EXCLUSIVE: Michael Saylor Masterclass On Bitcoin

[Music] good morning everyone welcome back to the best business show i'm super excited today we have a very special episode myself and michael saylor sitting down for a two-hour in-person conversation michael and i recorded a podcast episode about a year ago right after he announced that he was going to put a very material portion of his company's balance sheet into bitcoin and so maybe michael we can start with kind of a one-year update from when you actually decided to make that uh decision and how things have been going so far with uh microstrategy sure um well if you roll the clock back to july we had 500 million dollars of capital in our treasury we were holding short dated treasury securities and generating effectively like 20 basis points of yield on it we've seen a k-shape recovery wall street came back with the vengeance main street was was flat on its back and it was clear there's monetary inflation so we decided that we were going to lose a large portion of the 500 million in purchasing power if we didn't do something my forecast then was probably like 25 inflation like and you could have got there just by looking at the s p index so i thought you know 500 million minus 25 like losing 125 million dollars in 12 months is kind of like losing money at 2 to 3 x the rate that the 2000 people in the company were making money so we either needed to give the money back to the shareholders or we needed to invest in something so you know the thought was well if we're a company straw a main street company struggling against all the lockdowns with all the uncertainty and we are doing it minus 500 million dollars yeah it feels like a university giving up its endowment as it goes into a crisis right so decapitalizing the company it it was a way to give the 500 million of shareholders they would have put in the s p 500 and they would have got 34 percent on it if we had done that but we would have in essence left our ourselves defenseless without any capital so that was one strategy the second was invested all um i would have bought 500 million worth of bitcoin if if i was a private company i just would have walked out bought all 500 million i would have done it at whatever 10 000 a coin but as a public company you got to think about your outside shareholders and you can't it's not like there's 10 you can't just go to the tent of mask them what they want to do and get their buy-in when you're public you've got a shifting set of outside shareholders that are changing every minute of the day when the stock market is open so the way that you actually handle this is a bit more more um sophisticated what we did is we transparently we telegraphed that we were looking at this our first press release was an announcement that we were going to buy back 250 million dollars worth of our stock over the course of 12 months and we were going to invest 250 million dollars of our capital in hard assets and we said we're looking at everything under the sun and bitcoin was one of the things so i my first love of the bitcoin community was the way that i knew i liked all the bitcoiners was was one day later some cyber hornet some bitcoiner goes microstrategy is considering buying bitcoin with 250 million dollars now as bitcoin merged in there with gold silver commodities equity property real estate anything you could have imagined but the bitcoin community immediately picked up on that i don't know how they do that right they must be scanning for this nobody else picked up on it the stock was trading 120 a share a week goes by literally you announce you're going to spend 250 million dollars and buy your stock like you think it would move nope crickets um but the market had a week of notice and then a week later we stepped it up into the next gear which is okay we're gonna buy 250 million dollars worth of bitcoin we made the decision we're not splitting it across six assets right and it's a good thing we did right because uh bitcoin's up 332 in 12 months gold is down 7 if we'd split it 50 50 125 million of gold 125 million of bitcoin right it would have cost us billions if we'd gone all gold it would have cost us many many many billion billions we'll come back to that in a second so so we had to do something but the question is what so we just picked bitcoin we made the decision but we thought this is going to be jarring for some people stock is around 122 at the time right to put this in perspective the company's 500 million dollar revenue generator generating cash flow and um we have more than 500 million in cash and about 10 million shares so the company's trading one times revenue plus cash we give back all the cash the company trades at one times revenue the stock goes to 60 bucks a share right so we're like 122 no one's really paying attention but we said well maybe people think this is offensive they're not gonna like this or it's too risky how do you actually orange pill every one of your outside shareholders at the same time well you can't so the next best thing is we just offered to buy them out so the idea is if you don't like this we're going to buy buy you out we're going to post 250 million dollars to buy back shares at a premium so we offered to do the buy back at up to 140 a share which is you know buyout premium if you don't like it then you sell your shares back to us at a profit we wait 20 days so the market trades for 20 days and you know in the first week the market's trading on 135 like people so they're not even they're not even quite sure about the bio then after after a while they start thinking they're like well if i can put it back to the company at 140 then presumably maybe it's worth more so the stock trades up a bit past the 140. and at the end of the tender period we have uh about 60 million dollars worth of shares tendered everyone that didn't like the strategy had 20 days of selling to the open market and if you sold in the open market above 140 then why wouldn't you and if you're still