The physics of Bitcoin: Institutional gravity vs. Lightning's velocity

One of the hottest crypto narratives of 2025 is “Bitcoin’s institutional land grab.”

We’ve covered this from multiple angles before: Strategy — the company formerly known as MicroStrategy — now holds more than 470,000 BTC after its February rebrand, positioning itself not as a software firm but as the Bitcoin treasury company. (Bloomberg)

Hot on its heels, Twenty One (XXI) — backed by Tether, SoftBank, and Jack Mallers — just launched a BTC treasury company with an initial stack of 42,000 BTC, instantly ranking among the top three corporate holders. (Cantor)

To many mainstream outlets, this looks like the inevitable “BlackRock-ification” of Bitcoin. Wall Street appears to be buying into the idea that decentralized financial systems, backed by economics favoring scarcity, are becoming increasingly attractive.

Some in the Bitcoin community see this as vindication for early adopters. But there’s growing concern that as more BTC migrates to brokerage accounts or corporate treasuries, the original ethos of Bitcoin is being diluted.

Put another way, there’s a growing tension between Bitcoin the idea (peer-to-peer, internet-native digital cash) and Bitcoin the reality (a highly valuable asset that becomes more secure and scarce over time).

Open Money’s mission has always been to explore this tension — within Bitcoin and across crypto — and to track whether new networks can remain open and permissionless as they become systemically important to global finance.

This month’s data suggests the answer still leans “yes” — and Bitcoin’s Lightning Network offers a clear illustration of how this could work.

The lightning counter-story

We draw from a recent Bitcoin Magazine deep dive into Lightning activity from companies building Lightning-specific products and services. (Bitcoin Magazine)

For context, the Lightning Network is a Layer 2 protocol built on Bitcoin that makes small, everyday transactions faster and cheaper.

Here are key highlights from recent Lightning data — and why they matter for Open Money:

Three lenses on the data

1. Yield as utility
   Block’s 9.7% return isn’t DeFi-style liquidity farming — it’s payment routing fees earned for solving real-time graph problems at scale. The yield arises from utility, not leverage. This challenges claims that Bitcoin is “just for speculation.” Lightning data shows yield emerging from real usage, and it’s likely to grow as adoption continues.
2. Self-custody at the UX layer
   Breez demonstrates how Lightning can vanish into apps, just as HTTPS faded into browsers. Users who tip podcasters or buy game credits may never realize they’ve opened a Lightning channel — they just see a fast, cheap payment. Open Money is about this kind of invisible openness: self-custody by default, lower costs by design.
3. Global access beyond KYC walls
   LN Markets sees heavy use from Latin America — often sidelined by global finance. Lightning channels require no broker, no investor accreditation, no national ID. Even when users trade synthetic dollars, final settlement is in BTC, avoiding stablecoin freeze risk.

Open Money is a tension, not a toggle

Bitcoin’s monetary base must coexist with large institutions — ETFs need issuers, custodians need underwriters. The real danger is capture: where BTC is locked in custodial silos and users interact only through permissioned APIs.

Lightning’s 2025 data suggests a counterforce strong enough to keep the base permeable:

• Economic density above the base layer
  Low onchain fees and empty blocks aren’t failures — they’re signs of Layer 2 doing the heavy lifting. Every Lightning transaction is a satoshi not idling in an ETF vault.
• Business models that break if coins can’t move
  Block’s yield requires global, uncensorable payments. LN Markets needs instant settlement. These firms are economically aligned with openness.
• Regulatory arbitrage flips direction
  A brokerage ETF is KYC-heavy and OFAC-monitored. A self-custodial Lightning wallet can comply with local rules after the fact (e.g., export a CSV). Open beats closed when it works better and complies more flexibly.

Don’t ignore the gravitational pull

Bitcoin’s treasury vacuum story isn’t going away. Strategy’s playbook is simple: as long as investors crave a “leveraged Bitcoin proxy,” the company will keep absorbing float. Twenty One, MetaPlanet, and others are following suit. (GlobeNewswire, Forbes)

That raises two strategic concerns for Open Money advocates:

• Liquidity risk
  If corporates control double-digit supply, margin calls or activist campaigns could force massive sell-offs. Self-custodial users should prepare for volatility unlinked to protocol health.
• Governance optics
  A congressional hearing where Fortune 500 CFOs represent “the Bitcoin industry” would be a PR loss. The antidote? Lightning-powered commerce that regulators can’t dismiss as speculative.

Where things go from here

1. Watch routing revenue
   If Block’s yield compresses as more nodes join, that’s healthy — it shows competition. A drop without volume growth, though, may signal stagnation.
2. Track channel liquidity vs. ETF inflows
   Lightning’s ~5,500 BTC in public channels is tiny compared to ETF coffers (~400,000 BTC). A 2–3× jump would show grassroots liquidity is still viable.
3. Promote borderless UX patterns
   Open Money won’t win by preaching decentralization. It wins by being better. When sending 100 sats feels as easy as an emoji, the tide turns. Breez SDK and Fedi’s community custodians are leading indicators.

The takeaway

Bitcoin’s institutional gravity is real — but so is Lightning’s velocity. The 2025 data tells a nuanced story:

• Institutions are locking up supply and legitimizing BTC as a reserve asset.
• Layer 2 innovation is unlocking new utility rooted in self-custody and openness.

Which force dominates will define Bitcoin’s future. Today, both curves rise. Tomorrow, the balance may tip. Keep your eye on routing yields, user-owned keys, and sats in the wild. That’s where the future of Open Money is decided.

Open Money Project update

I realize recent updates might sound like I’m circling the drain. It’s felt that way.

The real struggle has been cracking a narrative structure that makes the Open Money case compelling. I always knew that stacking daily posts wouldn’t make a book — but I expected some narrative device to eventually present itself. So far, nothing.

Finding that structure is now my top priority. Only then can I return to the writing itself. The good news: I am making progress. The bad news: it’s painfully slow.

More soon. As always, thanks for your support.