came out in 2014 which made it safer to self custody bitcoin. This was the retail buyer era where frictions were still present but were diminishing. In era three it became large and liquid enough and with a sufficiently long track record to attract more institutions. Entities built institutional grade custodians for it. Publicly traded corporations started buying some and various ETFs and other financial products came out to allow various funds and managed pools of capital to get exposure. Some nation states like the Kingdom of Bhutan, El Salvador and the UAE mined it or bought it and hold it at a sovereign level.
Others like the US have chosen to hold their confiscated coins rather than keep selling them back to the market.
Fortunately, and this is important, each era still includes the prior ones. Even though corporations are doing most of the net buying currently, retail investors can still buy as much as they want as well. It has never been easier to buy Bitcoin and take self custody of it. There are plenty of resources explaining how to do it. Multiple inexpensive and robust wallet solutions and on chain transaction fees are currently low.
I see people say things like I thought bitcoin was supposed to be for people for peer to peer cash. Now it's all big corporations and it is for people. Anyone with Internet access can buy it, hold it, or send it. None of that is negated by large entities which are also run by people buying it as well.
That is why I'm in agreement with both the cypherpunks and the suitcoiners. I want Bitcoin to be useful as freedom money, and that's in large part why I'm a general partner at Ego Death Capital, where we provide capital to startup companies that build solutions for the Bitcoin network and its users. That's also why I support the Human Rights foundation and other nonprofits as they fund developers and education providers that focus on providing financial tools to people in authoritarian or inflationary environments.
And yet it's also rational that large pools of capital, whether it be corporations, investment funds, or even sovereign entities, are going to buy Bitcoin once they figure it out, it's large and liquid enough to be on their radar. Now, it's important to remember that the majority of people are not active investors. They don't buy individual stocks, and they don't deeply analyze the difference between Bitcoin and other cryptocurrencies. If they do speculate on something as a trader, they're likely to buy it at the top and get shaken out at the bottom. Investments are often assigned to them in passive ways rather than chosen by them for themselves. In older days it was typically a pension. Today it's often automatic 401 employer matching with a mix of index funds or a financial advisor picking investments for them.
In my view, it's unreasonable to expect billions of people to flock to Bitcoin as an active decision.
It is, however, reasonable to work hard to make it so that anyone can access Bitcoin if they choose to, by making the barriers to entry as low and frictionless as possible via technological solutions and educational resources. Thanks to the hard work of many, frictions have never been lower than they are right now.
The best phrasing I've seen for this Bitcoin is for anyone, not everyone.
What this means in practice is that everyone should be led to water on the topic, but only a subset will choose to drink.
Risks and Opportunities in the Corporate Era at the surface level, the question of whether corporations are good or bad for Bitcoin is almost irrelevant because they're inevitable for Bitcoin at this scale. Once the asset became a trillion dollar liquid network, it became unreasonable to expect that it would be something only for individuals and not for corporations or governments. As an open and permissionless network.
Anyone with access to the Internet can buy it. So if Bitcoin can't succeed, if corporations or governments buy it, then it was never going to succeed. That would be like when aliens invade Earth in a fictional story and end up losing because they are vulnerable to water signs or can't deal with basic germs. War of the Worlds it was just never meant to be.
If I didn't think the bitcoin network was robust enough in its technical design and economic incentives to handle large purchases by institutions, then I wouldn't have bought any to begin with. In fact, that's part of why I bought it in the first place. I spoke about this in my 2023 fireside talk at Pacific Bitcoin when we move past the surface level and accept the inevitability of large entities in this space, there are still plenty of valid questions to consider.
Are there certain risks to the network if too much of it gets bought up by corporations?
And if so, can those be mitigated in some way?
Risk Concentration and Control the primary risk to consider is that if Bitcoin becomes significantly held by large pools of capital, it could lose some of its decentralized traits. While not a dismissible concern, I view that risk as overblown because the network has powerful anti fragile traits. That's why it has gotten so far 16 years now while remaining open and permissionless.
Bitcoin is a proof of work network, not a proof of stake network. In other words, holding large amounts of Bitcoin does not give the owner the ability to censor transactions.
Bitcoin miners can censor transactions, but only if the vast majority of them adhere to doing so. That is, in addition to censoring transactions themselves, the majority of them only build on prior blocks that censor transactions, and if they do censor transactions, those censored transactions can offer high fees to attract miners to switch mining pools or jurisdictions to uncensored the network and earn those fees.
Additionally, because Bitcoin mining is so low margin and competitive, they have to go to wherever cheap energy exists in its various forms, which generally spreads out jurisdictional concentration beyond a certain point.
It's a combination of simple but robust technology and economic incentives.
Entities run nodes which are the software clients that run the bitcoin network.
Nobody can force users to run a certain type of node software or update. To change the bitcoin network in such a way to benefit corporations or governments at the expense of individuals is not outright impossible, but it's an incredible uphill battle against widely distributed software.
