The Solution for U.S. Debt: Bitbonds
What is Bitcoin?
The Bitcoin Network launched in January 2009 by its creator, Satoshi Nakamoto, who mined the Genesis Block, marking the first block on the Bitcoin blockchain. The Bitcoin Whitepaper described it as a decentralised, peer-to-peer electronic cash system designed to remove the necessity for banks. Transactions are recorded on a transparent blockchain and secured with cryptography, preventing double-spending. The network is coded to limit the total supply to 21 million Bitcoin (BTC).
As adoption grew, Bitcoin quickly became recognised as both:
A medium of exchange and;
A store of value
Recent history of Bitcoin
In January 2024, the U.S. SEC approved spot Bitcoin Exchange Traded Funds, marking a major milestone and bringing BTC into the mainstream.
In October 2024 Donald Trump was re-elected as President of the United States, ushering in a pro-crypto stance. This was in contrast to Operation Choke Point 2.0 which the Biden Administration deployed.
Demand for Bitcoin
Early demand for BTC was driven by retail investors who were interested in making atomic (instantaneous) peer-to-peer payments. As adoption grew and demand overwhelmed supply, HNW and family offices began to see the value in the network. Bitcoin became known as a store of value or "digital gold". In recent times the demand for BTC has surged, underpinned by institutional adoption. Hegde funds, corporations, asset managers and pension funds have allocated substantial capital to BTC. This has occurred mostly through BTC ETFs such as Blackrock's IBIT, Fidelity's FBTC and Greyscale's GBTC.
Cumulative BTC ETF Flows
The macro case for Bitcoin
Concerns over the lack of restraint by Governments around the world have led investors to look for trusted alternatives.
Fiscal deficits and money printing have resulted in currency debasement and inflation. The 21 million fixed supply of BTC has a predictably low level of inflation, making it an attractive store of value.
The unprecedented levels of sovereign debt have raised questions about the sustainability of the existing system. Central Banks are also losing credibility in fighting inflation and providing positive real yields.
What's next?
The unpredictability of Trump-era diplomacy is having a clear impact. The erratic imposition of tariffs - targeting both allies and adversaries - has undermined confidence in the U.S. dollar, contributing to its weakness. In response, investors are turning to alternatives like Bitcoin, gold, and silver as safe-haven assets.
Recently, Senator Ron Johnson warned that the deficit could soar to $60 trillion by 2035, highlighting the urgent need for responsible fiscal measures.
Looking ahead, it seems inevitable that governments will attempt to inflate their way out of growing fiscal deficits, as there is little political appetite for meaningful spending cuts - something the token efforts by the Department of Government Expenditure (DOGE) illustrate.
Western governments remain encumbered by obligations such as pension schemes, unemployment benefits, and disability support. The prevailing trend points to widening deficits and expanding money supply. To understand the long-term implications for fiat currencies, one need only examine the fates of the Argentine Peso or Turkish Lira. In contrast, Bitcoin’s incorruptible code offers a compelling alternative. Can BTC rise further? Absolutely.
US Dollar vs Argentine Peso (USD/ARS)
What happens if long term rates blow up in the U.S.!?
In the event that the U.S. National Debt continues to blow out (currently $37 Trillion), we envisage a scenario where the U.S. is forced to buy its own debt. This is similar to what Japan has been forced to do over several decades. The exodus of foreign capital will put pressure on the USD & force long-term yields higher.
A financial instrument that could be used to mitigate higher rates is Bitbonds!
What are Bitbonds?
The Bitcoin Policy Institute has proposed a novel financial instrument: Bitcoin-Enhanced Treasury Bonds - a hybrid bond comprising 90% U.S. Treasuries and 10% Bitcoin (BTC). This structure aims to solve two problems simultaneously: the U.S. government’s rising debt burden and stagnant demand for Treasuries. With the government needing to refinance over $14 Trillion in debt in the next three years at higher interest rates, these bonds could lower refinancing costs while building a strategic Bitcoin reserve.
An example of a Bitbond would be where the U.S. Government issues a bond where 90% of the funds go to the Government and 10% is used to buy Bitcoin. The Government would pay an interest rate of 1% on the borrowings, payable over 10 years. Upon maturity the investor would receive 100% of the BTC upside up to a yield of 4.5% compounded return. After this is achieved, investors would receive half of the remaining BTC upside. The U.S. Government receives the remaining 50% of the BTC upside.
U.S. Treasury Bitcoin Bond Example
The worst-case scenario is that the investor receives his money back (90 + 10) after 10 years. The best-case scenario is that the investor receives a compounded yield of 4.5% plus 50% of the BTC gain thereafter. See the chart ‘Investors 10 year Return (%)‘ below.
Investors 10 Year Return (%)
The U.S. Government benefits because it finances its lending at 1% (not 4.5%+++) and it takes half of the BTC upside after the higher yield has been paid.
If the US Government financed $1 Trillion in Bitbonds at 1% it would save $459B in interest repayments over 10 years. If BTC appreciated to $1Mio per BTC by 2035, the U.S. would have accumulated $240B in BTC holdings. Total savings at a price of $1Mio per BTC equals $699B ($459B + $240B). Not bad!
Amplify this strategy and you might just solve the US debt burden.
Government Savings on a $1T BitBond compared to a 4.5% 10yr Bond
Government Savings = Savings from interest repayments + capital from Bitcoin Reserves
Conclusion: Why Bitcoin matters now more than ever
Bitcoin began as a bold experiment in digital money - a decentralised, cryptographically secured alternative to fiat currency - but it has since evolved into a foundational asset class reshaping how the world thinks about value, money, and trust. With its fixed supply, transparent ledger, and immunity to political interference, Bitcoin offers a modern counterweight to increasingly unstable monetary systems.
Amid rising inflation, sovereign debt crises, and geopolitical uncertainty, Bitcoin stands apart as a neutral reserve asset not bound to any single nation’s interests. The recent institutional embrace of Bitcoin, through ETFs and emerging instruments like Bitbonds, signals a structural shift in global finance - from legacy systems to programmable, incorruptible alternatives. In a world where governments are likely to inflate their way out of debt and fiat currencies face credibility crises, Bitcoin presents a durable, long-term store of value.
As we move forward, Bitcoin is no longer just an asset for the digitally curious - it is a hedge against systemic failure, a strategic reserve for forward-looking institutions, and potentially, a critical component of national financial policy. The question is no longer what is Bitcoin, but rather, how will you position yourself for the world it’s helping to create?
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