holding the shares at the end of the tender period and you don't like the strategy you sell under the tender so the result of the dutch auction is we had 175 million dollars of extra capital you know we thought about it we put another press release okay this is our primary treasury reserve asset so the the first notch was this is a treasury reserve asset the second step is this is the primary treasury reserve asset then we bought 175 million more bitcoin so that point we're up to 425 million uh the first tranche is in the 11 500 range uh that was that was a little bit difficult it was more difficult to do the second tranche because bitcoin traded down we had a loss it traded down to like you know into the tens and even yeah you remember that so the second tranche we bought at nine at 10 000 something uh because we're committed right and and you know if you go pull the twitter stream there's all sorts of interesting commentary on our our you know strategy so you basically had done let's call it up to that point 425 million of a 500 million dollar balance sheet and you had rotated your shareholder base to people who were aligned with the strategy and you had also planted the flag in the ground as the first publicly traded business in the united states to identify uh a treasury strategy that would leverage bitcoin as the primary currency or the primary asset that you would use in your treasury when you do all that i know that there's been a whole bunch of conversations in the uh kind of behind the curtain i don't need names but what are other fellow publicly traded companies other finance executives people on wall street at that point are they saying you're crazy are they oh wait this is really interesting tell me more about it trying to learn like what was the reaction after the first 425 million dollars i think it was largely ignored by every other publicly traded company i i don't think there's a lot of awareness or to it when we did our due diligence checks we found overstock two or three years ago had a few million dollars of bitcoin on his balance sheet and that's it right we couldn't find anybody else um and uh and so this is off the beaten path but it seemed like so rational to me like it seems so obvious bitcoin is is digital gold it's basically engineered to be digital gold what do you need in a inflationary environment you need something that's like gold but better than gold you have to make a choice uh it was obvious that the institutions were coming right i mean you had you had companies like fidelity getting into the space just you know six months earlier or whatever but the fact that we're institutional custodians was a big check box grayscale was doing good business at that time so so it struck me as being a rational thing to do but no other public companies had done it and it wasn't it wasn't totally clear to me why although at this point now it becomes clear right in hindsight so we went through that we did the 425 million uh the stock traded up bitcoin started trading up at that point i started speaking in public and you know you were the first person i spoke to i remember right and and you know i learned most of what i knew about bitcoin by by uh scouring the internet and looking at your podcast looking at reading all of the stuff that was posted right and i tripped through all these different things and uh one thing i knew from your podcast was you always ask the question right you know at the end right you're like you can ask me a question remember correct now you get to ask me the one question so what i remembered about pomp was he wants to know a book and he wants uh and he wants a question or he gives me a question so i'm like gosh what question am i going to ask pomp and you know how do you learn bitcoin you study twitter and you study youtube and you surf the web so here's what i know i know i get to ask you a question and i know jack dorsey has bitcoin in his bio so the question is how do we how do we get jack dorsey to buy bitcoin next correct right correct and uh you know at that point we're all alone is a publicly traded company and people aren't quite sure if we're crazy but what happens next is some bullish things right i mean i thought that um when square bought bitcoin that was a seminal event right because one data point is a question mark but when you had the second data point you can draw a line and so that was a big day um when uh paypal announced support for bitcoin and they started uh sort of moving it that was a big day that was a data point right those were the data points that moved us from 10 000 to 12 000 a coin and uh at some point you know somebody some uh citron research studied uh you know discovered my stock and andrew left i guess said something positive and uh the stock started trading up and then it traded into the high 100s and then it it traded into the 200s and and bitcoin started trading up and when we got into the teens people thought well there's something interesting here so the next step in our journey was like in addition to me starting to communicate why we had done what we done the next step in the journey was to go out and buy more bitcoin so we started buying more bitcoin as part of the treasury reserve strategy and that got people's attention then um when the stock got to the 300 range that was the highest it's been in a decade 300. so we started thinking well maybe we can raise more money and so we went back to the convert market and we had we were trying to raise 400 million dollars in a convertible debt offering but it was extremely popular and we were oversubscribed so we upsized the deal to 650 million dollars so that was a screaming home run we we had uh we had proposed a 32 to 37 premium we priced it at the 37.5 premium the high end of the spread we proposed like 1.25 to 0.75 percent interest we priced at the low end of the of the interest rate so we raised 650 million dollars at 75 basis points with a strike price of 398. the stock had not traded at 398 in a decade so it