I’ve been thinking about this a lot lately. Bitcoin Layer 2 Foundations should start holding Bitcoin in their treasuries. It makes too much sense for them not to.
And apparently I’m not the only one.
As someone who has watched this space evolve, let me explain why the Bitcoin Layer 2 Foundation should listen to Molly and me.
For many years, Bitcoin was known as the “digital lock.” This was a surefire store of value, but it didn’t make much else. But now, with the explosive adoption of Bitcoin Layer 2, Bitcoin is becoming a “programmable rock.” These layers have added features such as smart contracts and scaling solutions, making Bitcoin more versatile than ever.
But here’s the problem. These projects raise millions of dollars from VCs and investors, and most of that money ends up being held in fiat currencies such as the US dollar. That’s a big mistake.
why? Because Fiat is melting ice. Each year, it loses 5-10% of its value due to inflation. The longer you hold it, the more it loses value. Bitcoin, on the other hand, has a compound annual growth rate (CAGR) of around 70%. If these foundations held their treasury in Bitcoin rather than fiat currency, their runway would not remain the same, but would grow.
Imagine a 70% increase in developers, grants, and resources to fund projects every year. This is the kind of edge that can make or break a Layer 2 ecosystem.
Okay, okay. Bitcoin is unstable and these foundations need some stability. Therefore, it makes sense to maintain a legal airstrip for three to four years. Helps cover short-term needs. But what about the rest? It should be Bitcoin. In the long term, this strategy could double or even triple the viability of these foundations, giving them the time and resources they need to succeed.
There is precedent for this too. Remember EOS? They raised $4.2 billion in 2018 and reportedly bought 164,000 Bitcoins with it. Today, its Bitcoin value is around $16 billion, even though EOS itself has disappeared from the map. Now imagine if the Bitcoin Layer 2 Foundation did the same thing and actually used Bitcoin to grow and sustain the ecosystem. The potential is huge.
After all, these foundations are built on top of Bitcoin. They believe in that future, so why not keep it in their safe? Bitcoin is the ultimate store of value. If you are running a Bitcoin Layer 2 infrastructure, stop holding depreciating fiat currencies and start holding Bitcoin. It’s not just a smart move, it’s an action.
This article is a take. The opinions expressed are solely those of the author and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
