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David Bailey promised his investors Medici’s Florence, but he delivered them a total collapse. In 2025, Bailey’s Nakamoto Inc. lost 99% of shareholder value in a wreck so complete that it now serves as Exhibit A in why building corporate treasuries on pure Bitcoin speculation is a doomed exercise. This is not a story about one bad CEO or one failed company. This is a story about incentives, narrative warfare, and how the Bitcoin community chose to abandon the protocol’s actual economic design in favor of a get-rich-fast fantasy that collapses the moment the money stops flowing upward.
- Strategy’s Bitcoin play
- When ideology blinds Bitcoin
- Bitcoin’s design has hard limits
- Bitcoin’s design takes a detour
- Cash system, not a speculative vault
- Preserving Bitcoin’s cash purpose through BSV
- Treasury Trap: BTC needs real utility
The Nakamoto disaster exposes something the maximalist community does not want to examine: Bitcoin as originally designed cannot sustain itself through perpetual price appreciation. It was engineered to survive through transaction volume. The difference between those two models is not academic. It is the difference between a system that can function indefinitely and one that devours itself.
Michael Saylor has become the public face of Bitcoin treasuries. He is also (so far) the exception that proves the rule. Strategy (NASDAQ: MSTR), formerly Strategy, works because Saylor did not build a company to speculate on Bitcoin. He grafted a Bitcoin strategy onto an existing software business that generates half a billion dollars in annual revenue. When the music stops, Strategy has employees to pay, customers to service, and cash flow to survive on. Strip away that operating business, and you get Nakamoto Inc.: a hollow shell that implodes the moment the chart stops going up.
The model that works, and why it works for now…
Strategy is not a pure Bitcoin treasury company. It is a software and analytics business with real customers, real revenue, and real operational costs. This distinction matters more than the maximalist community cares to admit.
Saylor began accumulating BTC in August 2020. He did not create a company from scratch to speculate on Bitcoin price. He retrofitted an existing, cash-flow-positive business with a treasury strategy. That is a different animal entirely.
The mechanics are straightforward. Strategy uses its software revenue as operational ballast. That ballast allows the company to raise capital through convertible debt and equity offerings. Saylor uses that capital to buy BTC. When BTC prices rise, the unrealized gains inflate the company’s market cap. That inflated market cap allows Saylor to raise more capital on better terms. That capital buys more BTC. The flywheel spins as long as BTC prices move upward.
The company’s stock trades at a premium to net asset value (NAV) because investors are betting on perpetual accumulation and price appreciation. Saylor issues convertible notes with interest rates sometimes below one percent because bondholders get BTC exposure with downside protection from actual business operations. This specific case, while very aggressive, is not technically a Ponzi structure. It is leverage built on real enterprise value, and whether or not it is “too much” leverage depends on how you feel about Saylor’s promises and projections.
Time will tell…
Critically, Strategy generally generates enough cash to service debt and keep operations running if BTC prices stagnate or decline. The software business produces positive EBITDA. Employees get paid. Servers stay online. Customers renew contracts. That operational backbone prevents the whole structure from collapsing during bear markets.
Is the model aggressive? Very. Is it risky? Very, very. Does it depend on Bitcoin price appreciation continuing forever? Yes, it does. And that is the flaw.
The Nakamoto disaster: What happens without an operating business
David Bailey promised shareholders the next Strategy. What he delivered was a masterclass in financial extraction.
Nakamoto Inc. was supposed to be a publicly traded Bitcoin treasury. Bailey, CEO of Bitcoin Magazine and a prominent BTC maximalist, promoted the company heavily and served on the board. The pitch was elegant: Why own Bitcoin directly when you can own shares of a company that accumulates Bitcoin and might trade at a premium?
Here is what actually happened.
The company was raised through a merger with a shell called KindlyMD in May 2025. PIPE investors (private investors in public equity) received shares at $1.12 per share. The public market opened at $28 to $31 per share. Retail investors piled in. By September, the stock had collapsed to 96 cents from its peak, then kept falling. By year’s end, Nakamoto traded at 29 cents.
