Nobody Understands Fixed Income (But Every Boomer Buys It)
A Layman’s Guide to Bonds, Bitcoin, and What Comes Next
Let’s start with a little confession: most people who own fixed-income products have no idea what they actually own.
Yet, across generations, especially among Boomers, they keep buying them. Municipal bonds, corporate bonds, preferred shares, annuities, bond funds, you name it.
Why? Because they promise safety, stability, and yield. But here’s the controversial truth:
Fixed income isn’t “safe.” It’s just complicated in a way that looks safe until it isn't.
And now, in 2025, a new breed of fixed-income products is emerging—ones backed not by governments or blue-chip corporations but by Bitcoin.
Yes, that “volatile internet money” that most financial advisors still can’t explain is now collateral for income-generating securities, and nothing is selling faster on Wall Street this month, so rest assured, it will be coming to an advisor conversation near you very shortly!
So what are these things? How did we get here? And what risks are hiding in plain sight?
This post is your crash course in the evolution of fixed income: from ancient grain loans to Bitcoin-backed perpetual preferreds like STRF. Buckle up.
The good news? You’re now about to be one of the few who actually understand this asset class with full historical context, and how its latest interaction will likely play out in the future.
The Long Game: Fixed Income’s Ancient DNA
Fixed income is older than money itself.
2400 B.C. (Mesopotamia): The earliest recorded bond agreements weren’t paid in gold or coin but grain. A farmer would borrow barley and agree to repay more later, with interest. If he defaulted, he faced legal penalties or even slavery.
Ancient Rome: Emperors borrowed from citizens and promised fixed returns. If the empire fell? You got nothing. Risk was real.
1600s Europe: The Dutch issued perpetual bonds, debt instruments with no maturity date that still paid interest centuries later. These were fixed income’s OG (Original Gangsta) version of “forever yield.”
Why it matters: Fixed income started as a trust-based relationship. The borrower had to deliver, or else. But there was always one key assumption: the asset you were getting paid in (grain, gold, currency) held value over time.
The Modern Machine: Bonds in the Age of War, Trade & Inflation
1700s–1940s ushered in the mass adoption and industrialization of fixed income:
The Dutch East India Co. tied bond payments to spice trade profits. High yield, high volatility. Present-day Boomers would’ve loved them.
U.S. War Bonds (WWI/WWII) helped fund the war effort. Treasury auctions were formalized, creating the “risk-free” benchmark that still anchors the global financial system today.
1940s–1970s: Inflation destroyed bondholders’ wealth. If you held fixed 3% Treasuries while inflation roared at 8%, you lost nearly half your purchasing power over a decade.
Lesson: Government bonds aren’t risk-free. They’re just default-risk free. Inflation, interest rate swings, and opportunity cost are always in play.
Enter the Casino: 1980s–2000s Yield-Chasing Madness
This was the era when fixed income stopped pretending to be boring.
Junk Bonds: Michael Milken turned low-credit corporate debt into Wall Street gold. Default rates soared, but so did returns—until the party stopped.
Mortgage-Backed Securities: Banks bundled home loans into bonds. People bought them thinking they were “safe” because they were diversified. However, when the U.S. housing market collapsed in 2008, so did global finance because the derivatives market was exponentially over-leveraged under the surface.
CDOs (Collateralized Debt Obligations): These Frankenstein instruments sliced and repackaged debt into “tranches” and stamped them with AAA ratings… even when the underlying loans were garbage.
Insight: Every time Wall Street gets bored with low returns, it invents something exotic, gives it a safety-sounding acronym, and sells it to pension funds.
Post-2008: “Safe” Gets Rethought
After the financial crisis, fixed income evolved again:
Private Credit exploded. With banks pulling back, institutional investors filled the lending gap, offering loans to mid-market companies. Risky, illiquid, but juicy yields.
Asset-based finance (ABF) surged, with bonds backed by real assets like autos, equipment, and even shipping containers.
Structured Preferreds emerged. These are hybrid investments, sitting between equity and debt. They often pay higher yields but carry unique risks, including perpetual structures, payment deferrals, and no voting rights.
Enter Michael Saylor, Mad Genius?
We don’t have time to go into the full context of Strategy (MSTR- formerly MicroStrategy) and Michael Saylor’s evangelical yet now polarizing status within the Bitcoin and public markets community. Still, I think Michael is one of the greatest financial engineering minds of all time, yet that is not an endorsement of his products or offerings. It personally scares the heck out of me, and his offerings won’t get any of my money. I sincerely hope he doesn’t fall from grace with his bold, but risky leveraged play on a Bitcoin Treasury Strategy, because he has been an invaluable educator and communicator of Bitcoin’s true value and potential.
