When you invest in a Bitcoin company, what's your thoughts process for returns on that vs Bitcoin?
Are you expecting that company's equity to outpace Bitcoin? Is it an insurance policy on your Bitcoin to have those companies?
Or is a framework like this post in mind?
I always think of it in bitcoin terms which is why I’m very choosy with investments. I’ve only made like 4 so far.
My expectation is that the companies equity outpace Bitcoin in order to consider it a successful investment.
I don’t think of it as an insurance policy but more like does this company need to exist? Are these founders talented? Do I want to see them succeed? Is it worth the high risk of losing bitcoin? Because the odds are good that I’m going to lose even if the company is successful. So I want to make sure I feel strongly about the effort such that I will still be happy being marginally less rich just knowing that I gave the right people a shot on the right thing.
TLDR: investing in bitcoin companies is more passion project than anything else. The odds are good that we will lose but if one does work… that will be quite special.
Ben here,
I appreciate the context and that's a common refrain I hear from people who swim in that circle, but probably not everyone.
For Bitcoin oriented capital allocators to really feel like they can invest outside of this psudeo-charity mental framework (I'm not saying that disparagingly), it feels like the incentives have to change a bit.
Would you feel like a Bitcoin denominated revenue share agreement would free up the way you'd approach an investment vs owning a piece of the company?
To be clear it’s not charity, I fully expect these companies to produce a significant return I’m just aware of how difficult that is going to be against Bitcoin over time.
100%. I get what you're saying and don't mean to insinuate that it is.
I just use that framing to say that "I don't think this investment will outpace Bitcoin" is a huge hurdle for any Bitcoiner to beat when thinking about allocating as an investor to Bitcoin companies.
Bitcoin is 100% the bar
But can an investment framework be made that changes the incentives a bit to make investment in Bitcoin/Bitcoin adjacent companies more attractive to a Bitcoin oriented investor.
If Bitcoiners are the capital allocators of the future, what's an attractive framework for them to actually allocate that capital?
Yield paid in bitcoin makes sense
Whether an investment in a company outpaces bitcoin itself is meaningless, in my opinion. It's the wrong framing.
We invest in securities, or anything honestly, to get returns in two major categories. Income or Equity. Revenue Stream or Nest Egg.
Bitcoin, if it grows in purchasing power compared to the base monetary asset (currently USD), is Global Equity. It's part of a Nest Egg, and the only way to get any value out of it is to exchange it for goods and services, or in exchange for other assets which we then turn around and exchange for goods and services.
That's not what I'm looking for in an investment, personally. If that's all I want, then I'd just buy Bitcoin and be done with it. Securities, companies, investments, they need to provide the other type of return. They need to give me a revenue stream. If they can do that, and added with all of the other investments I have I can pay my expenses for the life I want to live, then I will never have to sell any Bitcoin to pay for that life. That's the dream, that's the goal.
Bitcoin itself provides no income stream, unless we are operating a miner. It's all second hand. But expenses never go away, because we have to pay for food, lodging, travel, utilities, entertainment, all the things. I don't want to have to sell Bitcoin, I want my investments to generate a revenue stream so I don't have to.
I'm buying investment securities on the wall street side right now to build that revenue stream. I'm paying USD for those securities, and getting the revenue stream in USD. When (not if) Bitcoin becomes the Medium of Exchange and Unit of Account, I will be willing to spend Bitcoin for those securities, either on the wall street side of things or tokens on the Bitcoin/blockchain side of things. But they're going to have to show me that they can pay me a revenue stream, otherwise they're not worth the investment.
I'm not really a 'maxi', because I haven't converted my entire stack of capital to Bitcoin. But I strongly support efforts to transition to a fully wealth based system for capital, information, innovation and trust. Bitcoin is the foundation for a wealth based capital system. The others are coming.
You're basically agreeing with the framework of the OP here I think.
If you have to sell Bitcoin to make an investment you probably care about at least one of 3 things: will this outpace Bitcoin, is it something I value having in this world, will it pay me a dividend.
This framework is changing the investment structure in a Bitcoin company away from equity and more towards revenue share.