There have always been large pockets of bitcoin ownership. In the early years, Mt. Gox was estimated to have held around 850,000 coins, back when there were around half as many bitcoin in existence as there are now. Satoshi is estimated to hold over a million coins that he mined alongside everyone else, which due to having held through so many booms and busts for 16 years now, are widely assumed to have had their private keys burned or lost by this point.
Still, it's always best to monitor potential risks. Along with Rin of Electric Capital and Steve Lee of Block Inc.
I co authored a paper that analyzed Bitcoin consensus and associated risks back in 2024 and we open sourced it to the world as a living document that can update over time to reflect changing conditions and other opinions. You can check it out here.
Critics of large institutional and sovereign owners of Bitcoin can and should call out bad practices wherever they exist.
People can and should support or donate to legal causes or software development for areas of interest to them that benefit smaller users. Just like any public good, it's reliant on millions of individual actors working on the aspects that matter to them.
Opportunity Improving the Top of Funnel probably the biggest opportunity for the bitcoin network with the proliferation of spot ETFs and leveraged Bitcoin treasury companies is that it changes the funnel for how retail users come across bitcoin. Until recently, most people went to cryptocurrency exchanges to buy bitcoin where they'd get hammered with casino like marketing to buy altcoins instead.
The vast majority of altcoins only have one big pump cycle before they start to roll over and stagnate relative to Bitcoin forever and late retail buyers end up being the bag holders and yet cycle after cycle everyone got marketed with the next bitcoin which drew them in.
Read my Digital Alchemy article for more on that topic.
Now spot Bitcoin ETFs and Bitcoin treasury companies are a more likely first touch point for people when it comes to Bitcoin than casino like cryptocurrency exchanges, they'll have passive exposure to it via index funds. Since some bitcoin corporations are now in the top indices, they or their advisor might consider a position in a spot Bitcoin ETF and so forth. A subset of them might decide to research further and consider acquiring some into their own self custody and make full use of the asset.
Another use of altcoins historically was that people wanted bigger short term gains than what bitcoin could provide due to the bitcoin network's larger overall size. Bitcoin is already one of the best performing assets ever, but some people want even more volatility.
Leveraged bitcoin corporations provide a more volatile type of bitcoin exposure for those that want that. And as I mentioned before, the type of leverage that bitcoin corporations have is is generally superior to the type of leverage that individuals and hedge funds have access to. Some leveraged bitcoin treasury corporations will be run more conservatively or aggressively than others. People can even buy options on some of the most liquid Bitcoin treasury corporations if they really want to speculate and trade.
So the case for altcoins has arguably never been weaker, and given their horrible track record in aggregate, I think that's healthy. The altcoin industry has seemingly run out of narratives for now on how to substantially pump their networks. It makes far more sense to hold Bitcoin directly and or to invest or speculate in companies that combine Bitcoin with optimal types of leverage than it does to buy altcoins.
Summary Points to summarize this long form article, the way Bitcoin's monetization has unfolded so far is roughly like this, and none of it should be surprising.
First, Bitcoin started out as a collectible for enthusiasts and or people with big dreams for change, a neat new technological possibility to play with that might one day be worth something or provide some value to people with varying levels of conviction.
Second, Bitcoin started to become useful for situational medium of exchange purposes, even by pragmatists that were otherwise not focusing on it. Need to send money to a country with capital controls like Ksaras needed to Bitcoin could succeed where other payment rails failed. Need to receive payments or donations. Despite being the platform from the major online payment portals like WikiLeaks, Bitcoin could be a great workaround.
This established some degree of novel utility.
Third, various frictions like high volatility, countless competitors, and capital gains taxes acted as headwinds against Bitcoin's continued growth as a common medium of exchange. It still is growing for that use, but remains relatively small in that sense relative to what some people thought it might be like. After 16 years, if you spend Bitcoin with a merchant that does not hold bitcoin and they auto convert it to a fiat currency, then the benefits of Bitcoin are not being fully realized and there's a ceiling on how useful it will be for that purpose.
Every point of currency exchange is a friction and the Network effects are weak for a receive, immediately sell, situational type of asset or network, which results in a crowded field of competition at this stage.
Fourth, Bitcoin became recognized more broadly as the ideal form of portable appreciating capital.
Unlike other cryptocurrencies, it reached a level of decentralization, security, simplicity, scarcity and scale that made it attractive to hold for years with confidence. This is where network effects are more powerful. While it's not always easy to buy coffee with it, it has started to reach into the top 10 bearer assets that you could bring with you internationally in exchange for local value, surpassing the vast majority of the 165 fiat currencies in that regard.
Fifth, the Bitcoin network reached sufficient liquidity, scale and longevity to attract the positive interest of corporations and governments. There are huge pools of managed capital that are interested in the asset, and corporations and funds give them indirect access to it. Meanwhile, Bitcoin continues to exist as an open and permissionless network, which means individuals continue to use it and, and build upon it as well.
