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Issue #677: Bitcoin as super-collateral

Issue #677: Bitcoin as super-collateral

Feb 19, 2020
Marty's Ƀent

Issue #677: Bitcoin as super-collateral

An extremely underappreciated aspect of bitcoin is its increasing utility as collateral. Our boy Fiat Minimalist makes this very apparent in the above thread. As the price of bitcoin continues to increase and more and more individuals become familiar with its value proposition they will become increasingly comfortable allowing other individuals to post it as collateral for loans.

Over time, as this becomes more and more apparent to the market, bitcoin will transition from merely collateral to super-collateral. The asset that is demanded most for this use case. Why is that, you ask? Because bitcoin benefits from being a digital bearer asset that can be sent anywhere in the world and fully settle in a very short amount of time at any point in time. No waiting on the banking system to facilitate the movement of your collateral.

On top of this, bitcoin is the hardest, most verifiable asset that has ever existed. The ability to cryptographically prove that the collateral you are holding for a loan is actually there and has not rehypothecated is pretty massive. Institutions (like our sponsor Unchained Capital) are beginning to wake up to this fact. As overall understanding of Bitcoin increases, this will become more obvious to others. Even in traditional finance.

With all this being said, there is still a lot of infrastructure that needs to be built out to ensure Bitcoin works as super-collateral. Mainly, multisig solutions and escrow services that allow the individuals taking out the loan, the institutions or individuals issuing the loan, and a third party arbitrating between the two (or more) parties to appropriately settle disputes. Uncle Marty is confident these solutions will come to market over time. Unchained Capital and others are already working to solve the multisig aspect of this equation. The escrow and arbitration services are what need to build out.

I am confident they will be built out. It makes sense that multisig would be tackled first. As you freaks know, there is likely a necessary order of operations to all of this.  

Final thought...

My God. So much laundry.


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