The Case for Bitcoin Layer 2 Foundations to Hold Bitcoin in Their Treasuries
As the cryptocurrency landscape continues to evolve, a growing number of experts are advocating for Bitcoin Layer 2 foundations to hold bitcoin in their treasuries. This strategy, although seemingly straightforward, has the potential to significantly impact the long-term success of these foundations.
The Evolution of Bitcoin: From “Digital Rock” to “Programmable Rock”
In recent years, bitcoin has transformed from a mere store of value to a versatile asset, thanks to the emergence of Bitcoin Layer 2s. These layers have introduced functionalities such as smart contracts and scaling solutions, making bitcoin an attractive option for developers and investors alike. However, despite this growth, many Bitcoin Layer 2 foundations continue to hold their treasuries in fiat currencies, a decision that may ultimately hinder their progress.
The Risks of Holding Fiat Currencies
Fiat currencies, such as the US dollar, are subject to inflation, which can result in a loss of value over time. With an average annual inflation rate of 5-10%, the purchasing power of fiat currencies decreases significantly over the years. In contrast, bitcoin has consistently demonstrated a Compound Annual Growth Rate (CAGR) of around 70%, making it a more attractive option for long-term investments.
The Benefits of Holding Bitcoin in Treasuries
By holding bitcoin in their treasuries, Bitcoin Layer 2 foundations can potentially increase their runway and resources. With a growing treasury, these foundations can fund more developers, grants, and projects, ultimately giving them a competitive edge in the market. While it is essential to maintain some stability by holding a portion of the treasury in fiat, allocating the majority of the funds to bitcoin can lead to significant growth over the long term.
A Precedent for Success: The EOS Example
In 2018, EOS raised $4.2 billion and invested in 164,000 bitcoin, which is now worth approximately $16 billion. Although EOS itself has declined in value, the bitcoin investment has proven to be a lucrative decision. Bitcoin Layer 2 foundations can learn from this example and adopt a similar strategy to grow and sustain their ecosystems.
Conclusion
In conclusion, holding bitcoin in their treasuries can be a strategic move for Bitcoin Layer 2 foundations. By doing so, they can take advantage of bitcoin’s growth potential, increase their runway, and ultimately contribute to the success of their ecosystems. As the cryptocurrency landscape continues to evolve, it is essential for these foundations to adapt and make informed decisions about their treasuries.
Source: Bitcoinmagazine.com
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