Learning from Monetary History: The Pitfalls of DAT Strategies

Summary

1. DAT strategies boost stock prices but inherently include the fragility of 'just holding'

Digital Asset Treasury (DAT) companies integrate cryptocurrencies into their finances, boosting stock prices and corporate value. However, a strategy that merely continues to hold cryptocurrencies, assuming price increases, exposes vulnerabilities the moment market conditions change. Historically, the act of hoarding resources in anticipation of value appreciation has been repeated, but rarely leads to sustained success.

2. The decline of the Spanish Empire and Sweden illustrates the limits of a 'resource-dependent economy'

Both the Spanish Empire, supported by the Potosí silver mines, and Sweden, which based its finances on copper, mistakenly believed in the intrinsic value of the resources themselves, neglecting domestic industries and new value creation, leading to rapid decline. The value in metals arises either from 'collective illusion' or 'conversion to new businesses', and resource dependency is extremely vulnerable to paradigm shifts.

3. DAT companies are challenged on how they utilize cryptocurrencies in real business strategies

While cryptocurrencies like Bitcoin do possess scarcity, merely hoarding them does not guarantee sustained growth for nations or corporations. What is crucial in evaluating DAT companies is how they plan to use the held cryptocurrencies for business and value creation. As history shows, speculation and a supremacy of holding always invite backlash. DAT strategies must integrate 'utilization' with 'holding'.

Today's Coin: "Philip III 8 Maravedí Copper Coin"

Digital Asset Treasury (DAT) companies, which adopt the strategy of incorporating and operating cryptocurrencies as core corporate assets, have been a topic of discussion in the cryptocurrency industry for some time.

Anticipating price increases in cryptocurrencies and incorporating them into financial strategies is seen as having potential to enhance corporate value, and indeed, the stock prices of these companies have significantly risen.

Some DAT companies, judging this strategy as beneficial, are also moving to purchase additional cryptocurrencies.

There are rumors that some DAT companies, by allowing institutional investors who are not permitted to invest in cryptocurrencies to purchase their stocks, are effectively providing them with opportunities to invest in cryptocurrencies.

If stocks are purchased, funds for buying cryptocurrencies can be secured, and an increase in stock prices can be expected.

Furthermore, if the price of the purchased cryptocurrencies rises, the company's assets expand, and stock prices rise even further. If the bullish market is maintained, both the market capitalization and stock prices of DAT companies will increase.

However, doubts always linger about what results the strategy of 'just holding' can sustainably produce.

Interest was invented during the Mesopotamian civilization, and since then, attempts at profit-making have been repeated. Naturally, strategies of holding promising valuables have also been historically tried numerous times.

Large-scale trading aimed at short-term profits—so-called 'speculative' behavior—is still generally disliked, but this time, we want to analyze the problems of DAT companies based on a certain resource monopoly incident that occurred in 16th-century Europe.