Ah, back to this topic: From hating on one type of financialized crap (=loyalty programs) to another (financialized bitcoin; shitcoin companies)

MONEY DOESN'T HAVE A CAPITAL STRUCTURE;

there is a fundamental issue with STRC existing as anything but a stablecoin. I believe this is true for pure-play publicly traded bitcoin treasury companies in general and they may never “hold par” for this reason. I actually don’t believe such a structure should ever hold par regardless, but the best version of it is a stablecoin, and it needs to exist at scale in a competitive environment to function.

Fits well into the "par price of money" we're thinking about these post-Mehrling days (#1595092, #1596093, #1428602)

DIGITAL CAPITAL:

When Michael Saylor calls STRC digital capital, credit, money, or any of these vague terms, he means that converting Bitcoin’s capital appreciation into a fixed payment is needed to make it closer to money today. Put simply, trade the upside for downside protection, and you get stability.

That must be the most succinct, non-judgy, two-sentence description of what these (surviving... #1521292 let's be honest, most of them are dead/dying #1519091) treasury companies are up to.

if bitcoin goes up a lot, then a financial structure that trades away the upside to limit the downside creates the stability needed to use it as dependable money today in a fiat economy. What is novel here is that you’re basically describing a money market fund fully backed by bitcoin. In other words, over-reserving a dollar liability by multiples in bitcoin should be able to reliably keep a peg to the US dollar and pay interest.

Waaait, waiiit. Didn't we try this once...

The Conflict of Interests in the Capital Structure

Strategy is a company with a capital structure, and because of that, it is criticized for the conflicts of interest that come from it. Parker Lewis has been publicly critical of treasury companies for reasons that, in my opinion, are primarily related to this. My pushback on these criticisms is that, yes, there are conflicts of interest between equity holders, preferred equity holders, and other tranches of capital…but every capital structure has conflicts of interest. That is the fundamental nature of a capital structure.

This is simply the nature of a company. Money —is not a company. Money is a commodity for the vast expanse of history. In recent years, in the fiat economy, it is a debt contract, and that contract needs to be homogeneous. It must remain homogeneous to be fungible.

THIIIIS:

When you take a slice of a capital structure and call it money, it must be independent of other liabilities. Being a slice of a capital structure means that it, at any point, can have a senior or subordinate claim issued, which will have the “issuer,” in this case management (ie, Saylor) forced to choose between making a decision that supports either the “money” sleave or the equity sleave or the senior convertible credit or anything else at all.

Exactly. We've seen that in the last twelve-ish months: Saylor picked management/insiders/benefactors and (one of) the preferred equities... by sacrificing some bitcoin but mostly diluting commons like crazy. Owners of MSTR have been insanely diluted (SHAFTED! SCALPED!), no matter the accounting tricks they've employed to hide it and the talking points they've distributed to the sycophantic podcasters. (#1513175, #1292636). Have fun staying poor, bagholder suckers.

"This is the problem with something like STRC being “money” or money-like. It’s part of a capital structure, which inevitably distorts its value and, thus, its fungibility."

It's difficult to account for/properly assess an interest-bearing monetary token (1/365th of the annual interest, added back to the banknote every day??). Deposit accounts at major commercial banks sort of abstract away from that -- by paying you some interest on your balance, but mostly just bag the convenience yield and/or customer inattention (#1598123).

"A stablecoin is the purest version of fiat economics. The government issues debt, debt backs the money, and nobody is in between."

Interesting observation... All those who came to bitcoin to "be your own bank" or exit the banking system will find a new home:

The stablecoin architecture completely disintermediates the banking system and domestic banking institutions will fight it until the bitter end for this reason. Banks exist because regulations allow them to, not competition. #1598910
Stablecoins can and should be able to pay interest. Debt pays interests, debt backs currency, and the stablecoin layer blends the heterogenous debt contracts into a single homogenous token that is fungible. This is obviously what every consumer wants. A dollar asset that pays them interest. Because of their efficiency, stablecoins can pay much more.

Aaaaaaand, TL;DR, stablecoins will always beat out Saylornomics

I don’t expect STRC economics (overcollateralized bitcoin) to be how this starts. I think fiat-backed stablecoins with large bitcoin reserves that allow them to pay more interest than any other pure fiat reserve issuer is how it emerges.

...screw u, Blok.

The optimal stablecoin is a dollar-pegged, interest-paying offshore stablecoin that is backed by actual bitcoin and is redeemable in bitcoin. I think that is the end state, and it is starting with 5% of the reserve in Tether.