We can then look at two more levels which are potentially ahead if the network keeps expanding.
Sixth, as the Bitcoin network becomes larger, more liquid and less volatile, the more interesting it can become for large sovereign entities. What starts out as a small sovereign fund investment can eventually find its way into currency reserves or as a method of international settlement at scale, countries keep trying to build closed sourced alternative payment methods with little adoption or agreement for them, while this open source settlement network, with a finite supply of its own independent units, is gradually bootstrapping itself across the world.
Seventh, the larger, more liquid and less volatile it becomes, the more attractive it can become for shorter term holding periods as well, and thus can potentially assert itself as, as a more ubiquitous medium of exchange. This should only be expected when tons of people already hold it and are already comfortable with it, and when its purchasing power can be relied upon in the short term, in addition to the long term.
Overall, I continue to view Bitcoin as being in a good place technically and economically, and its path of adoption is expanding as expected.
All right, and that wraps it up. And there is a ton to unpack in this because there's so much, oh, there's so many great little nuggets in this one. And it's things that like we've kind of talked about in kind of big picture, kind of spaced out. But I just love. She takes this entire piece and just kind of lays out the entire picture and how stocks and bonds and, you know, corporate treasury companies and all of These things fit into the kind of path dependency of Bitcoin's history. And I love this, the summary at the end. You know, usually it's just kind of like a set of bullet points or something, but I just love the, the flow of just like listen, this is what has happened with bitcoin and this is what you can expect to extend from that.
Honestly, I think to really do the whole topic itself justice, I should have a full on guys take episode. But I can't let this go. I can't let this episode go without doing a kind of a brief guy's take as to what we would cover and referencing how Lyn poses kind of the whole argument in this piece because I think she just does a great job and there's a lot of different little I saved a ton of little clips in sections here.
So first thing, just thinking about the corporate bonds, the ETFs and all of this stuff is I think people forget just how much capital is stuck, like just stuck somewhere where it has to have a very strict type of purchase or type of allocation and in a very strict environment and under explicit only these types of companies, only these types of entities or instruments are even allowed to be accessed through this particular avenue. And importantly, I think people forget just how much capital is in those environments. In fact, it's probably safe to say that most capital is locked up in these kinds of markets. This is where everyone's pension is. This is where everyone's 401k is. This is where mortgages are traded in large tranches of mortgage backed securities.
More investment capital exists in the financial markets under strict conditions and limitations into how and where it can be used and moved than exist buried in people's closets, underneath their mattresses, or just directly in somebody's cash bank account.
Now I actually think that is likely to shift toward the latter heavily aggressively. In a sound money world, I think we will definancialize a ton of stuff. The idea of everyone having a 401k for no particular reason, investing in a bunch of indices with a bunch of stocks that just arbitrarily go up in value when you have sound money, that will be a kind of dumb strategy. Now that doesn't mean that everybody will just have Bitcoin on a hardware wallet under their mattress. But the type and mode of capital of saving and investing capital for the future will change dramatically.
But that will take a really long time to do. And right now there are tens of trillions of dollars stuck in financial markets. Maybe a hundred trillion Like, I don't, I don't even know. The numbers when they get that big are just kind of ridiculous. And there's tons of just guesswork. But there's an enormous astronomical amount of money that exist in these locations. And bitcoin, treasury companies, ETFs, bitcoin bonds, all of these things unlock access to that capital. And importantly, if bitcoin is going to be the money of the world, there is no, and I don't know, Lynn Alden had to have said this seven times in this piece, and I don't know how many times I've said it on this show. There is no way. There is no path, there is no reality, there is no universe in which the world ends up on a bitcoin st standard in which bitcoin does not exist at these different levels of the financial system. It is axiomatic. The, the notion of being on a bitcoin standard, of a bitcoin standard having existed at all is dependent upon it being in those places. If financial markets, bonds, the cost of locking UP capital for 10 years, if all of that stocks and equities of indices and nasdaq, if all of that crap isn't weighed against holding Bitcoin directly or isn't priced in bitcoin, then it's not a bitcoin standard. It absolutely has to be in those environments. And what the hell would it look like when it starts to move into those environments, when it's the best performing asset in the world? Probably a lot like what it looks like right now. The perma bears and the bitcoin is captured and the corporations are stupid and they never should have bought any bitcoin. And now the dream is dead people. I don't understand what, what was your image of reality? Where did you see this going? What did you expect the future of Bitcoin to look like if you thought it was going to be accessible to billions of people? Like, I'm, I completely agree with Lyn Alden here is that I completely agree with both sides, with both arguments, the cypherpunk argument and the suit coiner argument, because both of those markets and both of those layers of the financial system and both of those areas technologically in the world exist at the same time. And neither one of them are going anywhere. They both will change dramatically because of the existence of bitcoin and the existence