Introduction
- Michael Saylor's "Bitcoin yield curve" is like a game where his company, Strategy, uses its Bitcoin to offer different investment options. Each option is like a different flavor of ice cream, with its own taste and price.
Short Summary of the product
- Bitcoin as the main ingredient: Just as all the ice cream flavors use the same base, all of Strategy's special investments are backed by the company's large collection of Bitcoin.
- Different flavors of investment: Strategy offers different types of investments, like special company stocks called "preferred stock," which are like the different flavors of ice cream.
- Different prices and rewards: Each investment has its own risk and reward. Some are safer but might offer less profit, while others are riskier but could offer more. This is like some ice cream flavors being more expensive or special than others.
- A different kind of chart: Usually, a "yield curve" is a graph that shows how much money you can earn from one type of investment over different lengths of time. Saylor's chart is different because it compares the profit from many different investments at the same time, all tied to Bitcoin.
- The main idea is to let people earn money from Bitcoin in different ways, not just by waiting for its price to go up.
Longer Summary
- The "Bitcoin yield curve" described by Michael Saylor refers to a new financial product created by his company, Strategy (formerly MicroStrategy), which is a set of different securities with varying yields and durations.
- This curve is built on Bitcoin as the underlying collateral, creating a "Bitcoin-backed yield curve". It offers investors different yields based on risk and time, rather than the traditional method of plotting yields against time for a single type of asset.
Key features of the Bitcoin yield curve
- Collateralized by Bitcoin: The securities are backed by Strategy's vast Bitcoin holdings.
- Multiple instruments: The curve is composed of four specific preferred stock issuances: STRC, STRF, STRD, and STRK, each with a different structure and yield.
- Varying yields and durations: The instruments offer different fixed or variable rates and have different durations, mimicking the structure of a traditional yield curve but with Bitcoin as the asset. For example, STRC offers a variable monthly dividend, while STRF has a fixed coupon and step-up protection.
- Alternative to traditional yield curves: Unlike traditional yield curves that plot the yield of one asset (like U.S. Treasuries) over time, Saylor's curve plots the yields of multiple different securities against each other to provide a range of income-generating options backed by Bitcoin.
- Purpose: The goal is to offer a new form of fixed-income investing that is directly tied to Bitcoin, providing a way for investors to earn yields while having exposure to the digital asset.
- How it's different from a traditional yield curve: A traditional yield curve plots the yield of a single type of bond (e.g., U.S. Treasury bonds) across different maturity dates (e.g., 3-month, 2-year, 10-year).
Last words:
- Saylor's Bitcoin yield curve plots the yields of different securities (preferred stocks) against each other, not against maturity dates. The primary variable is the instrument itself, not the time to maturity.
The End
@Shortsegments
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This post was written by Shortsegments, who has been writing about cryptocurrency, the blockchain, digital ledgers, bitcoin, ethereum, and decentralized finance; where digital ledgers and smart contracts meet finance, for seven years. You will find his articles here on his blog Link to his blog.
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The massive dip that happens recently in the world of crypto has created a lot of panic and doubt about the future of bitcoin
Yes indeed they were successful in sowing fear and uncertainty. They will make money selling into the hype they created and then make money buying at the bottom of the crash in price they precipitated. They cannot help themselves it's free money for them, and more bitcoin in the end.and make money buying