A Bitcoin bond works similarly to a government or corporate bond but references BTC as either the repayment currency or collateral. El Salvador’s so-called ‘Volcano Bonds,’ for example, tie returns to both the country’s energy initiatives and Bitcoin’s price performance. Think of it as a typical bond wearing a Bitcoin jersey.

While it opens up new ways to finance projects using crypto, it also carries market volatility risks. If BTC prices drop, the issuer and investors face challenges in meeting or receiving interest obligations. Nonetheless, the concept is groundbreaking, demonstrating how Bitcoin’s growing acceptance can extend beyond straightforward payments into more traditional financial products.