seemed like reasonable if you could sell 650 million dollars of stock at 398 dollars a share seemed like a reasonable thing to do at the time so then we took that we bought bitcoin with that so that was we started out with um with we're going to raise the money for general corporate purposes and along the way the discussion was what are you going to do with it i said well you know i want to be able to buy bitcoin with it and they said well we should put that you know into the disclosure i said yeah we should disclose that and then they said well are you sure you're going to buy it i said yeah so eventually it flipped and it became we're doing it to buy the bitcoin so that became in the history of first right we're the first public company to buy bitcoin on the balance sheet where the first public company the declarative treasury reserve asset we became the first public company to do a dutch auction which is in essence like an equity issuance to buy bitcoin right it's like i'm either buying my equity back or i'm uh or or issuing the equity so with the first dutch auction you know where the proceeds eventually became bitcoin then the first convertible bond to buy bitcoin and uh i think that all of those things rotated the shareholder base right i think um the most important thing was to be long bitcoin right so in essence the first publicly traded company where the shareholder bases is long bitcoin and it started out my aspiration was it'd be great if half of our enterprise value is based upon enterprise software and half is based upon the assets because before we did this we got substantially no credit for the assets like people are basically taking the 500 million and they're like okay well that's going to be worth zero right or negative because you were one times revenue plus uh just the cash on the balance sheet yeah yeah so um if you've got a low growth cash cow right that that's like being a dentist where you're going to make a lot of money every year for a decade and maybe you'll make five percent more each year for a decade if you've got a low growth cash cow but the money supply is debasing at 25 a year it kills you right it's like the road to serfdom is working exponentially harder for a currency getting exponentially weaker what i saw was 2 000 people doing a hundred thousand things right every year to make 50 million dollars and then watching the enterprise lose a hundred million dollars a year due to a political decision so in essence we're running as hard as we can we're falling backwards and the situation was literally hopeless right like people wonder where the bitcoin is hope come from well it just was hopeless right i mean the operating business is hopeless and and you know okay you know you're going to work yourself to death for a decade and do a million things right with 2 000 people and you're going to be worse off in a decade than you are today that's operationally hopeless right that's and then on the balance sheet if somebody says we're not even thinking about thinking about raising interest rates it means for the next four years you're going to get zero percent on your money and is going to be worth half as much in 36 months as it is worth today the balance sheet is hopeless and this is all before we even see the persistently high inflation that we're seeing now right this was just from a market structure standpoint of uh this had been going on pre-kovid got accelerated during covet you started to recognize this again last year if you go back and look at the inflation numbers in q3 q4 i mean it was obvious that we were in uh increasing or accelerating but we weren't at five percent cpi for three four five months right now's a much much different situation so at what point do you switch from this as purely a defensive like treasury strategy of we want to take the cash on our balance sheet and put it in an asset that uh we can protect ourselves protect our purchasing power to then it feels like you made the switch to go offensive that first bond offering was an offensive i think you called it right there i think that it's a defensive strategy uh through the dutch auction we had to do the dutch auction to provide a graceful transition for our shareholders to get long bitcoin right you're either long bitcoin or you're selling out to us at a premium one or the other and then from that point bitcoin started moving up and our stocks started moving up and then we realize that we like the conservative thing to do is just stop there and if we stopped there i mean we would be all equity 475 million dollars invested at a thousand dollars a coin or something and that's not a bad result right we would have made six extra money but um what we realized is we could borrow money at 75 basis points and we and you know bitcoins up 171 a year every year for a decade right if you can borrow money at one percent and invested 171 percent your arbitrage is 170 on how much well how how much do you want right like where are you going to stop that when you borrowed at the 75 basis points i was impressed but then you followed it up and you borrowed even more at a zero percent interest rate if i remember correctly what was the second offering because the first offering came out the strike was 398 bitcoin kept moving up our stock kept moving up eventually that bond was the best performing bond of the entire year right anthony what i'm saying is of every single corporate bond sold in the year 2020 every convert every junk bond everything sold every municipal bond whatever you could imagine the single best performing bond was microstrategy convertible bond which where you would have you could have doubled your money you know at some point is trading insane amounts like triple you know your money on a bond okay so we had good success there and of course bitcoin kept moving up and our stock up moving up and we realized by february that we could do another offering the next offering uh was we came in the market offering 600 million dollars the first one