The Utility Problem

Currently, Bitcoin has only limited utility, as the network can only handle three transactions per second and (with the recommended sixth block back for settlement certainty) a minimum latency of one hour approximately for settlement certainty to further transact any received Bitcoin. There are “layer 2” protocols that are supposed to create utility for Bitcoin such as the “Lightning Network”, but they still have restricted, cumbersome and vulnerable processes, which have failed to be largely adopted outside limited use-cases such as closed economy games.

Separately, although Bitcoin can be “staked” (but not lent) via various decentralized DeFi protocols for liquidity pools or swaps, the protocols are recorded on public, open-source blockchains and are vulnerable to hacks, rug pulls, front running and spoofing. They also lack scale and capacity. Currently, regulated banks have restrictive balance sheet reserve requirements that make crypto custody commercially unviable and native crypto assets are not approved products for brokers or investment advisors. As of now, outside of individual self-custody or accounts with crypto custodians, the only way to gain long exposure to Bitcoin is via the various Bitcoin ETFs. These products carry extra custody and fund accounting/admin fees, and still do not offer broader utility (lending, collateral, payments).

Our Solution

TapestryX, a next-gen L1 Networked Accounting Ledger Tech, can enable Bitcoin (escrowed by Coinbase or another Custodian) to be tokenized for an institutional permissioned network operating in real-time. Not only is this less expensive than Bitcoin ETFs to access long exposure, but with TapestryX’s real-time, validator-free, accounting-based distributed ledger, the network would allow regulated and fiduciary institutions to facilitate Bitcoin trading, borrowing and lending (with spread-based financing) and the means to configure any type of TradFi or DeFi transaction, as well as a simple means to settle Bitcoin to/from the Bitcoin network.

With simple configurations and coded APIs, a private BitcoinX Network (tokenized on TapestryX) can easily be expanded to tokenize other cryptocurrencies, fiat currencies (as a better alternative to stable coins), and tokenized real-world assets.

A network using TapestryX would be able to provide its participants with real-time accounting of all transaction types (including future-dated obligations) and easily allow for read-write custody, accounting, and tax reporting reconciled to what is an auditable double-entry accounting and custody sub-ledger, all for a fixed cost of roughly $3k/node month.

Implementation

A network sponsor is needed to convene initial network participants and get things started. The best candidates for sponsorship include Coinbase and other crypto platforms, traditional custodians (STT, BNY, JPMC), financial network providers (SWIFT, FIX), capital markets software companies (Broadridge, SS&C, FIS), or cloud providers (AWS, IBM, Azure).