The Nakamoto structure locked in a call option that would allow Bailey’s private companies to sell to the public vehicle at $1.12 per share, regardless of the market price. When the stock crashed, that option became an instrument of pure extraction. Bailey’s private firms received 363.6 million shares at a price four times the trading price.
📉 BITCOIN BET SENDS NAKAMOTO INTO A 99% COLLAPSE
Bitcoin treasury firm Nakamoto Inc. $NAKA is down 99.32% in ~280 days, wiping out $23.6B in market cap.
With 5,398 $BTC bought near ~$118K, its treasury now sits on roughly $270M in unrealized losses. pic.twitter.com/SOBUuXZEOP
The company had zero operating revenue. No software sales. No service contracts. No business. Just Bitcoin on the balance sheet and debt that needed servicing when the chart stopped going up.
By October, the debt spiral began. The company borrowed $203 million from Two Prime Lending to redeem $200 million in convertible notes. Four days later, they took out $206 million in USDT from Antalpha at seven percent interest to pay off Two Prime. On December 16, they borrowed $210 million in USDT from Kraken at eight percent interest, collateralized at 150% by Bitcoin holdings.
Lenders were insulated. Shareholders were exposed.
Bailey told investors from the beginning that he would use this vehicle to acquire BTC Inc. and UTXO Management, both companies he founded. The documents were public. The terms were disclosed. The strategy was: pump the stock, get inside pricing on your own firms, dilute the public shareholders while insiders sold at the locked-in price, then use the wreckage as a shell to acquire your private empire.
The Bitcoin Magazine CEO, the man who runs The Bitcoin Conference, the leader who positioned himself as steward of the movement, engineered a 99% destruction of shareholder value to enrich himself.
The cognitive dissonance in the BTC community was stunning. Bailey was “one of them.” He talked the maximalist language. He preached about hodling and the number going up. The community gave him a pass because he was part of the tribe. This is what institutional capture looks like when ideology substitutes for scrutiny.
How many more times will this happen before they learn?
The economics that actually matter
Here is the uncomfortable truth that the maximalist movement does not want to examine: Bitcoin was never designed as a perpetual appreciation machine for corporate treasuries, and that’s why this model doesn’t work for everyone.
Bitcoin’s security model depends on miner revenue. Miners receive two streams: the block subsidy (new coins) plus transaction fees. Both fund the hardware, electricity, and operations that secure the network through proof-of-work (PoW).
The block subsidy halves every four years and will reach zero by 2140. At that point, 100% of miner revenue must come from transaction fees. This is not speculation. This is arithmetic, but it also ignores the practical fact that the block subsidy will be less than one whole bitcoin by the year 2032, so the price would need to double TWICE in the next six years just to be as comfortable then as it is today; and it’s already been uncomfortable to mine for most of the last five years.
If BTC remains primarily a store of value with minimal transaction activity, where does mining revenue come from? The maximalist answer is always the same: “The price will be so high by then that even small transaction volumes will generate enough fees.” This is circular logic that assumes perpetual price appreciation. It is the exact assumption that destroyed Nakamoto Inc.
Bitcoin was always designed to scale transaction volume. Satoshi Nakamoto’s original vision was a peer-to-peer electronic cash system capable of processing millions or billions of transactions per day, generating revenue through utility rather than artificial scarcity.
Consider the math: If Bitcoin processes five billion transactions per day at an average fee of $0.01, that is $50 million per day in miner revenue. That is sustainable security without perpetual price appreciation or decreasing subsidies.
If Bitcoin processes 500,000 transactions per day at $50 per transaction (same total revenue), you have created a system unusable as money. You have created digital gold for vaults while everyone transacts on Layer 2 solutions, sidechains, and alternative networks. You have created a security model dependent on price, never stopping its ascent.
This is the trap the BTC community walked into. They chose artificial scarcity of block space over genuine transaction scaling. They built an ideology around small blocks and high fees. They treated network congestion as a feature rather than a problem. They sacrificed Bitcoin’s actual economic design for a narrative about permanence and hoarding.
