Bitcoin versus Altcoin – A Corporate Dilemma?

For a while now, and just in the background, there has been a long-simmering feud between the advocates of Altcoin and the purists of Bitcoin as they compete to win the corporate treasury boom*. Indeed, many companies have been loading up their balance sheets with unheard of amounts of digital assets, and the debate has come to the fore as to which tokens belong on the balance sheet and just as important is why they should appear there. Basically, the argument between the two sides rests on the premise as to how value should be stored and also how it should be grown.

*Corporate Treasury Boom – In this year alone, in excess of one hundred companies have been formed and are known as digital-asset treasury companies (or DATS) and have been buying cryptocurrencies, some of whom are struggling with this high-risk strategy. The philosophy underpinning these companies is just to buy cryptocurrencies and thereby offer investors a way into the digital-asset boom while at the same time offering lucrative returns.

Those who side with Bitcoin feel companies should be built on the premise that ideological purity and a hard supply cap should be the only digital-asset to legitimately appear as a treasury asset on the balance sheet. However, Altcoin supporters are promoting an investment scenario premised on dynamic returns offering yield generating tokens such as Solana and Ether which can be built into portfolios. Altcoin are challenging the ethos that Bitcoin is the only digital-asset that belongs on a balance sheet, and data released suggest that today they are edging ahead in the battle.

Indeed, data shows that altcoin prices are rallying whilst other data shows the purchases of Bitcoin by the corporate treasury companies are on the decline. Figures recently released show that in June of this year purchases were circa 66,000, however in August just 14,800 Bitcoin were purchased. Elsewhere, total Bitcoin holdings have declined with the accumulation rate by treasury companies sliding to 8% in August down from a March high of 163% which can account for the average purchase size declining 86% from its peak earlier in the year to just 343 Bitcoin in August. 

Experts suggest that Altcoin, with their capacity and ability to be distributed throughout the decentralised finance markets**, are better placed to generate yield. This premise appears to be supported in the marketplace, as ,just recently, a USD 500 Million investment by Pantera Capital was secured by Helius to build a Solana based treasury. Indeed, while some senior players (notably pro-Bitcoin) have suggested that Ether or Ethereum is not the best asset by any means for a treasury company, data shows that some USD 16 Billion in Ether have been added to the balance sheets of treasury companies. 

**Decentralised Finance Market – This market, also referred to as DeFi, is a blockchain-based financial system that provides traditional financial services such as lending, borrowing, and trading without intermediaries such as banks or brokerages. It operates on public, permissionless blockchains utilising smart contracts to speed up and automate the process, enabling peer-to-peer transactions for participants in the network. The DeFi market focuses on replicating traditional financial services within the crypto-asset ecosystem, but through automated protocols rather than centralised institutions.

However, the total holdings of Altcoins are, according to data released, not really comparable to the holdings of Bitcoin treasuries which currently total circa USD 116 Billion. But the shift towards Altcoins has not gone unnoticed. The battle for which coin to support will continue with the ultimate prize being corporate investment in either Bitcoin or Altcoin treasury companies, however one CEO has ventured that the ultimate strategy is to have a digital asset company with a blend of both Bitcoin and Altcoin.