Treasury Diversification with Bitcoin Reserve?

Ecosystem
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As the title suggests, I am opening a discussion on Treasury investment in Bitcoin to be held as a Reserve Asset.

Diversification of the Polkadot Treasury is not a new topic, and the ecosystem has already approved some forms of asset diversification. Based on the latest Treasury Report and data from doTreasury.com it appears that we have diversified into USDC/USDT (for a stable payment system), and MYTH. We have also diversified into various loans and liquidity offerings for players within the ecosystem.

Bitcoin continues to mature, corporations and nations are starting to publicly float the idea of adding it to their balance sheet.

Polkadot continues to mature and is starting to take shape as a full-fledged global enterprise.
Diversification into Bitcoin could be a strong move, displaying our strength and agility in one action, while also reinforcing the idea that we believe in the multi-chain future.

While I believe Polkadot is a force in its own right, I also believe in diversity and think a 1-3% investment in Bitcoin could be a smart move for the DAO.

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I’m not against this per se however I think first and foremost our treasury should diversify by investing in our own ecosystem, i.e. parachain tokens. Which not only serves the purpose of asset distribution but also injects much needed capital.

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How do you propose the Treasury to fund the purchase of Bitcoin? If you purchase Bitcoin by selling DOT, that would be bad for the ecosystem…

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@Cyrill I agree. Treasury diversification through parachain token investment is an important part of keeping our ecosystem healthy. I also entertain the idea that perhaps we are still so young that we need to focus our investments on ourselves.

Bitcoin is the foundation that we are all built on, the best performing asset of the past decade, and can provide a small hedge for DOT during our own downturns.

As far as I know, the only way for us to actually get Bitcoin on our Balance Sheet would be through Interlay’s iBTC. This route could provide the opportunity to not only diversify our holdings, but to use our parachains.

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By that logic and looking at this 3 year trend it’d be highly desirable to just get rid of all DOT and buy BTC.

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As an outsider, I don’t see any “lack of a hedge” problem, I see an inflation problem (and then some others, but I don’t want to go there).

One has been inflating at 1%, other at 8-10%. Simple comparison:

|Year|One  |Another|Relative|
|----|-----|-----|-----|
|2022|0.900|0.990|1.100|
|2023|0.810|0.980|1.210|
|2024|0.729|0.970|1.331|

Inflation is not the only factor, but it doesn’t help. One can’t inflate at such a high rate and expect appreciation (all other things being equal). People somehow think more coins helps with development and outreach, but they ignore that it also floods markets and it would require phenomenal growth to beat that inflation.

Secondly, BTC is also famously unstable, but if you look at that 3 year chart you can’t even see that. So it’s not a hedge at all. BTC crashes, all crypto (except stablecoins) crashes. It just doesn’t make any sense anyway (even before the first argument is mentioned).