I warned @saylor many times that constantly buying Bitcoin nonstop and backing it with his own company shares is playing with fire. I tried to be a helpful friend, tried to help him see the risk, he decided to ignore and backfire on my warnings by calling my warnings nothing but… pic.twitter.com/OtdFCUBff0
— Doctor Profit 🇨🇭 (@DrProfitCrypto) February 23, 2026The maximalist movement did not discover this accidentally. It was a conscious choice driven by the incentives of large holders. Capping transaction capacity limits supply. Limited supply should push prices higher. This benefits everyone who already owns Bitcoin. The cost is borne by everyone else: users who cannot afford to transact, developers who cannot build applications, businesses that cannot deploy at scale, and ultimately, miners who face a collapsing revenue model after 2140.
This is the context in which treasury companies like Nakamoto exist. They are the logical endpoint of a system that has abandoned its original purpose. If Bitcoin cannot be used for commerce at a reasonable cost, then speculation becomes the only remaining use case. Treasury companies are not an accident. They are the inevitable outcome of choosing “digital gold only.”
How BTC abandoned its design
The original Bitcoin protocol contained no 1MB block size limit. That was added as a temporary anti-spam measure. It was always meant to be removed as adoption increased and the network matured.
In 2015 and 2016, the Bitcoin community had a choice: scale the block size upward and fulfill Satoshi’s vision of a peer-to-peer electronic cash system, or artificially constrain the network and build ideology around scarcity. Small blockers chose constraint, and they treated anyone with the “Cash” position as some kind of dangerous leper in the broader community. They built that choice into the narrative: small blocks are pure. Large blocks are corruption. This was not engineering. This was identity politics, and the consequences were predictable. Transaction fees on BTC climbed from cents to dollars to tens of dollars. The network became unusable for regular commerce. Developers left. Applications went elsewhere. Thousands of new blockchains were spun up in the fallout, and the utility case for BTC collapsed. What remained was the narrative: Bitcoin as digital gold, forever appreciating, forever held, never spent.
The BTC community had to invent reasons for high fees. They became features: proof of commitment, demonstration of value, and gatekeeping to maintain decentralization. The emperor had no clothes, but the community convinced itself that nudity was the point.
Into this world came corporate treasuries. If you cannot use Bitcoin for payments, why not use it as collateral for leverage? If the protocol cannot scale transactions, why not create financial engineering around price appreciation? Strategy did this competently because Saylor had a real business underneath and was first to market with the idea. Nakamoto Inc. did it without guardrails because Bailey had nothing but ambition and a bull market. Big mining companies also got in on the action because “why not?”
One by one, all Bitcoin treasury companies will either willingly dump their BTC or be forced to as prices fall.
Data shows companies have reduced their exposure to BTC by over
37% within the past three months, the largest downturn in history.
Bitcoin is a failed experiment.… pic.twitter.com/zwfYTLB27H
Why Bitcoin was designed for transaction volume
The whitepaper is titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” Not “Bitcoin: Digital Gold for Perpetual Hodling.” Not “Bitcoin: A Vehicle for Leveraged Corporate Speculation.” Cash. A system for transactions, for commerce, for economic utility beyond speculation.
Satoshi explicitly planned for massive scaling. The protocol was engineered to handle millions of transactions per day. The block size limit was temporary. Simplified Payment Verification (SPV) was designed to allow light clients to validate the network without downloading the entire ledger. Specialized servers would index blocks for small fees. Users would have options: run a full node, use an SPV wallet, or subscribe to a commercial service. The network would specialize and scale.
This was the vision. A global settlement network issuing and settling cash payments that could process billions of daily transactions at low cost, fueling a network on which tokens and smart contracts could thrive! Security funded through transaction volume and miner specialization, not perpetual price appreciation. A monetary system that could actually function as money for the Internet.
