MicroStrategy, Bitcoin, BitFi AND Collateralisation
MicroSrategy’s Approach to Raising Debt:
Michael Saylor has been a pioneer in the Bitcoin space, educating people on sound money principles and highlighting the properties of the ultimate bearer asset. Owning Bitcoin is an investment in a decentralised financial future, where we don’t need to trust — we can verify. A future where we can custody our own assets and be self sovereign individuals, transacting peer to peer with zero counterparty risk.
Michael’s approach to collateralizing Bitcoin is a testament to his visionary thinking and deep conviction in the future of digital assets. By leveraging Bitcoin as collateral, he has not only positioned MicroStrategy for potential long-term gains but has also demonstrated a new financial strategy that could reshape corporate finance.
HOWEVER — the centralised strategy used has HUGE counterparty risk.
COUNTERPARTY RISK:
MicroStrategy holds a significant amount of Bitcoin on its balance sheet. To raise capital, the company borrows money from financial institutions, using a portion of its Bitcoin holdings as collateral. For example, in March 2022, MicroStrategy’s subsidiary, MacroStrategy LLC, secured a $205 million loan from Silvergate Bank. The loan was collateralized by Bitcoin held in a custodial account with the bank.
OH DEAR….
What have we learnt from the last cycle? Do we not remember the FTX and Celsius debacles? Counterparty risk and “trusted third parties” — no more self custody for Microstrategy for this Bitcoin.
Surely relinquishing custody to financial institutions that are built in a fractionalised system is asking for trouble. There must be a better way? A way to transact peer to peer — to collateralise your Bitcoin? BUT, Bitcoin doesn’t have smart contract functionality and can’t be used natively on DeFi.
Ether, BitFi and GVNR
BitFi or (Bitcoin Defi) will be the narrative of 2025.
What is GVNR?
GVNR stands out as the only permissionless, universal control framework in the market, offering a distinct advantage over existing solutions.
GVNR allows any connected chain to control assets on any of the other connected chains. This means that every connected chain can control Bitcoin, meaning every GVNR connected chain becomes a competitor to Stacks. GVNR opens up BitFi, enabling Bitcoin to be utilised as collateral, providing liquidity to the entirety of the digital asset ecosystem — WITHOUT the reliance on fragile bridge infrastructure.
GVNR will be the leading solution for cross-chain control and the drive towards Bitcoins collateralisation cross-chain and the mobilisation of trillions of dollars of liquidity.
REMEMBER:
RULE NUMBER 1 — NOT YOUR KEYS, NOT YOUR CRYPTO.
RULE NUMBER 2 — DON’T BRIDGE, GOVERN.