2020-10-23 22:43 |
The last three months in Bitcoin have been marked by large corporate entities transitioning significant portions of their treasury holdings into bitcoin. In August, software intelligence company MicroStrategy announced that it purchased 0.1 percent of the total BTC supply (its CEO Michael Saylor has since gone full maxi, and become a bit of a celebrity in the space). Major payments company Square, which has been offering BTC exposure to users of its mobile payments platform for some time, allocated $50 million of its assets to bitcoin in early October. And just yesterday, U.K. fintech company Mode allocated 10 percent of its cash reserves to buy BTC as a treasury asset.
To compile this trend into a single, easily-digestible database, Coinkite’s Rodolfo Novak, a.k.a. NVK, launched bitcointreasuries.org. It lists companies that have made the transition to hold bitcoin as a treasury asset, along with their market caps, the base price of their investment vs. today’s value, the amount of BTC they hold and, critically, the percentage of the total supply of BTC that each has bought up. The allocations listed total a whopping 3.74 percent of all of the bitcoin that will ever exist.
“I always assumed that there was a place where you could see, not a complete list, but some list of large holders of bitcoin that are not private entities,” Novak explained to Bitcoin Magazine. “Especially with publicly-traded companies, because they have all of their books public anyway and it’s all audited. But I couldn’t find anything and I’m a lover of buying domains, so I just started putting [bitcointreasures.org] together in the hopes it would create more FOMO for other companies.”
Why Now?The listing mostly consists of blockchain-focused companies that have divested into BTC some time ago as part of their larger business missions. Grayscale Trust, for instance, holds the highest proportion of bitcoin on the list by far at 2.17 percent of the total supply.
But many of the purchases or filings listed on the site took place this year. Novak explained that, while it might seem like lots of companies are jumping into Plan B all at once, it’s likely that even the most recent purchases have been planned for a long time, demonstrating a HODLer’s understanding of the asset.
“Corporate governance, especially for publicly-traded companies, moves at a snail’s pace,” he said. “So there had to be some mechanisms in place — sort of like a template of how to go about this. And that took years to make 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 goes down, it goes up again. Number go up.”
But the reasons for moving toward a bitcoin-heavy treasury should be clear, especially in recent months.
“You have this store of value, everything serves at the pleasure of store of value,” Novak said. “And, you know, you hold it because you still want to be above water 30 years from now…. It’s just like, ‘Hey, I have cash in the bank, it’s going to shit, I need to find a solution.’ And, you know, gold pet rocks are not a solution.”
What Does This Mean For Bitcoin?Because there is a finite supply of bitcoin (there will only ever be slightly less than 21 million BTC released into circulation), when any entity snatches up a significant amount, it affects everyone who might want to get their hands on some as well. And, because a major 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 frontrunning corporate interest, Novak is bullish about the trend.
“Everything’s good for Bitcoin, right?” he asked. “Bitcoin scarcity comes from people buying, right, and you have a limited cap supply on it. So, the more these behemoths buy it, the price goes up for everybody else.”
He also pointed out that as more diverse types of entities begin to hold bitcoin, the more the network overall 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, that have it, the more secure the network is… If Kim Jong-un has bitcoin and the U.S. has bitcoin and China has bitcoin, it’s in everybody’s interest to not make any change to Bitcoin, right? Because if one wants a change that’s beneficial to them, the other ones are going to want that change too. So, it’s a beautiful set of incentives.”
Some retail-sized investors might see this trend as a warning to stack sats while they’re still available. But Novak points out that, while the bitcointreasuries.org roster is growing, there’s still significant opportunity to get ahead of the bulk majority of corporations.
“The little guy still has a chance to frontrun a Berkshire Hathaway,” he said. “You can even DCA at $10 a week or whatever, and you can be buying before they do. So, I think it’s not an opportunity that people should waste. It’s criminal not to have bitcoin exposure at this moment.”
Where Is This Trend Going?When asked about where the trend in corporate allocation of BTC is headed, Novak said that he thinks bitcointreasuries.org will no longer exist in 10 years because “every single publicly-traded company that has treasury management in assets that are not just the dollar, they will have some exposure to bitcoin.”
That seemed to be a matter of inevitable hyperbitcoinization, but in the shorter term, it may help that some groups already on this list have published their methodology for divesting into BTC. For instance, Square released a white paper detailing its investment. Novak could see this utilized by other groups that are interested in following it toward Plan B.
“They created a template that other publicly-traded companies in the U.S. can just sort of follow and be regulatorily compliant to get this done,” he explained. “Now, you just go to a [corporate] board, you show that paper. You go to your legal, you show that paper. Compliance, show that paper, done. You just make the transfer and buy the bitcoin.”
A near-future bull run will also likely motivate more companies to follow Square’s lead. But the ultimate motivator may just be Bitcoin’s end game. The companies that have already made the ranks of bitcointreasury.org have adopted an incredible tool for opting out of the legacy financial system if and when that becomes necessary. Others will want to join them.
“Now they have an instrument that they can just send somewhere else,” Novak explained. “Let’s say the U.S. decides to go to shit, right? They could just send this BTC out, they don’t need permission.”
To listen to our full conversation with Novak, check out our podcast on this topic on these platforms:
AppleSpotifyGoogleOvercastLibsynThe post As Corporations Build Bitcoin Treasuries, We All Win appeared first on Bitcoin Magazine.
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