I know this exchange of time for bitcoin stack is what Pierre is doing at Riot but I see utilization of bitcoin stacks in another way. In order for bitcoin to fulfill its potential as money, it has to be used at capital. It is the hodlers dilemma: bitcoin outperforms all markets on a 4-year duration so why would you spend it?
If I’m not going to sell bitcoin but I want to buy tangible assets I think I can derive value from…the only other option is to collateralize loans with my Bitcoin … denominated in whatever currency the seller of the asset will accept.
The crux of that strategy is that the use of capital from those bitcoin collateralized loans has to beat return on equity expectations. Its “debt vs. equity” competition not “capital investment vs. bitcoin” competition.
In that way my bitcoin debt becomes the equity underwriting conventional economic deals. And the competition isn’t outperforming Bitcoin, it becomes outperforming traditional equity - likely private equity where equity expectations are 20%+.
That being said, right now the bitcoin loan market is far too shallow and short-term (6 months) and expensive (14%) to deploy this strategy widely and with sufficient risk-management to ensure you don’t lose your coins chasing projects but I believe it is where we are heading.
Ultimately Bitcoin has to engage in the real world in real financial markets.
There needs to be downward pressure on interest rates and outward pressure on duration for bitcoin collateralized loans. Only in that way will Bitcoin start to act as capital competing in the marketplace.
As an aside, in MartyBent (npub1guh…6hjy) rip with Matt Dines, Matt says these loans have a 3% fee!? Crazy expensive…I’m guessing just because the market is so shallow and they have to keep people employed. I would expect that goes down over time.
cc: bitcoinpierre (npub1hxw…40pf) preston (npub1s5y…6q7z) LynAlden (npub1a2c…w83a) Jeff Booth (npub1s05…eyhe) jack (npub1sg6…f63m) ODELL (npub1qny…95gx)
brock / Brock Wilson
npub1dl…234z9
2024-09-13 13:58:45
in reply to nevent1q…d4xr
Author Public Key
npub1dl3snacnxj9qu5a5llsch0qld4vrvv2s0pv5wh0ntsq80ndz304ql234z9Published at
2024-09-13 13:58:45Event JSON
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"content": "I know this exchange of time for bitcoin stack is what Pierre is doing at Riot but I see utilization of bitcoin stacks in another way. In order for bitcoin to fulfill its potential as money, it has to be used at capital. It is the hodlers dilemma: bitcoin outperforms all markets on a 4-year duration so why would you spend it?\n\nIf I’m not going to sell bitcoin but I want to buy tangible assets I think I can derive value from…the only other option is to collateralize loans with my Bitcoin … denominated in whatever currency the seller of the asset will accept. \n\nThe crux of that strategy is that the use of capital from those bitcoin collateralized loans has to beat return on equity expectations. Its “debt vs. equity” competition not “capital investment vs. bitcoin” competition.\n\nIn that way my bitcoin debt becomes the equity underwriting conventional economic deals. And the competition isn’t outperforming Bitcoin, it becomes outperforming traditional equity - likely private equity where equity expectations are 20%+.\n\nThat being said, right now the bitcoin loan market is far too shallow and short-term (6 months) and expensive (14%) to deploy this strategy widely and with sufficient risk-management to ensure you don’t lose your coins chasing projects but I believe it is where we are heading. \n\nUltimately Bitcoin has to engage in the real world in real financial markets.\n\nThere needs to be downward pressure on interest rates and outward pressure on duration for bitcoin collateralized loans. Only in that way will Bitcoin start to act as capital competing in the marketplace.\n\nAs an aside, in nostr:npub1guh5grefa7vkay4ps6udxg8lrqxg2kgr3qh9n4gduxut64nfxq0q9y6hjy rip with Matt Dines, Matt says these loans have a 3% fee!? Crazy expensive…I’m guessing just because the market is so shallow and they have to keep people employed. I would expect that goes down over time.\n\ncc: nostr:npub1hxwmegqcfgevu4vsfjex0v3wgdyz8jtlgx8ndkh46t0lphtmtsnsuf40pf nostr:npub1s5yq6wadwrxde4lhfs56gn64hwzuhnfa6r9mj476r5s4hkunzgzqrs6q7z nostr:npub1a2cww4kn9wqte4ry70vyfwqyqvpswksna27rtxd8vty6c74era8sdcw83a nostr:npub1s05p3ha7en49dv8429tkk07nnfa9pcwczkf5x5qrdraqshxdje9sq6eyhe nostr:npub1sg6plzptd64u62a878hep2kev88swjh3tw00gjsfl8f237lmu63q0uf63m nostr:npub1qny3tkh0acurzla8x3zy4nhrjz5zd8l9sy9jys09umwng00manysew95gx",
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