Hey Jessholders
Many, if not all of us got into Bitcoin because at first glance it looked like a moon shot, you put a little capital in you take a lot of capital out after a run and you're sorted. The bull and bear run cycles bring with it different people and for those who stay, they get a bigger picture as they see both sides of BTC and how to manage these cycles more effectively.
The ones that stay are able to limit their downside, price in accumulated positions and know when to take profits, even removing their principle all together and only playing with the house in future. As BTC grows in value it makes it harder to centralise as people and institutions can only buy so much of the circulating supply.
The more the supply gets locked up the less liquidity is out there and the higher the price goes as trades circulate trying to secure the newly minted BTC dropped into the market by miners. This cycle will continue to repeat as BTC grows in price and with it comes new opportunities.
HODL'rs know no sell price
In BTC we have a portion of people known as HODL'r of last resort, these are people that value BTC so much they would not sell it at any price. This also gives the market a floor but what has long been criticized is that its value that is unproductive.
It's just sitting around being saved and is not providing any economic value. I get that, and to an extent, I agree, the problem will only get worse as more BTC gets locked away by Holders.
So how can we unlock the power of this multi-billion dollar sector?
DE-FI collateral
The De-Fi space is growing at a rapid pace but the thing I don't like about it is that we're forced to purchase these no-name unbacked shit coins to get in on the action. Yes, the yield is great but when it comes time to sell will there be liquidity to match and also none of the DE-FI yields is coming from productive assets which are to me is a large concern.
While some De-FI relies on a native coin, others are looking to collateralise with BTC. We've seen wrapped BTC on Ethereum and L-BTC on the liquid network side chain, which I think both have considerable promise for hodlers of the future.
How collateralised coins work
Essentially what you're doing is locking the value of your BTC up in a smart contract and then creating a representative currency that runs on another chain and can be used for things like trading or creating loans backed by the value of BTC or a portion of the value, depending on the risk in that market.
You provide the value, the platform then looks to match the value with businesses or funds looking for capital to buy or generate productive assets.
Potential use cases
This could be used to go into venture capital and fund a basket of startups, hoping a few make a large exit and pay back investors. It could be used to buy corporate bonds which see corporations pay back their debt to you as the debt holder. It could be used to invest in index funds and spread the value across a range of businesses in a certain asset class and pay you a return.
Getting paid double to HODL
For those who have HODL'd for years you know very well the upside I can bring, but with De-FI we could put HODL'ing to even better use. Providing businesses and projects with backing, allowing them to borrow against the collateral and pay you a dividend back in satoshis.
I can't see why anyone wouldn't take up a deal like this in the future and once BTC hits the trillion-dollar market cap range, why it can't be used to fund all sorts of productive projects without risking your capital.
BTC could not only pay you in nominal purchasing power increases but also as an additional dividend, can it become a gift that keeps on giving?
Have your say
What do you good people of HIVE think? Do you think BTC backed funds will be a future use case?
So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."
Let's connect
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