A bit of just a mental framework, but there's a template link I shared if you wanna look futher into the concept we layed out
Was still at work, just needed to type that out. I've looked at the agreement, and it mostly fits the framing that I've been using for a wealth based economy, getting away from the debt based economic system that is destroying us.
The way I define things: Debt based systems pull from the future to build the present. Wealth based systems build from the present to build the future.
Bitcoin aligns well with a wealth-based system due to its finite supply and decentralized nature, avoiding reliance on debt-based fiat systems. The SAFBP’s use of Bitcoin payments supports this, but the minimum payment clause and lack of operational clarity introduce debt-like risks.
Not a lawyer, just some concerns and ideas.
The clause requiring minimum monthly payments of [___] BTC, regardless of revenue, forces the company to pay even if it lacks funds, mimicking a debt obligation. This could lead to borrowing or asset liquidation, pulling from future resources.
New Clause: “The Company shall make monthly payments to the Investor equal to the Revenue Percentage of its monthly Revenue, as calculated in Section 2(b). No minimum payment is required, and payments shall not exceed available Revenue.”
The agreement doesn’t confirm that the Purchase Amount comes from the investor’s own resources, leaving room for borrowed funds that would align with a debt-based system.
New Clause: “The Investor represents and warrants that the Purchase Amount is derived from their own funds, free of any loans, liens, or encumbrances, and that no borrowed funds are used to fulfill this agreement.”
The agreement defines Revenue broadly but doesn’t clarify how the company generates it. If revenue comes from speculative activities (e.g., Bitcoin trading), it risks undermining wealth-based value creation.
New Clause: “The Company represents that at least 80% of its Revenue shall be derived from operational activities, such as product sales, services, or blockchain-related infrastructure, rather than speculative trading or investments in cryptocurrencies.”
The agreement lacks mechanisms for investors to verify revenue or payment calculations, reducing trust and control over their assets.
New Clause: “The Company shall provide quarterly reports to the Investor, including audited Revenue statements and payment calculations, verified by an independent third-party auditor. Investors may request additional documentation to substantiate Revenue figures, subject to reasonable confidentiality terms.”
Payments are calculated using the Bitcoin Price Index at month-end, exposing both parties to Bitcoin’s volatility. This could lead to unpredictable USD-equivalent returns, complicating wealth-based stability.
Revised Clause (Section 2(b)): “The Bitcoin amount of each monthly payment shall be calculated by dividing the USD value of the Revenue Percentage by the 30-day volume-weighted average Bitcoin Price Index, calculated from the 1st to the last day of the applicable month.”
The abbreviated agreement omits details on how Bitcoin payments are handled or secured, risking loss of present assets due to hacks or mismanagement.
New Clause: “All Bitcoin payments shall be sent from a multi-signature wallet requiring at least two independent keys, one held by the Company and one by a trusted third party. The Company shall maintain industry-standard security protocols for all Bitcoin transactions and custody.”
If the company holds or trades Bitcoin to make payments, it could expose investors to speculative risks, diverging from wealth-based principles.
New Clause: “The Company shall not use the Purchase Amount for speculative trading in Bitcoin or other cryptocurrencies. Any Bitcoin held for payments shall be limited to amounts necessary to fulfill obligations under this SAFBP and stored securely.”
The Term ends when the Payment Cap is reached or after [___] years, but prolonged commitments could feel like future obligations if revenue is low. Investors might feel locked in without clear exit options.
New Clause: “The Investor may terminate this SAFBP with 60 days’ notice if the Company’s average monthly Revenue falls below $[___] for six consecutive months. Upon termination, the Company shall return any unused portion of the Purchase Amount, converted to Bitcoin at the current Bitcoin Price Index.”
With these modifications, the SAFBP would:
Rely solely on revenue-based payments without minimums, eliminating debt-like obligations.
Use only unencumbered investor funds and secure operational revenue sources.
Provide transparency through audits and reports, empowering investors.
Mitigate risks via price smoothing, secure custody, and limited speculation.
Offer flexibility to exit if performance lags, focusing on present value creation.
This is a good first draft. It needs to be enticing enough to Bitcoiners. Guys like HODL can’t feel like it’s charity.