of sound money, but it doesn't mean they're not going to exist anymore. To the contrary, both of them have astronomical amounts of decades of investment and change and structural and architectural redesign that they all have to go through both at the. What's our new peer to peer technology going to be? Noster Pub key, Pear stack. Like oh, we're going to like E Cash. We're going to redefine what it means to to have bitcoin at retail and we're gonna redefine a sound monetary standard for people who can actually hold their own keys, who can actually have independent money sovereignly anywhere they are in the world. We're gonna create the sovereign individual, we're gonna create the digital nomad that can travel anywhere and has no tether to any particular country. We're gonna create privacy networks, we're gonna create independent and non custodial markets and exchanges. We're gonna create all the cypherpunk permissionless stuff. We're doing it like every, every year buy there's a new tool. We are currently building the ever loving shit out of all the things that the cypherpunks have wanted for the whole time. What does corporations being here and buying a bunch of bitcoin with corporate bonds have to do with that not being possible anymore and in what way has it slowed down? But you know what else? We're going to have financial instruments, we're going to have ETFs, we're going to have corporate bonds, we're going to have Bitcoin treasury companies. In fact, every company is going to be a bitcoin treasury company. But for the first 10 or 15 years or so, the ones who do it for first and do it leveraged and do it very carefully, care carefully and responsibly over long periods of time and know what they're doing and how to actually intelligently perform a speculative attack against the devaluing and the crap fiat of the world. They're going to win super, super hard against everybody else. But at the end of the day, every company that will eventually all be bitcoin treasury companies on a bitcoin standard or will all have their bitcoin treasury go up slowly in value over time. Because that's what sound money does when the economy grows, it goes up in value. It goes up in purchasing power directly in proportion to the capacity and growth and prosperity of the economy.
That's why the purchasing power changes at all. It's based on what the economy can produce and how difficult or easy it is to produce the thing when you're not in fiat upside down land. That's literally how you measure the economy's growth.
The point and the value and the reason this is going to expand the bitcoin economy by $10 trillion is because of the unlock is because of the access to capital that has had no access to it for a long time and access that capital that was going to be locked up for the next 10 to 20 years necessarily. This is why, despite being a fiat instrument, there is reason to suspect or to value something like Microstrategy or Meta planet or even GameStop as a Bitcoin treasury company. Because if your money's stuck in a 401k and you're bullish on bitcoin, your money is stuck in a fiat instrument anyway. You might as well put it in one that goes up with bitcoin rather than one that goes up because fiat goes down.
You know, there's an interesting thing about the whole corporate bond stuff is, you know, the bit that I've looked into the microstrategy thing is they seem to be very well positioned. I think so many people think that it can't possibly work or that they're going to screw themselves or they're being super irresponsible because of what most people think leverage is. And people forget that there's a lot of different ways that you can leverage and there's a lot of different degrees of leverage. You know what they are doing is not doing a 100x on BitMEX. And if the Bitcoin price falls by 10 or 20%, they get margin called. You know, she has a section in here actually about this.
Hold on a second. I've got a. I got a quote. I know I do.
Here it is. So hedge funds, quote hedge funds and certain other pools of capital typically use margin loans. They borrow money and use it to buy more assets. But they risk having a margin call if the value of the asset drops too low relative to the amount of money borrowed. A margin call can force the hedge fund to sell assets if they dip too much in price.
Even when they have a strong conviction that those assets will recover to new highs. Having to liquidate a good asset at its lows is a catastrophe.
In contrast, corporations can issue bonds often with multi year durations. If they hold bitcoin and the price dips, they don't have to sell prematurely. This gives them a better ability to weather periods of volatility than entities that rely on margin loans. They are still bearish scenarios that could force corporations to liquidate. But those scenarios would involve a much longer bear market occurring, thus making them less likely.
I think she does a great job just putting it in context here is that the corporate bond type of leverage is just as much cleaner and easier way to leverage. And specifically as I understand the microstrategy and I've kind of gotten loose confirmation but you know, everybody can be wrong and not understand the specifics and I haven't done the deep dive into it because I just don't have money in the fiat system anymore. I've, I've just done full on bitcoin and you know, maybe I could make a, you know, put a little bit of bitcoin into microstrategy and it would be worth it and it would do better than bitcoin. I just don't do well. I don't know. I don't really want to handle a lot of. I deal with banks as much as I want to deal with banks and I still have to deal with banks quite a bit. So maybe if it really looks enticing and I want to take, you know, a few percent and quote unquote, leverage it and like put it in a slightly higher a vehicle that I expect to do a little bit better than bitcoin, that would be the only way to actually use it. But right now I just don't have the time to focus on it and I don't really have the time to deep dive into microstrategy or, excuse me, strategy and their, their process or their structure. Unless of course I'm just doing it on the show. And maybe if you guys want me to, I can, I can do what I, I'm sure somebody has like a really serious write up with like 30 pages detailing all the details.
