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bitcoin collateral
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Summing Up The Case For Bitcoin As The Future Of Collateral

Tony Spilotro by Tony Spilotro
1 year ago
in Bitcoin
Reading Time: 3 mins read
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Today, a report was released by Arcane Research in partnership with Bitcoin trading platform Bitstamp outlining the case for BTC as the future of collateral in the finance world.

The nearly 70-page report deep dives into the various reasons as to why this is, and how they see it coming to be. Here’s a summarized version ahead of digging into the report further to learn more.

The Many Use Cases Of Cryptocurrency

Bitcoin, like the internet in many ways, is a blank canvas. It is the technology for which developers can build upon, and the creative can utilize and implement in a variety of ways.

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Revolutionary technologies like the two don’t come along very often, and when they do how they fit into everyday life isn’t always clear. And even when use cases are obvious, other uses emerge as time goes by and the users of the technology find other ways to apply it.

Related Reading | Overheard On CNBC: If It Wasn’t For Bitcoin, Gold Would Be $3K

When Bitcoin first began it was pitched as the first form of cryptographically-secure digital cash. From its early days, the asset has transformed into more of a store of value, a speculative asset for trading, and a compelling digital currency that could potentially disrupt many facets of finance.

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Where it goes next is hard to tell exactly, and could take many forms. Some see the cryptocurrency becoming the global reserve asset, while Arcane Research’s report points to Bitcoin taking over the collateral market, and here’s why.

btc bitcoin

Only over the last year have institutions realized the potential of Bitcoin | Source: BTCUSD on TradingView.com

Bitcoin “Perfect” To Become The Global Collateral Asset

Because of the asset’s potential and seemingly unlimited use cases, it makes for perhaps the greatest speculative asset historically. Due to that, it trades with wild volatility that’s caused it to be especially attractive with derivates traders. And that’s where a new use case has unexpected blossomed.

According to Arcane, Bitcoin’s use as collateral has been essentially bootstrapped by the derivatives market due to digital portability, acting as a proof of concept for other collateral cases.

Related Reading | Running Bitcoin: Passing The Torch From Hal Finney To Jack Dorsey

The report goes on to call Bitcoin the “perfect” collateral asset for reasons beyond portability, however. Other reasons for this claim include the fact the asset cannot be seized and is therefore free of counterparty risk, and it trades globally, 24/7 across all borders.

Bitcoin’s use as collateral in DeFi applications is also growing thanks to Wrapped BTC. The overall use in all collateral applications from DeFi to derivatives and then some, is anticipated to reach 1,000,000 BTC by 2023.

The collateral market is currently a $20 trillion market just waiting to be tapped into by Bitcoin. While not everyone might have saw this use case coming, it is certainly one the asset could serve, and would ultimately benefit investors and the ecosystem both.

Featured image from Deposit Photos, Charts from TradingView.com
Tags: bitcoinbtcbtcusdBTCUSDTcryptoxbtxbtusd
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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