Mullvad isn’t blocked on any relays for me

Knots vs Core is an example of Bitcoin anti fragility in action. It’s an example of the cyber hornets rising and buzzing in defence of the network. It looks chaotic and unstructured, but is a manifestation of the inherent resilience of #Bitcoin.

One reason the debate is polarised is that the underlying problem may not be recognised. The only reason to have a mempool is not just fee estimation, it is also to construct block templates for mining. Since such template production is, in practice, centralised enough that we can successfully submit transactions directly to large pools, the real solution to this issue may be linked to the efforts to decentralise the majority of block template production - like what Ocean and others are doing.

The actual problem or solution isn’t clear to me, but we’ll get there, eventually.

Yes.

Completely true, but scarcely recognised. When the inner world is truly known, the distinction between the inner and the outer collapses into an unfathomable unity.

Absolutely loved this. Do read OTSS when you get a chance, like all of Allen’s pieces it is comprehensive, deep, and clear - it was my introduction to him back when it was published - and clarified a lot of my suspicions and steered me away forever cryptos and the DeFi LARP. I’ve been following everything he writes since then.

Thanks, Efrat. Keep the awesome podcasts coming!

😂

Yeah, I hear you. I really do.

But. Recapitalising the world with Bitcoin is value creation. I love to see individuals adopting Bitcoin, and they are the most numerous and quite a powerful group - but all adoption is good adoption, and I want to see the corporate world become bitcoiners as well. And eventually, governments of every size.

The peer to peer is scale invariant - individuals are peers, corporations are peers, and governments are peers, among each other. Peers of every scale acting in their self interest is one of the pillars of Bitcoin’s resilience.

The prefs of Strategy, which strip excess return and volatility in exchange for yield stability, are creating value, both for their investors, and for Bitcoin itself. There’s a lot of demand for outpacing or minimising fiat inflation without undue risk - bonds of every duration have hundreds of trillions in them because of this. Satisfying this demand in a new and ethically sound way, with bitcoin as the base collateral, is valuable. Worthy goal, imo. Far from icky.

I don’t know which side is correct in this, arguments from you and sipa both make sense to me.

What I do know is that I’m very grateful for your expertise, morality, perseverance, and all the amazing work you do, for Bitcoin and humanity.

So, THANK YOU 🙏 Luke, from the bottom of my heart.

If Bitcoin continues to bitcoin, everyone will bend the knee, eventually. The S&P index was driven my the mag7 in recent years. There will come a time when it is driven by Strategy alone.

Spam is any information in the chain that isn’t monetary. Since bitcoin dematerialises money to information, there is no way to stop arbitrary information on chain.

Relying on “good” behaviour isn’t what bitcoin is about, it’s about relying on “self-interested” behaviour. If illegal information on chain could stop bitcoin, it never could work anyway.

I’m glad that this is the biggest thing we’re quibbling about. I’m also glad that Knots is gaining so much traction, it shows us that Core doesn’t have any power. Bullish.

Cheers 🍻 to that.

#Bitcoin held in self custody is the undisputed GOAT, and has properties that aren’t even tangentially approached by all of the etf’s or BTCTC’s, and never will.

Not independently. It arises always as the interplay between subjective and objective.

🤣 😂

Manifestation is decentralised consensus. Checks out.

I agree with your top four, the clearest pure play picks at the moment, and the diminishing allocation sizes. Different jurisdictions as well.

Strategy and Saylor are in a league of their own. The prefs are, if demand for them is sufficient, a way for Strategy to safely increase their leverage ratio significantly - from 20% to 50% or more. Longer term performance of #MSTR if they manage to maintain the higher ratio will likely be unprecedented.

I wonder if there’s been any discussion on the moat the size of the treasury gives BTCTC’s? To issue preferred equity? And how long can we expect demand for them to grow? How much demand is needed for MSTR to maintain the target leverage ratio - as it keeps getting harder the higher bitcoin goes, and maybe as the treasury grows? Just as the ATM runs into diminishing percentage returns, where are the capacity constraints for the prefs?

If demand for such prefs is constrained, then I could see the senior prefs of large BTCTC’s being more credit worthy as they are more over collateralised - which should give them a lower cost of capital. The actual moat advantage seems to have many variables - like varying demand for the different prefs along the seniority stack, saturation, etc.

Saylor and Mallers have my trust, and have had it since before BTCTC’s.