So I, yeah, I could absolutely do a deep dive if you guys wanted to. But I don't know, it seems like feels like it's not necessary. But I'm happy to do it if people actually would want to listen to it on the show. But again, loose confirmation from a bunch of people that I've asked the same question to. But it sounds to me the rudimentary view is that they are leveraging their equity, not their bitcoin, which means that their equity could go down in response to a bitcoin price decline or a steady and persistent bitcoin price decline. And if they aren't making enough or paying out enough in order to keep the people in those positions and there is a significant sell off, they could lose a lot of equity ownership in the company at prices that would technically be below value or you know, below par with what you would expect the company to be worth, I think.
But none of that means leveraging bitcoin they don't have to mar, they're not going to get margin called on the Bitcoin they purchase. And in fact, the fact that they continue to purchase Bitcoin with profits and purchase Bitcoin because everybody's still buying their equity and their bonds, the floor of the value that the equity ought to hold is actually growing. Even if Bitcoin is stagnant because they have leverage over extended periods of time. And people expect Bitcoin to be worth more in the future, even if there's a temporary or short term downturn. So it just doesn't seem as crazy as I think it looks on the surface because of how successful it is and because most people are just projecting the he's going on Bitmex and buying a 100x option because that is not what they're doing.
But anyway, that's my basic view of the whole corporate treasury and bond stuff. And I think Lyn Alden just kind of broke it down well. And really it is about access to capital. It's about access to capital.
And if Bitcoin is going, Bitcoin is necessarily going to access all capital, like Bitcoin is the most accessible, permissionless, can be in any form, and will integrate at every single layer of every financial system in every country across the globe.
It's going to have an instrument, there's going to be something for all of it. And all of that capital is only going to be able to access it if it infiltrates every single layer and every single type of instrument and every single category of pricing, like the ranges and the types of, you know, capital agreements that you can make. Like whether or not it's short term, whether or not it's, you know, trade in a medium of exchange and direct exchange, whether or not it's long term bonds, like all of the various durations and types of agreements as well, on top of all of the different instruments and layers of the financial system, it will be in all of them. And necessarily so, because it's going to be the measuring stick by which the price of time is weighed. Because it is the most sound, most accessible and most globally robust money that we have. It will grow toward and fulfill that role more and more every single year until that truth ceases to be true. Something else is an order of magnitude better or something breaks it. That's it. In my opinion, that is the only way. Everything else is just noise and bumps along the road to a Bitcoin standard. And the two paths to that not happening are Bitcoin breaking The architecture of the system not actually working at scale, which every year that goes by is less and less likely, or something that is an order of magnitude better at decentralized, independent, robust consensus that has higher integrity when two vicious enemies are using it at the same time exists. I think the second path is way less likely. The first path is really the one that we have to protect against and we have to think about. And that includes the, you know, quantum keys risk, or quantum, you know, breaking the cryptography risk. The massive systemic bug that was unrealized and not dealt with properly. Too much centralization in mining and the building of consensus, the system of consensus building and basically other problems in that category. And all of those are solvable problems. And those problems can and will come and go in various forms. I think we will have, you know, cryptographic threats that will be mitigated and may hit the network very hard at some stage in its maturation and growth cycles. There will be bear markets from a technical standpoint. There will be bear markets from a network resiliency standpoint. There will be bear markets in, you know, the consensus centralization standpoint. But I think all of those are, they're all surface layer, they're kind of above the architecture, or they're the things that keep the architecture in play, the pieces in place so that the game can be played. And those are things in which the game itself has become imbalanced and the network and the people and the institutions and the technology around it need to adjust. Those are all solvable things. It's like, you know, we're temporarily centralized on the Internet into big platforms. That's solvable. That is a technical and social challenge. We will fix the problem. We are fixing the problem. It's just a big, painful, difficult, long term problem. It takes 20 years to fix, or more accurately, accurately, it takes 20 years for all of the biggest and most costly problems of that architecture to come to fruition. And then probably it takes five to 10 years for the pressure to have built and the technology to be fixed such that it swings back in the other direction. But in my mind, Bitcoin is the soundest, most secure, most accessible, most sovereign and independent and radically neutral money that there is on the globe. And thus it is going to be the monetary standard as long as we can protect it to get to that point. And it just takes time and the shifting of people's perception and framing around money and value. And in fact, actually that brings us to the whole idea of ubiquitous money, which this is something that I have talked about so many times.
And Lynn does such a good job of like hitting this concept actually from in a different way. I love the. Because I usually think about it in just the store value to medium of exchange to unit of account. And she talks about it more in the. How the.
How to frame the utility itself of situational money versus ubiquitous money. So I'm going to hit a quote real quick that she does. So in order for something to be used as ubiquitous money, the spender has to already have it and the recipient has to want to hold it.
Notably, people usually want to receive more of what they already have. After all, if a potential recipient wanted to hold it, they likely would have already bought some.