we started with 400 million this time we started 600 million but again it was oversubscribed we upsized it exercised the green shoe it became a 1 billion 50 million offering and the range was 50 basis points to zero so we struck it as zero and uh you know uh up 50 37 i forget the number but we ended up having a 50 premium or 47 i forget exactly it was a high premium it was a low coupon the strike price was fourteen hundred thirty two dollars a share so now put this in perspective this is ten times the price of the dutch auction [Music] you know some number of months earlier now um so why'd we do that well because if you could borrow a billion dollars at zero percent interest and invested in something going up 170 percent a year pretty good trading why wouldn't you do it right uh like every single business on earth that's debt financed presumably is borrowing money to invest in something which is going to return a higher yield than the cost of the debt now this i want to pause here and make one point the reason that i was sensitive to inflation like was i immediately saw the inflation in march and april in the stock market right because my inflation bogey wasn't if i were to go to all my uh investors and say i got 500 million dollars i'm investing in a 2 interest and inflation rates 1 percent they wouldn't have given me a pat on the back they would have said the s p index is moving up ten percent a year your bur your hurdle rate your cost of capital is not one percent or two percent it's ten percent and maybe you're getting five percent yield on uh on a piece of debt then i don't hold my nose but you're losing five percent a year half-life of the money is 12 years okay fine but like you shouldn't be holding you should be you should be buying your stock back or buying another company with that sitting on that cash is it doesn't make any sense safety says the dollar weighted monetary inflation rate across you know all all currencies for the last 30 years is 14 interesting number he comes up with 14 is the inflation rate of the currencies now that would be the inflation rate on scarce desirable assets or any portfolio of assets and if i look at my screen right now over the last 10 years the s p 500 is showing 14.15 percent interest a 14.15 percent compounded annual growth rate nasdaq's up you know whatever 19 you know uh gold is up 20 basis points nothing bitcoin is up 170 base 170 right and long bonds give you like two and a half percent so the monetary inflation rate equals the s p index well yeah that the traditional way you'd value um a stock is you would put a risk premium on it and you would say well your cost of capital is the return plus the risk premium so it used to be we think well there's a three percent risk premium and the inflation rate then would be 11 but i think that if you buy the s p index you're kind of in theory stripping out the risk because you're buying 500 companies so the s p index can be viewed as a proxy for monetary inflation and the question of inflation is what's your inflation rate well what do you need to buy if you're a consumer then your inflation rate might be cpi if you agree to buy what the federal reserve tells you you should want right and and the market basket of things in the cpi is what the government says you should want in your life but they never included a picasso or a jet or a yacht or a house in miami beach in that market basket a step even further than that is the number 14 uh percent is very interesting because my understanding is uh if you go back obviously uh cpi used to represent a cost of goods index so what is literally the change of price of individual goods year over year over year and that's how inflation was measured now obviously we have a cost of living index which is what you're talking about in terms of well here's the things that we think you should want here's the general weightings of these specific assets or consumables inside of this basket and then that's kind of our moving target for this measurement of inflation but if you were to go back um and look at the cost of goods index based on how it used to be calculated for cpi and apply it to today's numbers you get about 14 and so not only is the s p not only is that monetary inflation but also that cost of goods index based on the original calculation of inflation is around 14 as well which is uh you know there's coincidences in life but it seems to keep coming back to somewhere in that kind of mid uh teen number when we're trying to understand what is that inflation isn't it interesting you know the hedonic adjustments kill you but on the other hand you know and and i say this oftentimes inflation is a vector and what i mean is you got to use you got to use multi-dimensional arrays and and linear algebra to even start multi-n-dimensional linear algebra to even start to deal with the issue another way to say it is you can calculate a different inflation rate for any person in any jurisdiction based upon their mix of product services and assets they want to acquire and so common sense says a person that wants to acquire a set of manufactured goods and wants to watch streaming youtube has a lower inflation rate than someone that wants to buy picassos now what if you want to be rich if you want to be rich your inflation rate is very high because you have to acquire assets if you want to be middle class your inflation rate is different so back to why why i did what i did if you're the ceo of a publicly traded company your inflation rate is the cost to capital and the cost to cap because your shareholders hold you to that cost of capital if i go to a public a public investor and i tell them my goal is two percent and they're saying well the s p is up 14 percent then i'm undershooting their goal their their index is is the s p index right so so the inflation rate for an investor is the index now of course different investors have different impact decisions if you go back to the strategy if you're a fixed income investor you're you've