I’ve been thinking about this a lot lately: Bitcoin Layer 2 foundations need to 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 the evolution of this space, let me explain why Bitcoin Layer 2 basics should listen to me and Molly.
For years, bitcoin has been known as “digital rock,” a solid store of value but not much else. But now, with the explosion of Bitcoin Layer 2, Bitcoin is becoming a “programmable rock”. These layers add features like smart contracts and scaling solutions, making bitcoin more versatile than ever.
But here’s the thing: these projects raise millions of dollars from VCs and investors, and most of that money ends up in fiat currencies like the US dollar. This is a huge mistake.
Why? Because fiat is a melting ice cube. Every year it loses 5-10% of its value due to inflation. The longer you keep it, the less it’s worth. On the other hand, bitcoin has a compound annual growth rate (CAGR) of around 70%. If these foundations kept their treasury in bitcoin instead of fiat, their track wouldn’t simply stay the same, it would grow.
Imagine having 70% more resources each year to fund developers, grants and projects. This is the kind of advantage that could make or break a Level 2 ecosystem.
Ok, ok, I get it: Bitcoin is volatile and these foundations need some stability. For this reason, it makes sense to maintain 3 or 4 years of track in fiat. It would help cover short-term needs. But the rest? It should be in bitcoin. Over the long term, this strategy could double or even triple the reach of these foundations, giving them the time and resources they need to succeed.
There is a precedent for this too. Remember EOS? In 2018 they raised $4.2 billion and reportedly purchased 164,000 bitcoins. Today that bitcoin is worth around $16 billion, even as EOS itself has disappeared from the map. Now, imagine if Bitcoin Layer 2 foundations did the same but actually used their bitcoins to grow and support their ecosystem. The potential is enormous.
Ultimately, these foundations are being built on Bitcoin. They believe in its future, so why not keep it in their treasures? Bitcoin is the best store of value available. If you run a Bitcoin Layer 2 foundation, stop holding devalued fiat and start holding bitcoin. It’s not just a smart move: it is THE move.
This article is a Take. The opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.