So if a new type of ubiquitous money were to arise, the majority of people would likely first encounter it as an investment, acquire some because they view it as likely to appreciate in purchasing power and then be willing to receive more of it as payment as well. At that point, they don't need to be convinced to accept it as payment. They already like the asset. So whether they are buying more of it or people are directly giving it to them as a means of payment are nearly the same thing.
Oh man, I cannot repeat that more times.
The medium of exchange phase happens when everybody has already normalized buying and holding Bitcoin and you can't just flip that switch on and you know what it looks like to actually get to that point. A massive, slow growing, broad store of value phase in which everyone thinks bitcoin is the best investment and the best savings asset in the world.
God, her I don't have it right here in front of me, but the way she put it, which I thought was great, is you will not get to a medium of exchange phase. Off of charity, off of bitcoiners being encouraged to spend their bitcoin.
Bitcoin as a medium of exchange happens when merchants demand bitcoin because they want to hold it. And it's actually incredible how many things still have to be sorted out just to get to that point. Like a great example is I'm working with a good friend, Joey for bookkeeping and stuff with the company.
And I'm working with. Basically I'm working with all bitcoiners, right Is I try to get fully paid in bitcoin or if I don't, I charge a little bit of fee so that I can turn it right into bitcoin immediately. And then I pay everyone else in bitcoin. But most, and most of them have to convert most of it into dollars and we all price it in dollars, because that's the easy way to price, because that's what all of our liabilities and debts and costs are denominated in for general purpose stuff.
However, there was one point where.
So I was working with my bookkeeper and we just talked about this. We laid this out the other day, and we're probably going to. If we can actually, like, formalize this and make it into something, something that we can actually, like, give to people and that other people could use and integrate themselves, I think we intend to do this. Because I feel like being on a bitcoin standard, we run into these, like, weird little oddities that you're like, oh, crap. I never even thought about that as a problem.
But there have been multiple times, and in this particular case last year, where they did not invoice for a couple of months, and then when they finally invoiced for a, you know, particular, like, a good section of work that was done, the bitcoin price had or began to skyrocket. And then I didn't get to the invoice for, like, two months or something like that. And bitcoin, the bitcoin price had moved from like 60,000 to 90,000 in that span of time. And importantly, they wanted bitcoin, like, Joey wanted to have to be paid in bitcoin and to hold bitcoin so that the value and the price would go up. And of course, I'm doing the exact same thing because I'm on a bitcoin standard and I am concerned about the amount of bitcoin I get. When someone doesn't. When a sponsor or somebody we're working with doesn't pay me for a week and the bitcoin price goes up 10%, I'm like, Ah, crap. Like, pay me so that I can get it into bitcoin, because now I'm gonna get way less SATs for it. Well, this problem actually comes up. Comes up quite a bit because, like, that was a huge hit to him and how many SATs he got, because I was basically paying the invoice at $90,000 and he invoiced me at, like, 64. But then the same thing happens sometimes in reverse and with everybody that I'm working with, because Everybody wants the SATs, and even though our costs are in dollars and we're billing in dollar denominations, we're all trying to make sure that we can get as many sats as we can and securely hold it for as long as we can. And so the system that we've come up with is actually to. And this is actually a perfect example or use case for something like UTX Oracle so that we can actually agree on the price. Shout out to Steve if you haven't watched. If you don't watch the roundtable or know who Steve is and don't know about UTX Oracle, you got to check it out. You can actually pull the bitcoin price in dollars from your bitcoin node very easily. And importantly, everybody will have the same price. And it is, it's actually one of the cleanest and best recorded global prices in dollars for bitcoin that you can find. And it is exist entire. You don't have to have an API, you don't have to trust a company, you don't have to argue about which exchange you're using. This is a perfect use case for it. But basically the idea is not of UTX Oracle.
You should definitely check that out if you don't know. But the idea is that for the month that the work is being done, because we, you know, invoice are usually invoicing for a month or a period or a quarter, whatever, but for the period that the work is being done that we actually average out the price of bitcoin over that entire month and then the invoice is paid or locked to the number of sats based on that average. So if the price of Bitcoin goes from 90 to 80 over the course of that month, well, then the invoice is done at a price of $85,000 Bitcoin. If the price goes from 90 to 105, then the price of the invoice is at 97.5 thousand Bitcoin. And so the goal is to actually split the difference on either the gain or the loss over the course or over the period in which the work was actually done. Now, we haven't fully implemented this and or we don't know exactly how this is going to go. And with bitcoin becoming crazy volatile, it might be. Might be terrible. It'll probably work against me basically the whole time because bitcoin's probably just going to be up for a while and I'm not able to do this exact same thing on the flip side with sponsors or some of the work that I'm doing with audio books and stuff. So it's certainly not a perfect system, but it's just something that, like we have to figure out how to think on a bitcoin standard and this kind of a system or something like it is a great way to smooth out the volatility, where you just have like stairs, like gradual stair steps, and real strong stability in the overall price of bitcoin because you're measuring it over long periods of time and because everybody involved in the work and the payment are all valuing the sats and how many sats they get as opposed to the dollars. It's like, yes, we're pricing in dollars, but the point of the dollars is to get this amount of sats. So it's interesting. We're doing an experiment and I'll let you know how it goes. And if we end up building or coming up with a system that we all really like and seems to be something that we want to do indefinitely, I will, we'll do everything we can to try to make it available, easy to plug into, you know, your Excel spreadsheet or whatnot. Because we are having to do a lot of this stuff because everything we do is in bitcoin and all of the accounting has to be in dollars at the same time. But you know why we're able to use it as a medium of exchange?