got like a a sovereign you know or corporate uh fixed income rate you know you've got the junk bond index you've got the corporate you know investment grade index you've got the sovereign debt index you have capital structures in the world that have different indexes someone that wants to send their kids to an ivy league school and wants to have a house in the hamptons right they have a different index someone and someone that wants to be obscenely wealthy has a different index right so that's why you could everybody talking past each other because all and of course if you keep changing the indexes the s p 500 index changes right they rebalance it the pci the pce indexes they get rebalanced so so the indexes are changing and if you allow someone else to feed you the index they want you to focus on you can you can see it right now right the official inflation rate in canada is four percent but the housing price is up fifteen percent the official inflation rate in the us is five percent but the case shiller index is up 27 okay and uh and uh of course it all comes down to deciding what you want in life now in the last 12 months the s p is up 34 percent if you're sitting on a 100 billion dollars worth of cash and you put it in the s p index you got 34 billion dollars back you have 134 billion right now if you if you held it in conventional treasuries you're short 34 billion if you convince yourself that the inflation rate was five percent or if you convince yourself that you're you could say look my treasury index is is just the short dated sovereign debt index and so as long as i'm beating the 20 basis points i'm good and you know and and and uh by the way like if i have a bunch of money sitting in a bank my bankers come to me i've literally had bankers from the big wire houses they came to me when i'm sitting on 100 million or 200 million in cash and they go you know we can get you into one of our money market funds that'll yield 22 basis points and that's much better than the nine basis points and they're selling this to me there are people in suits that make a lot of money and they're selling it to me and you read the prospectus and the prospectus is they're gonna do something and they're gonna charge you a 27 basis point fee to generate 22 basis point yield to you you're literally they're making more money than you are you're giving 60 of the yield to someone in a suit that's getting that's giving you a service to get your five basis points more but there are there are people that convince themselves this is a good idea right and we come back to that second it is a it's an important truism in the market why is it that everybody hasn't bought bitcoin people ask that right all the bitcoiners wonder why don't all these investors buy bitcoin and the answer is because there's trillions of dollars of capital locked up in capital structures that are chasing a different index right there's trillions of dollars of money sitting with people that think that inflation is cpi there's trillions of dollars sitting in real estate funds and they're trying to beat cpi if i got rents and i'm raising them at the cpi rate and i'm happy with it there's trillions of dollars invested in fixed income funds where they have to beat the trunk bond index or beat the corporate index or beat the sovereign index and if they beat the sovereign index if i have if i have 20 billion dollars and all i got to do is beat you know the junk bond index or or i get paid then i'm getting paid to invest 20 billion dollars to get 50 basis points more what happens to those people let's say that inflation isn't 5.1 or 5.4 wherever it comes in on a monthly basis now uh and we all agree it's something that is higher but there's disagreement on how much higher is it six percent or is it 14 um in terms of uh the actual inflation number what happens to all the people who are using cpi as the benchmark do they just succumb to the inflation over time and continue to lose money until they wake up or something else i think a lot of people have a hybrid situation like um for example let's say i run a real estate trust or i run a real estate company and i have a hundred million dollars a year worth of rental income it's capped at cpi does the leases are assigned 10 years 20 years 30 years duration five years duration and then you've got all the trade relationships like i can't go to i can't go to the people that rent my building and tell them that the inflation rate's 14 right i mean would you pay a 14 increase in your rent here no no no so there's a certain inertia in in parts of the economy where they're going to move up at cpi or they're going to be flat or maybe they can do double cpi but at the same time maybe you're the person running that real estate company you're thinking well i'm going to take my cash flows and i'm going to invest them in would you invest them in a stock that you thought would go up at cpi or would you invest them in the s p index if you thought you would get cpi not really so what you have is you have people that are sweeping their cash flows from an operating business that's low growth and they're putting in the s p index if you know they're looking for the growth to come from the investment okay the s p is up 34 how many companies in the world generated 34 more cash flow or raised their prices by 34 or grew their revenues 34 in the last 12 months not many right 98 99 they're in a they're in a a fiat operating system where they're going to raise their prices or generate cash flows at a rate slower than the rate of monetary inflation but those same people will turn around and they'll buy bitcoin or they'll buy property or that you may buy property that you is going up faster right there's not a single commercial rent there's not a single commercial lease i think in the world where they raised the price of the rent 27 in the last 12 months right at least i can't imagine if you had a lease no one's got it capped at the case shiller index so on one hand residential property