As Companies Build Bitcoin Bonds, We All Win

As Companies Build Bitcoin Bonds, We All Win

bitcoin-bonds

The last three months in Bitcoin have been marked by large corporate entities that have transitioned significant parts of their treasury holdings to bitcoins. In August, software intelligence company MicroStrategy announced that it has bought 0.1 percent of the total supply of BTC (its CEO Michael Saylor has already reached the ceiling and become something of a celebrity in space).

The large payments company Square, which for some time has offered BTC exposure to users of its mobile payments platform, allocated $50 million of its assets to bitcoin in early October. And just yesterday, the British fintech company Mode allocated 10% of its cash reserves to buy BTC as a treasury asset.

To compile this trend into a single, easy-to-digest database, Rodolfo Novak of Coinkite, also known as NVK, has launched bitcointreasuries.org. It lists the companies that have made the transition to keep bitcoin as a treasury asset, along with its market limits, the base price of their investment relative to today's value, the amount of BTC they hold and, critically, the percentage of the total supply of BTC that each bought. The allocations listed a total 3.74% of all bitcoin that will exist.

"I always assumed there was a place where you could see, not a complete list, but a list of large bitcoin holders who are not private entities," Novak told Bitcoin Magazine. "Especially with publicly traded companies because they have all their public books anyway and it's all audited. But I couldn't find anything and I love buying domains, so I started bitcointreasures.org [ ] in the hope of creating more FOMO for other companies"

Why now?

The list consists mainly of blockchain-focused companies that have divested into BTC some time ago as part of their larger business missions. The Grayscale Trust, for example, holds the highest proportion of bitcoins on the list by far 2.17% of the total supply.

But many of the purchases or filings listed on the site occurred this year. Novak explained that while it may seem that many companies are jumping into Plan B at once, it is likely that even the most recent purchases have been planned for a long time, demonstrating HODLer's understanding of the asset.

"Corporate governance, especially for publicly traded companies, moves at a slug pace," he said. "So there must be some mechanisms in place - a kind of model of how to do this. And it took years to get done and, you know, bitcoin goes up, bitcoin goes down. And if you haven't been in this space for a decade, it's hard for you to understand that after bitcoin decreases, it increases again. The number goes up"

But the reasons for switching to a heavy treasure trove of bitcoins should be clear, especially in recent months.

"You have this value reserve, everything meets the pleasure of value booking," Novak said. "And, you know, you hold it because you still want to be above water 30 years from now…. It's like, 'Hey, I got money in the bank, it's going to suck, I need to find a solution.' And, you know, gold pet stones are not a solution"

What does this mean for Bitcoin?

As there is a finite supply of bitcoin (there will only be just a little less than 21 million BTC thrown into circulation), when any entity grabs a significant amount, it affects everyone who wishes to get their hands on some as well. And, as an important value proposition for bitcoin is this scarcity, these corporate purchases have implications for the price of bitcoin relative to fiat as well.

As a Bitcoiner who is ahead of corporate interests, Novak is optimistic about the trend.

"Everything is good for Bitcoin, right?" he asked. "The scarcity of bitcoins comes from the people who buy, right, and you have a stock limit for that. So the more these giants buy, the more the price goes up for everyone"

He also pointed out that the more different types of entities start retaining bitcoin, the more the network as a whole will benefit.

"You want your enemies to have bitcoin, you want your competitors to have bitcoin," he said. "Because the more types of people with different sets of preferences, different sets of incentives have, the more secure the network will be... If Kim Jong-un has bitcoin and the US has bitcoin and China has bitcoin, it's in everyone's interest not to make any changes to Bitcoin, right? Because if one wants a change that is beneficial to them, others will want that change as well. So it's a nice set of incentives"

Some retail investors may see this trend as a warning to stack satellites while they are still available. But Novak points out that while the list of bitcointreasuries.org is growing, there is still a significant opportunity to get ahead of most corporations.

"The little boy still has a chance to win a Berkshire Hathaway. You can even DCA for $10 a week or anything, and you can buy before them. So I don't think it's an opportunity that people should waste. It's a crime not to have exposure to bitcoin right now"

Where is this trend going?

When asked where the trend is going in the corporate allocation of BTC, Novak said he thinks bitcointreasuries.org will no longer exist in 10 years because "every publicly traded company that has treasury management in assets that are not just the dollar, they will have some exposure to bitcoin."

This seemed to be a matter of inevitable "hyperbitcoinization", but in the short term, it may help that some groups already on this list have published their disinvestment methodology in BTC. For example, Square has released a white paper detailing its investment. Novak could see this being used by other groups that are interested in following him toward Plan B.

"They have created a model that other publicly traded companies in the U.S. can simply follow and comply with regulations to do so. Now, just go to a [corporate] board and show that role. You go to your legal, show me that paper. Conformity, show me that paper, that's it. Just make the transfer and buy bitcoin"

A high run in the near future will likely also motivate more companies to follow Square's example. But the ultimate motivator may just be bitcoin's final game. Companies that have already arrived in bitcointreasury.org have adopted an amazing tool to choose to leave the legacy financial system if and when that is necessary. Others will want to join them.

"Now they have an instrument they can just send elsewhere. Let's say America decides to go to shit, right? They could just send this BTC, they don't need permission"

source: nasdaq.com

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