It's not because I'm, I'm being charitable. It's not because, like, I really want to use it as a medium exchange. I really want to, I really want to pay people in bitcoin as opposed to fiat.
No, it's because everybody is a bitcoiner and everybody wants the bitcoin. We are all holders first and we are receivers of SATs second.
Damn it, people. It is so path dependent, it's so clearly path dependent that you first have to value Bitcoin as something to hold over the long term in order to want to regularly and demand it payment. And as Lyn Alden says very plainly, it's not going to happen as a charity if it has to happen because bitcoiners want to go use it for no particular reason and it's not even super beneficial for them to use it in the scenario, then it's not going to happen.
All right, now when it comes to like the different eras of bitcoin, this is, this is one that I think she just hit really good and I think is really important to explain is when people are talking about like, oh, now it's like corporate bitcoin and now it's government bitcoin and all of this stuff, and now inexplicably normal individuals and cypherpunks and builders and everybody retail can't purchase bitcoin. I don't, obviously that is not true. So quote, fortunately, and this is Important, each era still includes the prior ones.
Even though corporations are doing most of the net buying currently, retail investors can still buy as much as they want as well. In fact, it's never been easier to buy bitcoin and take safe self custody of it. There are plenty of resources explaining how to do it. Multiple inexpensive and robust wallet solutions and on chain transaction fees are currently low. I see people say things like I thought bitcoin was supposed to be for people. Now it's for peer to peer cash. Now it's all big corporations and it is for people. Anyone with Internet access can buy it, hold it or send it. None of that is negated by large entities buying it as well.
This so the like nothing, nothing has changed about the cypherpunk nature, about who can buy it, about whether or not you can do peer to peer electronic cash or peer to peer markets or zap people on Nostra. Like none of that changes just because large corporations buying it are currently the talk of the town.
It's just that large corporations buying it are the talk of the town because they have a lot of capital and they're the new people in the new entrants into the network. But it absolutely changes nothing about the prior eras. In fact, all of those layers still exist. And what's happening is that it's getting, it's pricing itself up the ladder of liquidity. It's like okay, where is this asset now? Liquid and large and, and trustworthy enough or legitimate. Legitimate enough to now enter into a new layer of the market. But none of those other layers are gone. They're literally underneath the layer that it is now. Currently. The big news in, all I can do is use myself as an example is I use bitcoin more today than I have ever used it ever.
I have used bitcoin for.
What are we, we're 14, 14 years now. Holy crap.
I have used it all the time. I've held it for a long time. I've, I've bought more, I've sold some, I've lost some. I've used every wallet under the sun. People say lightning doesn't work. I zap people so much.
I use, I have more lightning transactions than in the last three months, I guarantee you. I've had more lightning transactions in the last three months than I did Bitcoin transactions in the first 10 years that I used bitcoin and I was using it.
And I bet I have more bitcoin like on chain transactions in the last year than I had in the first 10 years of using Bitcoin and I was using it, my various wallet seeds and backups and keys problems has become an exponential problem. So when somebody is like, oh, now it's all just big corporations, I'm like, please explain to me how my use has been hindered at all or how I am not like what it is more peer to peer cash. It is more explicitly peer to peer cash in every way that peer to peer cash would be defined to me right now than it has ever been. And it's so easy also to show people who, why it would actually be valuable because you have a whole new layers of financial, corporate and government entities that are making it legitimate. And this actually brings me to one of the other points that she talks about is the top funnel is the. The now you're actually making it so that people don't encounter Bitcoin for the first time in shitcoin exchanges that are selling them garbage and that they have to sign up in some place they never even heard of. They don't even know what this stupid. The hell is Coinbase, Binance, this ridiculous thing. And they want me to, they want me to buy Doge Poopy Coin. All you have to do is buy a little bit of gas because it's a, it's a ERC20 Ethereum staked coin. What the hell is happening right now? It's actually a fantastic thing that somebody might get their first exposure through their 401k because then they're just going to be thinking about the various ways that they can get access to Bitcoin and they might actually learn more about it when it becomes the most, the strongest thing in their portfolio. And they want to know why. And you know what? They won't be advertised or exposed to polychain Shiba tokens.