or other types of property could actually be accreting at a much higher rate while your rents don't accrete at a higher rate so you're taking duration risk so i i guess the more important point is there's a lot of capital when we think about capital structure it's like 500 trillion dollars to 900 trillion dollars of capital floating around there it's locked up in structures some of it is in currencies and and it can move rapidly some of it is invested in companies that can't right move rapidly some of it is tied up in in uh equity some of it is tied up in in debt some of it's tied up in a trust i have a trust my trust gave 10 million dollars to a financial advisor or or to a company whose strategy is investing in mid-duration corporate debt and every year i review their performance versus their index and over the course of a decade i might start to shift small amounts out but i think that the capital is structured in such a way there's enough inertia in the system it could take 30 years yeah for the for the capital to get reallocated right like we're we're waging a war on the 60 40 portfolio right how long will it take before people allocate that as 65 35 or 70 30. right it takes a long time there are people still invested in gold you and i joke about that gold's been failing for 12 years or something like that right gold's the same price as it was when bitcoin was invented and yet an aggressive move would be a macro investor allocating from 50 gold to 45 gold and 5 bitcoin and that's a bit that's a year's work yeah let me ask this question um retail investors or individuals i think uh over the last 12 years or so um took bitcoin and as a generalized group it went from a contrarian idea or contrarian trade to a consensus trade there's now you know 100 plus million people around the world that have decided hey this is good enough for me to go ahead and store some of my value uh or economic wealth here um and so you can argue that that contrarianism became more of a consensus we now over the last maybe 18 months have seen in the financial or institutional uh finance world more people jumping into the game and so definitely some shift from pure contrarianism to now a little bit more of a consensus everyone has to have some sort of bitcoin strategy you can't simply just say oh it's just for drug dealers it's just for criminals you at least have to have had a conversation now because fidelity paul tudor jones stanley druckenmiller many others have all now started to participate what does it take for public companies where i basically break down there's two groups right there's yourself tesla and square as the three major publicly traded businesses that are multi-billion dollar companies that have pursued a treasury strategy that includes bitcoin and then there are all of the publicly traded crypto native companies whether they're miners whether places like coinbase etc it's still contrarian in the public markets to have bitcoin on your balance sheet what does it take to get the shift that we've seen in those other two cohorts to now get it to a consensus type uh you know movement or idea i mean i think there's some you could check off catalyst that are impediments that will become accelerators um first of all uh regulatory clarity right uh if you're hearing if you're seeing support for let's start with the most basic issue is bitcoin an asset or a currency okay the word cryptocurrency has is a very politically charged world word because if bitcoin was a currency it's an opposition to the us dollar okay and if it's an asset it's an opposition to gold okay so um just resolving the fact it's a digital asset not a digital currency most people's how many public uh speakers how many how many well-regarded investors have made negative comments about bitcoin over the past 12 months because they're mistaken they mistakenly think it's a currency and they think they're sticking up for the dollar right many like i prefer the dollar so if you understand it's a digital asset a a scarce store of value speculative digital asset that's how politically correct people would refer to it right and anybody else would say it's just it's just a digital asset or a store of value asset the first uh the first impediment is just understanding that and educating the market that it's a digital asset i think the second impediment is getting over the issue of uh is it a threat to the powers that being will be banned so first what is it it's an asset second will it be banned okay well no we're not going to ban cryptocurrency we're not going to ban bitcoin it's going to be around here so those two check boxes are huge i think the third uh check box is can i actually buy it via my existing bank every publicly traded company's been doing business with probably the same bank for 30 years pomp some have been doing this with the same bank for 50 years some for 100 years okay if you trace it to to have adopted a new banking relationship is not a one in a decade thing but public companies don't change in a decade right so if i could if i could buy this directly through bank of america or jpmorgan or city group etc i think that makes a big difference if i have to go to a you know an institutional-grade bitcoin exchange that's a one-year exercise in due diligence right friction to doing it there's two issues right one is is before you give a billion dollars to a counterparty you know you have to you have to inspect their accountants their legal teams their licensing their executive team would you give a billion dollars to a private company that's new right it's like that's a huge hurdle um and the second is they're not fdic insured right they're not the the in primitive being backed by the us government means that you know in a liquidity crisis the federal reserve gives you 10 billion dollars or a hundred billion dollars how much money did you need right and that's what the big uh the big license banks have and you know the last holdout that wasn't doing that was goldman sachs and the great