Only time will tell on the former, but nonetheless, as other public companies rapidly raise billions of dollars and innovate off of his playbook, the emergence of Bitcoin-fixed income products is here, and the accumulation of this scarce asset is now beyond inevitable.
Back to our regularly scheduled programming now on 21st-century fixed-income product innovation…
Enter STRF, a modern spin on this concept that adds something no fixed-income product has ever had: Bitcoin as collateral.
What Is STRF, Really?
STRF (ticker: STRF) is a perpetual preferred stock issued by Michael Saylor’s company, Strategy (aka MicroStrategy).
In plain English:
You get 10% annual dividends, paid quarterly.
It accrues if they miss a payment, and the rate climbs up to 18%.
You don’t get voting rights or equity upside.
There’s no maturity—it lasts forever, unless they choose to redeem it.
It’s backed (in theory) by the company’s massive Bitcoin reserves.
It trades on the Nasdaq so that you can buy or sell easily.
To a Boomer investor tired of low bond yields, it sounds like a dream. But is it?
Let’s break it down.
Why STRF Is Different (and Possibly Dangerous)
1. Perpetual Timeline
Unlike a bond that matures in 5 or 10 years, STRF has no end date (just like the Dutch bonds of yesteryear). That means your principal is never automatically returned. Based on the “Rule of 72” (a quick formula that is popularly used to estimate the number of years required to double the invested money at a given annual rate of return), this means you need to hold this investment for 7.2 years to double your principal (or 3.6 years to get it back before you are “in the profit”)
You can only get out by selling it—or waiting for redemption (which may never come).
2. Bitcoin-Backed (Kinda)
This isn’t a “secured bond.” There’s no legal lien on the Bitcoin, and the devil is in the details. It’s more like a psychological backstop. If Bitcoin tanks, the company's financial position tanks, and your dividends are at risk.
3. Compounding Payment Triggers
If Strategy skips a dividend, it starts compounding higher. This is great in theory, until they can't afford to catch up. Unpaid income continues to build, but remember: you don’t get interest on that compounding unless it’s eventually paid.
4. Liquidity Mirage
Yes, it trades publicly, but the market isn’t as deep as blue-chip stocks. If everyone tries to exit at once (say, during a Bitcoin crash), good luck getting full price.
5. No Voting, No Conversion
You can’t convert STRF into regular shares. And unlike bonds, there’s no protective covenant. You’re at the mercy of company decisions.
Why Boomers Love (and Misunderstand) Fixed Income
Boomers came of age when:
Bonds were simpler.
Interest rates were double digits.
Treasuries were considered a safe haven.
But the world changed.
Today’s bond funds are duration-sensitive and exposed to rate hikes.
Preferred stocks sit lower in the capital stack and carry deferral risk.
Structured credit is complex and often misunderstood.
Most investors don’t realize:
Bond prices fall when rates rise.
Preferreds can defer dividends indefinitely.
“Safe” funds often hold exotic debt like CLOs and junk tranches.
And now? Products like STRF layer Bitcoin price volatility on top of this already opaque risk stack.
Are We Watching the Birth of Bitcoin-Pegged Fixed Income?
It’s not crazy to imagine that 10 years from now, there’s a whole class of related crypto and Bitcoin collateralized bonds, structured notes, and perpetuals. STRF may be the first innovative offering, but it won’t be the last.
We’re seeing a new form of fixed income emerge:
Higher yield to offset crypto volatility.
No maturity = permanent duration risk.
Compounding clauses to attract yield hunters.
The question is whether the market learns to price these risks correctly or repeats 2008 with a blockchain twist.
My Final Thoughts: Own the Base, Not Just the Yield
Here’s the thing about Bitcoin: it doesn’t pay income, but it is the future collateral.
Owning it directly in a self-custody wallet (not through ETFs, brokerages, or wrapped contracts) means holding the raw capital that everything else will soon be built on, including all of these Wall Street-packaged products.
You can hand your personally owned Bitcoin down through generations without counterparty risk, management fees, or dilution.
STRF and its future offspring will likely mature into a legitimate fixed-income class eventually, but we’re early. There’s still engineering risk, pricing risk, and structural unknowns.
In the meantime, get your yield from more transparent, time-tested vehicles.
But don’t ignore what these Bitcoin-backed products are telegraphing: Wall Street must buy the base before they can sell you the paper layered on top.
That means you still have time to front-run the financial system establishment and innovative public companies by owning Bitcoin outright, dollar-cost averaging into a ‘wholecoiner’ status, and building generational wealth before the rest of the world realizes there are only 21 million to go around.
IN MY HUMBLE OPINION, 2025 is the last window to own the asset at this price band, before it becomes the collateral behind everything else.
Yours in wealth and health,
~Chris J Snook
Related Reading:
Sources
Historical & Market Evolution:
STRF + Preferred Securities:
Additional Reading: