P01 study notes [10.30.23 - block 814,552] Topic: Bitcoin collateralized loans ...

npub1ks2…pkex

2023-10-30 17:40:52

P01 study notes [10.30.23 - block 814,552]

Topic: Bitcoin collateralized loans [subtopic: bitcoin as pristine collateral]
—
Anything can act as collateral but several objective properties can be used to evaluate the quality of collateral

Poor collateral: currency deposits, machinery, inventory

Good collateral: real estate, stocks, treasuries

Pristine collateral: bitcoin

Properties that determine quality of collateral:

Market liquidity: How quickly and easily an asset can be sold

Settlement: The ease and speed of achieving final transfer of ownership

Security: Ability to secure an asset

bitcoin is pristine collateral because it trades 24/7 365 days a year on a global market (highly liquid), can be settled globally within 60 minutes in any amount for a relatively low fee, and can easily be secured with digital encryption instead of being physically secured

Compared to bitcoin, real estate an inferior form of collateral because it is relatively illiquid, has rigorous and costly settlement (verification of title, transfer of ownership), and is limited to a local market because the asset cannot be moved globally

Implications: With treasuries and currencies collapsing, the quality of any collateral denominated in currency is eroding

bitcoin is quickly becoming the apex form of collateral globally and eventually become the preferred form of collateral for banks to hold on their balance sheets

#bitcoin is the reserve asset of the internet economy and the most pristine form of collateral humanity has ever seen!!

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Published at

2023-10-30 17:40:52

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