Bitcoin's Emergence as the Global Collateral Base

The U.S. Treasury's recent debt buyback program spotlights a fundamental shift in the global economy – one where traditional assets like government bonds may be reaching their limits. This comes at a time when Bitcoin is maturing, offering properties ideal for use as collateral.

The Treasury's program is a response to a glut of older, less attractive "off-the-run" bonds clogging the financial system. These bonds were issued during the era of near-zero interest rates. Rising interest rates have diminished their appeal to investors, hindering the Treasury's ability to fund ongoing deficits, which show no signs of slowing.

The buyback program is a workaround, allowing dealers to offload unsellable bonds and create space for new Treasury debt.

However, it comes at a cost – further borrowing to buy back existing debt ultimately increases the government's long-term interest burden. This highlights the limits of the current debt-based system.

Bitcoin: A New Kind of Collateral

Bitcoin's unique qu…