$3 trillion. That’s the scale of the opportunity bitcoin treasury executives see in digital credit, a fast-growing class of bitcoin-backed debt instruments designed to generate yield on bitcoin holdings.

The market has already grown to about $10 billion in less than a year, participants say.

"What we're seeing with digital credit right now is exponential adoption," Matt Cole, Chairman and CEO of Strive, said during a panel discussion at the ongoing Consensus Miami about the evolution of Bitcoin Treasury companies.

"We're just about $10 billion of adoption in less than one year, and after the launch of Strive and outside of the bitcoin ETFs, that's the second fastest product launch in capital markets history."

Cole added that the global credit market is worth $300 trillion, and bitcoin-backed credit capturing 1% of that would represent $3 trillion in demand. "I don't think that's crazy," he said.

Digital credit is a new type of income-generating security backed by bitcoin, designed to let investors earn yield while reducing exposure to bitcoin’s price swings. The concept borrows from traditional credit markets, but instead of being backed by a company’s revenue or cash flows, the debt is backed by bitcoin held on the balance sheet.

These instruments are typically structured as perpetual preferred stocks, meaning they pay a regular yield with no fixed repayment date. Strategy, the world's largest publicly-listed bitcoin holding firm, pioneered the category last year, paving the way for others. Strive was the second public issuer of digital credit, with a product called SATA.

Strive is not the only one optimistic about digital credit. At the same panel, Katherine Dowling, president of Bitcoin Standard Treasury Company, which is preparing to bring roughly 30,000 bitcoin onto its balance sheet along, said her firm is actively looking at digital credit as the next step.

"We too will be looking at digital credit as well," Dowling said. "I think it's tremendously important." She noted that her firm's CIO brings a structured finance background to evaluate these products, and that the firm will be looking at diverse product offerings to meet the needs of different people.

"So you have to create that balance and listen to what the market wants, and also see what the market can bear and can offer for you," she said.

Amanda Fabiano, COO of Nakamoto, said her firm saw the structured credit trend early and built a fund on top of it, giving institutional investors access to digital credit in a wrapper that works for all, including those who cannot buy the instruments directly.

Nakamoto does not have its own preferred stock product, and is still weighing whether having one makes sense given its structure as an operating company with a treasury underneath, she explained.

"I do think there will be additional treasury companies that issue these, and we will assess which ones go in the fund and which ones don't," Fabiano said. Early this year, Nakamoto acquired BTC Inc. and UTXO Management, a firm managing Bitcoin investments and advisory for 210k Capital, LP.

Speaking of additional treasury companies entering the space, Kwasi Kwarteng, executive chairman of Stack and former U.K. Chancellor of the Exchequer, said the scope for growth is enormous. There are roughly 200 bitcoin treasury companies, he said, quoting Blockstream's CEO Adam Back, compared to 5,000 banks in the U.S. alone.

"If bitcoin does become a global financial currency, which I think it will, there's room for a lot more bitcoin treasury companies," he said, framing the digital credit opportunity in the starkest terms of the panel.

"It's a binary choice," Kwarteng said. "Either you believe bitcoin is going to the moon or you believe it's a Ponzi scheme. There's no middle ground."

For those in the first camp, the prize is not incremental.

Kwarteng explained that one percent of the $300 trillion global credit market would represent roughly $3 trillion, almost double bitcoin's current market capitalization of around $2 trillion.

"You're going to have digital credit, you're going to have the full gamut of opportunities. You're essentially going to create or recreate the financial system, the global financial system, based around bitcoin," he noted.