NAKA not so much - issuing equity to buy stocks of other BTCTC’s is one step too far! It’s like a crazy dilutive actively managed fund Frankenstein. 😂

LQWD claims to use their treasury to provide lightning liquidity and earn 24% btc denominated yield, I think they’re unique in that. The smaller names may be interesting trades (minuscule allocs) if we get a BTCTC mania sometime, but there are so many now. Looks like we’re seeing the beginnings of it.

Yes, true. Selling #MSTR to pay dividends is only sustainable if MSTR deserves a sustained premium over the price of Strategy’s total #bitcoin holdings (NAV).

Does it? I believe it does - if they can grow bitcoin per share and keep accumulating bitcoin. By how much, and for how long?

The preferred stocks have Strategy’s bitcoin as backing. This is Strategy using/leveraging their #bitcoin treasury to issue credit worthy debt. They aren’t just hodling their bitcoin. The difference between the cost of servicing this debt, and the returns of bitcoin accumulated from issuing this debt is their profit.

This profit can scale - if there is enough demand for the preferred’s.

This profit can last - for as long as the yield demanded for bitcoin backed credit instruments is lower than the growth rate of bitcoin price.

The common stock should therefore price this in as a multiple, and we have long term justification for it to trade at a premium to NAV.

In addition, index inclusion leads to a mNAV insensitive bid. ATM in this kind of rising mNAV environment - increases the floor to which MSTR can fall due to mNAV insensitive sells by index funds - and also increases their capacity to collateralise more issuance of the preferreds.

I don’t see this as a ponzi. It’s a legitimate way to get access to compounding bitcoin. Not priced in fiat, but getting a bitcoin denominated yield on a bitcoin treasury. That’s MSTR. It cannot last forever, and it cannot scale forever, but it could work for several decades, and it could grow to trillions.

I lean towards lump sum, but ultimately am fine as long as the BTCTC has regular and aggressive buys, and they’re not exposed to fiat in significant quantities or durations. If bitcoin truly does around 30% per year for the next decade or more, both these strategies will likely be equally effective.

Jurisdiction dominance is more important for BTCTC’s, I think. MSTR has the USA, Metaplanet has Japan. No clear leaders in the others yet.

There’s more hostility than interest in Bitcoin treasuries here on nostr, from what I’ve seen. Wouldn’t expect anything less from the most hardcore Bitcoiners, who dominate this space. 😂

#MSTR needs the price of #bitcoin to keep going up to pay the dividends. It does not require new money to pay older buyers.

$STRC is not designed to guarantee the coupon rate, but to keep the face value constant. If they will succeed at doing this remains to be seen, so I would wait to see how it behaves during a drawdown before committing to it. Since your time horizon is 2–3 years, maybe you could wait a few months for the product to mature a bit. Volume and demand so far is promising, though.

If bitcoin experiences a 30% or more drawdown, I would expect the yield on STRC to go up. The market is currently not pricing the preferred STR’s solely on the basis of prevailing TradFi interest rates, but also as a function of BTC price and #MSTR sentiment and leverage. So if interest rates drop, the yield on #STRC may go down as well. The actual yield on STRC is likely to be way more volatile than money market funds.

The key point of STRC is to eliminate capital appreciation / depreciation due to interest rate risk. So minimising drawdown - this is the goal for STRC. With that, you forgo any capital gains as well.

I don’t agree with the comment about a bad ending waiting to happen or MSTR having expenses greater than income. If the CAGR of the bitcoin collateral is greater than the expense of servicing the preferred’s, that is a sound business model.

The first rule of Bitcoin is that you don’t have any Bitcoin.

Whatever ignites your passion and interest the most, that’s what I want to hear about. Dampen the urge to cater to the audience, and maybe sometimes write what you would most wish to read. 😊

The #bitcoin block enables the first counter party risk free transaction in history.

All transactions, which is what makes a market, involve the exchange of one thing for another thing. If I buy 🍌 bananas from a fruit vendor, the bananas are separate from the money I pay for them, so either party CAN cheat, since I can take the bananas without paying, and he can take my money without delivering the bananas. It doesn’t happen often due to legal enforcement or social contract, but it always could. Since the transaction involves two separate exchanges, it is always possible for either party to get cheated.

The block, on the other hand, is an atomic event that enforces both exchanges simultaneously. The user gets his bitcoin transaction confirmed, and the miner gets the fees from the transaction - both in one event - the block is accepted, or not. If the block is re-orged, both exchanges are undone, simultaneously, and the transaction goes back to pending mode.