That is actually something I had not considered. That exposure through, you know, corporate bond environment or a bitcoin treasury company like microstrategy strategy. I keep. I'm going to, I'm going to forever call it its old name or an ETF or in the NASDAQ index, that is actually an order of magnitude better place for a lot of normal people to be exposed to Bitcoin than most of the truly garbage avenues in which most people have gotten in since 2017.
Think about it. Coinbase and Binance are based. They're pretty much the top dogs, right? I never recommend them, they're terrible places to send people. But I cannot tell you how many people I have said just go to river, just go to Swan, just go to any Bitcoin only. Bull Bitcoin. Please just go to one of these places. I give them the exact link or a freaking QR code. I'd say, like, just look, look, just, here's the app. This is all you got to do. And you can do it whenever you want at your leisure. And then I talk to them again in a month. They're like, well, I went on to Coinbase and I bought some Sheba token because that one was doing really good.
So I got Bitcoin. Now finally, ah, we're, we're buddies. Though I do have to ask a question about this bitcoin thing because I bought some rolling coin stump, I think that's what it was called. And then, and then Coinbase sent me an email and said they delisted it. Now I don't know what to do with it. Then I'm just like, oh my God, what the hell? These are horrible, horrible places to buy bitcoin. And people always go there because when they forget what you mentioned in person, which they inevitably will 10 seconds after they leave your presence, they're gonna look it up on Google and it's gonna be Coinbase, it's gonna be Binance, and the first thing both of those places are gonna show you is a chart on how much Airdropium has gone up this month. In that context, this is a massive improvement. This is a huge improvement over the touch points that people usually have getting into Bitcoin.
And they're not going to be any worse off. In fact, they're probably a heck of a lot safer holding a Bitcoin ETF or some strategy stock than they would be dumping half their savings in the bag holder bucks.
And that actually leads to another quote that I think the last one here that I say from Lyn, so quote. So the case for altcoins has arguably never been weaker. And given their horrible track record in aggregate, I think that's healthy. The altcoin industry has seemingly run out of narratives for now on how to substantially pump their networks. It makes far more sense to hold Bitcoin directly and, or to invest or speculate in companies that combine Bitcoin with optimal types of leverage than it does to buy altcoins. And that's really, I think where, where it goes to is that now you can, if you're just trying to speculate like crazy. If you're just trying to trade and you want aggressive volatility, you just, you just buy options, you just have leverage trades and companies that are, you know, trying to do higher leverage stacking of bitcoin because that gives them exactly the environment and the dopamine that they want, thinking they're going to get rich quick. And funny enough, it levels out the volatility of bitcoin itself. It ultimately has the effect of stability on the overall bitcoin price when it is more liquid in all of these different environments and all of these different instruments and all of the different levels of the financial system and accessible to retail and all of the previous eras are still here using it for all of the reasons it's being used. A great example is me and the people that I'm working with trying to figure out how to level out the price for when it is moving a lot so that if invoices get stuck or people don't get paid, nobody's worrying about nobody stressing out and trying to time the market when we're just paying and doing business on a normal basis.
So anyway, again, I'll let you know how it goes on that front because I think that could be useful to people. All right, with that, thank you guys so much for listening. I think we'll close this one out. Shout out to Lyn Alden for the great work. As always, shout out to people who tagged me in the post because, you know, two or three days could go by before I realize that Lyn Alden's released another piece. Please always tag me so that I know when there's a great read that you want to hear and I'll jump on it as quick as I can. Don't forget to check out the Financial Freedom report from the HRF. There's some really great stuff in Report 76 that I was actually just reading earlier today.
And in particular Breeze now supports Bolt 12 and Bip353. If you're a journalist, an activist, or an NGO with an Internet domain, and you want it to be easier to receive bitcoin donations sovereignly, you got to check this out. And you also got to subscribe to the Financial Freedom Report if you want to stay up to date on the tools and political news around helping to protect your sovereignty. And Speaking of sovereignty, PubKey allows you to have an uncensorable DNS. What if you had a link that you could give people that where they could always reach you and it didn't matter if someone tried to stop them? This is the dream of pubkey and they've built some really powerful tools, tools that I think could work incredibly well with nostr, incredibly well with the Pear stack. I want to see people try this stuff out and see what they can build with it. Check them out. There's a link in the show notes to join the beta and I have my pub key down there as well so that you can find me up on their their social the social version of their app that they're testing out so give me a shout out when you get up there. Lastly, don't Forget about the 10% discount on Chroma for your light health, for recovery, for your circadian rhythm and your hormone levels for your energy levels. You've got to check them out. You got to go down this rabbit hole if you haven't gone yet and saving 10% of your SATs is a no brainer. This is Bitcoin audible I am Guy Swan and until next time everybody take it easy guys.
As usual nature's imagination far surpasses our own as we have seen from the other theories which are subtle and deep.
Richard P. Feynman.
