Bitcoin Layer 2 Foundations Should Buy Bitcoin For Their Treasuries

Credit : bitcoinmagazine.com

I have been interested by this rather a lot currently: Bitcoin Layer 2 foundations ought to begin holding bitcoin of their authorities bonds. It makes an excessive amount of sense that they do not.

And Apparently I’m not the only one.

As somebody who has seen this house evolve, I wish to clarify why Bitcoin Layer 2 fundamentals are price listening to Molly and me.

For years, Bitcoin was often known as a “digital rock”: a strong retailer of worth, however not a lot else. However now with the explosion of Bitcoin Layer 2s, Bitcoin is changing into a ‘programmable brick’. These layers add options akin to good contracts and scaling options, making Bitcoin extra versatile than ever.

However the factor is, these tasks increase thousands and thousands of {dollars} from VCs and buyers, and most of that cash results in fiat currencies just like the USD. That is a giant mistake.

Why? As a result of fiat is a melting ice dice. Yearly, it loses 5-10% of its worth resulting from inflation. The longer you maintain it, the much less it’s price. However, bitcoin has a compound annual progress charge (CAGR) of about 70%. If these foundations held their treasuries in bitcoin as a substitute of fiat, their runway wouldn’t solely keep the identical, however develop.

Think about having 70% extra sources yearly to fund builders, grants and tasks. That is the sort of edge that may make or break a Layer 2 ecosystem.

Okay, okay, I get it: Bitcoin is unstable and these fundamentals want some stability. Subsequently, it is sensible to maintain 3 to 4 years of runway in fiat. It could assist cowl short-term wants. However the remaining? It ought to be in bitcoin. In the long run, this technique might double and even triple these foundations’ runway, giving them the time and sources they should succeed.

There may be additionally a precedent for this. To remind EOS? They elevated $4.2 billion in 2018 and reportedly bought 164,000 bitcoins with it. At this time, that bitcoin is price about $16 billion, despite the fact that EOS itself has disappeared from the map. Now think about if the Bitcoin Layer 2 foundations did the identical, however really used their bitcoin to develop and maintain their ecosystem. The potential is gigantic.

Finally, these foundations construct on Bitcoin. They consider in its future, so why not preserve it of their treasuries? Bitcoin is the most effective retailer of worth there may be. In the event you run a Bitcoin Layer 2 basis, cease holding depreciating fiat and begin holding bitcoin. Not solely is it a wise transfer, it’s the motion.

This text is a To take. The opinions expressed are solely these of the writer and don’t essentially mirror these of BTC Inc or Bitcoin Journal.