financial crisis they broke down and they became a bank right and um it matters so if you want to move huge sums of capital right at the point that uh some of the the major banks handle the asset that makes a big difference because uh it checks a lot of boxes and people are pretty conservative about that i think the the next hurdle is uh accounting um explain what the accounts problem is because this i don't think a lot of people understand how big of a problem this is um it's a source of massive inertia because every publicly traded company is running on gap accounting and so we're publishing our gaap uh balance sheet and our p l every quarter and um investors are reading the p l and the whole point of gap accounting is in in theory i ought to be able at a glance in 30 seconds look at your balance sheet and know how much capital you have and in 15 seconds look at your p l and know whether or not the business is well run and when the gap accounting aligns with the underlying business then you can do that but when it gets out of alignment then you have to adjust it with pro forma accounting non-gaap accounting or adjusted accounting and when you get to adjusted accounting it goes from being a 30-second inspection to a 30-minute thing and you know how difficult it is to communicate a 30-minute concept to the world very very challenging so the the issue right now and the issue when we got into bitcoin is is no publicly traded company held any material bitcoin so so uh the accounting treatment was probably appropriately conservative the most conservative accounting treatment you could imagine is indefinite and tangible and what indefinite intangible accounting means is you buy something you you test it against the market continually you take the lowest bid and you mark the value of the asset down to the lowest bid at any point in the history of your ownership and you treat that not as an investment but you treat that as a loss in the core business the operating business so if you have a business that makes 100 million a year and it's run perfectly you know with a perfect pegged 20 operating margin right uh if you buy bitcoin and bitcoin trades down for one hour and trades back up again you might have a hundred million dollar operating loss and then you would be showing the business made no money this year on a gap basis so now you're an outside investor and you're staring and saying what happened to the software business it looks like it the operation got wrecked it's if i made a million decisions poorly you know i probably couldn't i couldn't go from 100 million in cash flow to zero right or if i did it'd be challenging but or on a saturday night someone could flash crash something and you would have a 100 million dollar loss showing on the operating statement so indefinite intangible means you'd take the volatility as an operating loss on your p l and you take the theoretical worst case the theoretical worst case would be i buy bitcoin and i wait for the lowest price ever and i sell it all okay that you take the theoretical worst case and you represent that as the as the uh status so when you print your quarterly results you print your annual results you want a simple example you buy a billion of bitcoin it trades down to 500 million then it increases to a billion then increases by a factor of 10 to 10 billion if that's the fact pattern when you close your books under indefinite intangible your books say you have 500 million dollars of assets and it says that you lost 500 million dollars in the in the operating business and the money's gone that's what gap accounting says in actuality you might have a statement that says you have ten billion dollars of assets and it looks to the uh to the casual observer like you generated a nine billion dollar investment gain so you can now how do you fix it pro forma adjusted accounting you have to create a schedule a reconciliation but but um now what have you done you've just made uh the uh first of all you've made the uh the investor's job 100 times harder and investors got to read all the pro formas think about it and figure and then they've got to reverse it out and figure out what really happened in the rest of the business right and then they've got to figure out what's your balance sheet really look like and then the second problem you have is your um your statements become non-comparable over time like for example i can't if i look at my balance sheet on a gap basis today versus a year ago right bitcoin could go up by a factor of 100 the balance sheet doesn't change so when you're comparing quarter versus quarter there's no information there because you're suppressing it right yeah and then if two companies have bitcoin one company has a hundred thousand coin and one company has ten thousand coin and bitcoin goes up by a factor of ten neither company shows an investment gain neither company shows a balance sheet adjustment and so how do you compare one company to the other company if you're trying to make a rational investment decision so things become non-comparable across securities and they become non-comparable across time and you're invited as an investor to create your own set of pro-forma systems to compare yourself which is like 1000 times harder so that's an impediment uh for a public company or for a company that relies upon gaap accounting but here's where it's really an impediment like why can microstrategy do it well because we rotated our shareholder base to be long bitcoin and because fortunately enough uh we were we were able to build a substantial bitcoin position so now if you know that microstrategy has a hundred and [Music] you know fourteen thousand 114 000 bitcoin yeah if i have 114 000 bitcoin and i you know 114 042 bitcoin all you have to know about microstrategy is take 114 000 and you multiply by the price and you know that we've got that much but let's say that you were google or you were apple or you were facebook well you've got all these other businesses or amazon and