Bitcoin is Glass
How a Revolutionary Innovation is Transforming Capital and Reshaping the Economic World
New innovations often captivate us with their immediate benefits, but their most profound impacts take decades to unfold. History is filled with groundbreaking technologies that began with narrow applications but went on to reshape entire industries and societies.
Take the discovery of glass, for example. Born out of an experiment with molten sand, glass became much more than a reflective material. Over centuries, it transformed how we see and understand the world. Today, Bitcoin is poised to follow a similar path. What many view as simply “digital gold” is, in fact, something far more significant: digital capital. Much like glass, Bitcoin will ripple outward, transforming how capital is stored, allocated, and used.
As another example, consider the history of electrification. By the late 19th century, electric motors were clearly superior to steam engines—cheaper, smaller, and more flexible. Yet it took factories nearly 40 years to adopt them. Why? Because electric motors required a complete rethinking of factory design. Old layouts, optimized for centralized steam engines, couldn’t take advantage of decentralized electric power. The transformation required re-architecting not just technology but the entire system it touched.
Similarly, Bitcoin’s potential to transform society will take decades to unfold. It isn’t just a new asset; it’s a new framework for thinking about and allocating capital. Like electrification, Bitcoin must adapt to legacy financial structures before its broader impact can be fully realized. This process is already underway, as seen in two recent examples: the emergence of Bitcoin ETFs and the transformative strategy of MicroStrategy.
Bitcoin ETFs: Early Adoption in Familiar Packaging
The launch of Bitcoin ETFs by leading asset managers marked a major milestone in Bitcoin’s integration into traditional finance. Before ETFs, institutional and retail investors faced significant friction accessing Bitcoin through unfamiliar channels like wallets or exchanges. ETFs solved this by packaging Bitcoin in a format investors were already comfortable with.
The success has been undeniable: ETFs now hold 1.11 million Bitcoin, worth approximately $110 billion in assets under management (AUM), making them the most successful ETFs ever launched. While ETFs are a breakthrough in accessibility, they are just the tip of the iceberg. Bitcoin’s potential extends far beyond being a financial instrument—it’s poised to transform the entire capital allocation process.
MicroStrategy: A Case Study in Capital Transformation
The most compelling example of Bitcoin’s transformational power comes from MicroStrategy (MSTR). Founded in 1989 as a business intelligence company, MicroStrategy’s pivot to Bitcoin in 2020 under Michael Saylor’s leadership has redefined its identity. Facing macroeconomic uncertainty and currency devaluation, Saylor identified Bitcoin as a superior treasury asset—scarce, durable, and accessible.
MicroStrategy has since become the largest corporate holder of Bitcoin, using innovative financial strategies to scale its holdings. Central to this is the convertible bond strategy, which has allowed MicroStrategy to issue low- or zero-interest debt to fund Bitcoin purchases. These bonds capitalize on Bitcoin’s volatility, offering bondholders downside protection alongside the potential upside of equity conversion. Convertible bond issuers are willing to buy these bonds at a premium due to the volatility to the upside of the stock, as a result of the company being a levered proxy for bitcoin (higher vol = higher premium). Another elegant feature of the convert source of funds is that as the stock price rises, the debt effectively disappears, as they are in the money and can be converted into equity at the discretion of the Company.
This strategy has reaped extraordinary results:
• MicroStrategy’s stock has grown 124% annually since adopting Bitcoin, outperforming Bitcoin itself (64%), the S&P 500 (15%), and even tech giants like the Magnificent 7 (31%).
• The company’s Bitcoin holdings are now worth over $40 billion, offering equity investors a leveraged Bitcoin proxy.
While critics raise concerns about volatility and leverage, MicroStrategy has mitigated these risks:
• Unsecured debt issuance protects its Bitcoin holdings.
• Its software business provides stable cash flows to service obligations (worth noting recent large issuance have a 0% coupon, thus no interest service costs).
• Convertible bonds eliminate repayment obligations once the stock price clears the conversion threshold (again, if you think the price of bitcoin is going up in the long term, that logic would imply MSTR stock price should as well).
Bitcoin’s impact on capital allocation isn’t limited to MicroStrategy. Today, 75 companies hold Bitcoin as a treasury asset, collectively owning 2.8 million Bitcoin worth over $280 billion. And with upcoming changes in accounting rules by the Financial Accounting Standards Board (FASB), Bitcoin’s appeal as a corporate treasury asset will only grow. Starting in 2025, companies will be able to report Bitcoin’s fair value in real-time, eliminating the historical bias of marking down losses while ignoring unrealized gains.
Hot take: Bitcoin Is Glass
To understand Bitcoin’s potential, consider the story of glass. Discovered by Venetian artisans in the 13th century, glass started as a simple reflective material. Over time, it transformed society. Eyeglasses extended human vision, enabling scholars to read and write into old age. Telescopes and microscopes unveiled entire worlds, fueling scientific revolutions. Glass art inspired awe, while mirrors helped humans see themselves in new ways, fostering the idea of individuality. Today, glass powers fiber-optic cables and digital screens, forming the backbone of the internet and even bitcoin itself.
Glass didn’t just solve one problem—it became a platform for innovation, reshaping how we see, think, and communicate. Bitcoin is following the same trajectory.
Where glass changed how we see the physical world, Bitcoin is changing how we see the economic world. Bitcoin is eating capital. It’s reshaping capital allocation, starting with pioneers like MicroStrategy but destined to influence companies, pension funds, endowments, nation states, alternative asset managers, and families. Bitcoin is more than digital gold—it’s digital capital. Its transparency, scarcity, and programmability offer a foundation for trust and innovation, just as glass offered a foundation for light and vision.
The lesson from glass is clear: transformative innovations ripple outward, touching every system they encounter. Bitcoin’s journey is just beginning. Like glass, it will take decades to realize its full potential. But already, it’s transforming how capital is stored and allocated, laying the foundation for a new economic order. Bitcoin is not just an asset—it’s a revolution in how we think about capital itself.