BTC abandoned this. They chose permanence over scale, ideology over pragmatism, narrative control over engineering reality. They built Lightning Network as a second layer to handle payments that BTC could no longer process natively. They wrapped the protocol in mysticism: small blocks are sacred, full nodes run on Raspberry Pis, everyone can participate equally. None of this is true. None of it has to be true. The narrative is the point.
BSV: The implementation that remained faithful
This is why BSV exists. BSV is the only implementation that refused to abandon Satoshi’s original design. When the BTC community chose artificial scarcity, BSV chose transaction scaling. When BTC implemented off-chain layer 2 solutions, BSV scaled the base layer. When BTC built a narrative around permanent hoarding, BSV remained committed to electronic cash functionality.
The numbers tell a story the maximalist community would rather ignore: BSV processes millions of transactions per day. Often more than BTC despite a fraction of the market cap. These are not spam transactions. They are gaming transactions, data storage, tokenization, peer-to-peer commerce, and supply chain verification. They represent actual use cases that are economically impossible on BTC due to high fees.
Apps can process millions of transactions with fractions-of-a-cent fees. Companies use BSV for supply chain integrity at scale. Developers build applications that would be ruinously expensive on BTC. This is what sustainable Bitcoin economics looks like: utility driving transaction volume, transaction volume generating miner revenue, miner revenue securing the network indefinitely.
Could BSV’s price appreciate? Potentially. But the network does not depend on it. The economic model functions through transaction volume regardless of price speculation. That is anti-fragile. That is sustainable.
The path forward: Choosing economic reality over narrative
The Treasury Company Trap is real. The Nakamoto disaster is the proof. More companies will fail under similar models if the BTC community continues down the path of perpetual speculation without underlying economic utility.
The answer is not to ban leverage or condemn corporate treasuries. The answer is to build Bitcoin’s value on something more sustainable than perpetual price appreciation: actual utility as global electronic cash.
That means scaling transaction capacity. That means keeping fees low enough for everyday commerce and micropayments. That means building applications that create real economic value through Bitcoin’s unique properties rather than speculating on its price.
For builders: Stop building on BTC. The base layer will not scale. Layer 2 solutions add trust assumptions and complexity that defeat Bitcoin’s core value proposition. Migrate to BSV, where the base protocol scales and transaction fees remain economical.
For businesses: Your Bitcoin infrastructure strategy should not depend on price appreciation. If you need to store wealth in Bitcoin, fine. But do not leverage against it, expecting perpetual gains. The Nakamoto wreck should be instructive: when the music stops, leverage becomes a weapon against you.
For regulators: Watch what Treasury companies do and how they rationalize perpetual capital raises against declining asset prices. The pattern is familiar from every bubble: new participants enter at high prices, early participants exit, leverage increases, the structure collapses, and retail investors lose everything.
For the Bitcoin community: The BTC narrative has been a successful marketing campaign. Digital gold resonates. Hodling feels righteous. The numbers going up provided emotional confirmation. But the narrative conflicts with the protocol’s actual design. Bitcoin was built for transactions. If you want to preserve its long-term viability, you have to accept that eventually, transactions will matter more than price.
This is not an argument for BTC to change. That community has made its choice. The governance structure, the ideology, and the incentive alignment all point toward continuing down the current path. This is an argument for everyone else to recognize that path for what it is: a dead end that will collapse when the perpetual price appreciation game reaches its limit.
BSV chose differently. It remained faithful to Satoshi’s design. It scaled transaction capacity. It kept fees low. It enabled economic utility. Build there. Transact there. Prove that Bitcoin can function as intended.
The Treasury Company Trap will catch many companies before this cycle ends. The only sustainable Bitcoin is one that generates value through transaction volume, not one that bets everything on perpetual price appreciation.
Satoshi understood this. The protocol was built on it. The original design is still there, waiting. BSV is carrying forward what the rest of the community abandoned.
That is the only path that survives.
This opinion piece is published to encourage discussion. The author’s views are their own and do not constitute legal, procurement, or policy advice, nor do they represent the positions of CoinGeek or its partners.
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