The Question If there's no risk-free asset, where does bitcoin belong in an investment portfolio? This is what BlackRock had to grapple with. From: Bitcoin for Institutions

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

⚠️ It is unacceptable to view a bitcoin payoff today as worth anything less than its current USD equivalent on an apples-to-apples basis with a fiat-denominated bond. These estimates assume no further currency debasements, which is a highly unreasonable assumption. From: Bitcoin Requires a Deflationary Mindset

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

From the Brown/Asness Paper: From: Bitcoin for Institutions

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

""The world came to the realization that there does not exist a risk-free asset, and at the same time, they would grapple with the question of where bitcoin belongs in an investment portfolio."" — Brian Hirschfield From: BlackRock (Redefining Portfolio Construction)

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

Monitoring Ongoing monitoring of custody providers, ETF performance tracking, and regular plan reviews are required. From: Bitcoin for Institutions

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

Current Mining Issuance 3.125 BTC per block (~10 min) From: Bitcoin for Institutions

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

Corporate Debt Companies raise money through bonds or equity stakes. Cash flow determines creditworthiness; without it, equity stakes or restrictive covenants are required. From: Bitcoin for Institutions

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

Key Insight from Bitcoin for Institutions: 5. ETFs provide price exposure but enormous counterparty risk —they are not a substitute for true bitcoin ownership through self-custody. Chapter: Bitcoin Custody Requires a Higher Understanding of Tradeoffs

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

Imagine: BlackRock's IBIT ETF has acquired 2 million bitcoin on behalf of its users. Bitcoin reaches gold's market capitalization of $20 trillion — that's about $1M per bitcoin. BlackRock's ETF would represent 10% of that value, or $2 trillion . That's $2 trillion of value on balance sheets of companies all over the world. Now imagine we discover that BlackRock cannot sell back that bitcoin because its custodian cannot perform the signatures required to move the keys. BlackRock loses $2 trillion, and all of their customers have to write down 100% of that value on their balance sheets. Poof. The world that understands BlackRock knows very little about their custodian, Coinbase. The problems w... From: Bitcoin Custody Requires a Higher Understanding of Tradeoffs

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

Like with speech, there cannot be truly free markets without the total freedom to transact . The US uses its status as the central issuer of the world's current reserve currency (the US dollar) and the world's reserve asset (US government bonds) to maintain its status as the dominant leader in the world. The US uses SWIFT payment network access to provide oversight over seemingly every transaction in the global financial system. "Know Your Customer" and "Anti-Money Laundering" regulations claim that nobody transacting has any right to privacy. The reality is that the majority of criminal activity in the world happens in US dollars—a much preferred network for crime than an unencrypted public... From: Bitcoin Users Value Privacy

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

Like with speech, there cannot be truly free markets without the total freedom to transact . The US uses its status as the central issuer of the world's current reserve currency (the US dollar) and the world's reserve asset (US government bonds) to maintain its status as the dominant leader in the world. The US uses SWIFT payment network access to provide oversight over seemingly every transaction in the global financial system. "Know Your Customer" and "Anti-Money Laundering" regulations claim that nobody transacting has any right to privacy. The reality is that the majority of criminal activity in the world happens in US dollars—a much preferred network for crime than an unencrypted public... From: Bitcoin Users Value Privacy

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

Job Security In practice, keeping their job is often a more powerful incentive than maximizing shareholder value. From: Bitcoin for Institutions

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

""If a borrower posts bitcoin as collateral, this loan would automatically become the most senior loan. A person will let any other asset go before relinquishing their bitcoin to a lender."" — Brian Hirschfield From: Structured Credit

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

Key Insight from Bitcoin for Institutions: 1. NQDC plans have no contribution limits and broad investment discretion, making them ideal for bitcoin exposure. Chapter: Deferred Compensation - Riding the Wave

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

Medium-Term Problem Pensions are not a long-term issue nor impending doom. Most will survive at least eight more years - two full bitcoin halving cycles. From: Bitcoin for Institutions

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

Board Approval A company wishing to carry out a five-year project will likely first get permission from their board. From: Bitcoin for Institutions

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

Monetary Sovereignty Not beholden to government or Fed monetary policy From: Bitcoin for Institutions

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

Key Insight from Bitcoin for Institutions: 3. Institutional failures in bitcoin (FTX, Celsius, etc.) share common themes of not respecting bitcoin's nature. Chapter: HODL'ing Bitcoin is Irrational

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

""A company that holds bitcoin in its treasury has a significant optionality advantage over one that does not."" — Brian Hirschfield From: Treasury / Balance Sheet - Having Optionality

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors

Key Insight from Bitcoin for Institutions: 5. Target date funds are the biggest opportunity - trillions in assets with long horizons and passive investors. Chapter: Mutual Funds / ETFs - Wielding the Blade

Bitcoin for Institutions | Math Academy

Interactive course on Bitcoin for institutional investors