Is there any other transaction in the world that has this property?

I don’t have a straight answer to your question. I’ve noticed the same - people just don’t get it or don’t want to hear it. Even those who do, get attracted to different aspects of Bitcoin, as it has so many.

The visionaries are few, and see how things could be different and better - the best among them see how things MUST be.

Most are conservatives, and work to keep what works working. They will be interested only when they can buy things with bitcoin.

Eventually when you can buy things only with bitcoin, the conservatives will be the majority of bitcoin users.

Not sure 🤔 if this is correct, but I think there’s at least a pair of arb trades between #STRK and #MSTR at conversion price and beyond - short one and use proceeds to go long the other.

The convertibility of STRK implies that

Price (STRK) >= Price (0.1 MSTR)

If we assume that MSTR is at 1000, STRK must be at least 100. Due to the yield and liquidation preference, STRK will have a premium.

The Effective Yield of STRK drops as its price increases, and so does the percentage of STRK price with the higher liquidation preference. So, in general, we can expect STRK premium to decline as MSTR rises (not true when broad market interest rates and/or perceived credit worthiness of the STR’s changes).

Further, with a simplifying condition that MSTR remains at and then above 1000, and STRK is at 100, we get two long/short trades

-

Short MSTR, long 10 STRK.

Short leg pays 1000 cash, and costs the Borrow Rate of MSTR.

Long (10 STRK) with the 1000 cash, so cost of position is covered. This position pays the Effective Yield of STRK.

All losses on the short position due to MSTR price rises are hedged by the long STRK position. If the STRK premium declines, there may be a small loss incurred.

In addition, maybe you could loan the long STRK position and earn the Borrow Rate of STRK.

Profit persists as long as

Borrow Rate (MSTR) < Effective Yield (STRK) + Borrow Rate (STRK)

-

Short 10 STRK, long 1 MSTR

Short leg pays 1000 again, and costs the Borrow Rate of STRK in addition to the Effective Yield of STRK.

Long 1 MSTR with this 1000, loan the MSTR share.

If the STRK premium expands, the long position doesn’t fully cover the short position here, but STRK premium will likely decline as MSTR rises.

Profit persists until

Borrow Rate (STRK) + Effective Yield (STRK) < Borrow Rate (MSTR)

-

Equilibrium is when

Borrow Rate (MSTR) = Effective Yield (STRK) + Borrow Rate (STRK)

At conversion and beyond, there should be short pressure on MSTR or STRK until this condition is met, causing the yield on lending your MSTR position to at minimum match the yield of an equivalent STRK position.

Even if, as likely, STRK costs more than 0.1 MSTR at 1000 dollar MSTR, the equilibrium condition just offsets by a proportional amount. In addition, I haven’t considered margin requirements for maintaining these positions.

Please reply and/or repost this if you consider it worthwhile. I welcome any insights / corrections as well!

#bitcoin #saylor

Happy to hear this - theory is all good and fine but lived experience is king. I do believe Bitcoin and the stack on top of it will have perfectly viable privacy when the need arises.

mNAV justified by accretive dilution on the stock to acquire bitcoin -

is quite different from mNAV justified by access to issue debt to acquire Bitcoin.

Both increase btc/share.

The first is ephemeral and better the smaller the current bitcoin treasury,

The second is enduring and advantaged in certain ways by large size.

The first will rotate with sentiment to newer and smaller LBE’s,

The second will endure for as long as the CAGR of bitcoin is higher than the CAGR of the cost of debt.

#mstr

The way I see it, yield and price always justify each other. STRF remains attractive at those prices because the drop in yield is justified by the increase in credit worthiness. Same with STRD.

What’s also interesting is the interest rate sensitivity of these instruments. What should they be?

#bitcoin #mstr #strf #strd #saylor

Thanos.

No one has come close for me, I’ve given up trying to understand why. So capable and noble, yet so so wrong.

“What did it cost?”

“Everything.”

Thou shalt not save

It’s the other way around for many.

I believe our god given strengths are what we find easy.

Our deficiencies, or opportunities to grow more complete, are what we find hard.

Great strategy.

Next step is to spend and replace.

This doesn’t decrease your stack, but it goes a long way to making the future where you cannot buy bitcoin, only earn it, come to be.

Earning and spending moves bitcoin, and when the demand to move bitcoin reaches critical mass, we win.