now you're trying to decompose the businesses and uh if they buy a big bitcoin position then uh what looks like a pristine p l that every everybody debates you know as apple's gross margin going to be 38 or 38.5 percent this quarter and that's a big deal right i mean their people take victory laps on getting within one percent of the gross margin well your gross margins would totally get all your money get blown out of the water from the volatility the accounting volatility of the bitcoin so how do we solve it what is the change that needs to be made where you would say okay the system we have right now is a issue and it's an impediment if we move to x that's the solution in your opinion yeah well um so there i joke with people right like you'll be better off buying baseball cards or or arts or just about anything than buying bitcoin from accounting point of view because if you were to buy if i went and bought sculpture or you know some random anything normally the test would be like once a year you check to see if the asset's been impaired but checking to see if an asset's impaired occasionally is much better than checking to see if the assets impaired every minute of the day right so so uh there are different types of accounting treatments but if you were to buy a billion dollars worth of um a security like an etf like one immediate fix is you buy a billion dollars worth of a bitcoin etf it's not proper anymore it's a security if you're owning a security generally accounting says you value securities based on fair fair market value or fair value accounting so that means that that um if it doubles you would show an investment gain this is the warren buffett's accounting for coca-cola stock or for apple right so very fair value accounting is applied to securities fair value accounting is applied to certain other things if the accounting goes from indefinite and tangible to fair value in that case then you would be showing the 10 billion dollars of bitcoin as an asset on your balance sheet and then you would show the gain or loss as an investment what they call below the line adjustment like on a quarter where it's up 2 billion you would have a 2 billion investment gain and a quarter where it's down 500 million you have a 500 million dollar investment loss and that's that provides more clarity it's kind of a benefit to investors because an investor can they can separate the gain in the loss from investment activity from the gain and the loss from operating activity right and that helps you to figure out is is the core business healthy and you if warren buffett prints like three dollars a share or some large amount of eps i want to decompose it into how much of it was from the stock portfolio versus how much of it was from the operating businesses right and and then i can extrapolate out rationally so ultimately i think fair value accounting is the solution to allow public companies to hold the hold this in large quantity this is why say even a tesla or square would buy not a hundred percent of their balance sheet or fifty percent but five percent yeah if it's five percent or one percent or two percent it's not going to be material to the rest of the p l and the rest of the balance sheet treatment when it becomes 50 the volatility from the accounting treatment will optically impair transparency against the p l and the rest so when i look at the public companies right now let's put aside the kind of bitcoin or crypto native companies the miners and um uh coinbase etc there's basically three publicly traded ceos that uh are orange pilled right yourself jack dorsey elon musk those seem to be the ones who have purchased bitcoin who have talked about it publicly who appear to understand the ethos of it and kind of why it's important for their businesses is this something where we are literally going to see one by one by one each individual ceo is going to have to get orange peeled and eventually uh make this decision or is there some milestone or like inflection point where you say when x occurs we will then see you know on a quarter by quarter basis tens of publicly traded companies or hundreds of publicly traded companies all going ahead and doing this okay well first i would say it's not just the three there's there's probably three dozen but every bitcoin miner is holding bitcoin on his balance sheet and one of the major things one of the catalysts that's taken place in the last 12 months is all the bitcoin miners coming public and all of the miners that were public on international stock exchanges shifting over to the nasdaq and the new york stock exchange right marathon and riot and actually if you look at it right now marathon has got a bitcoin exposure i i wonder when silvergate bank will right or how that'll work but silvergate's obviously a bitcoin company coinbase has got bitcoin on its balance sheet right you've got bitfarms hut eight you've got sphere you've got bit digital you've got galaxy you know you've got well there's a bunch of businesses that come out of the industry and i think we're going to see more and more go public so let's say that that number doubles or triples of like the publicly traded companies that come out of the bitcoin and crypto industry because you're just going to get a bunch of startups that continue to grow and eventually go public whether it's direct listings ipos or spax that number will just grow and i think there's a dozen other companies that are public that are holding it in their treasury at a a smaller amount so so what did the catalyst i mean clearly one thing that's already happening right is the regulatory clarity that's coming um the more clarity if the regulators uh move forward and they clarify the treatment of uh stable coins and security tokens and defy exchanges i you know i feel like the the connection of bitcoin to crypto has been holding it back right because because stable coin regulation is unclear secure many cryptos or security tokens that's uh that's holding us back the exchanges that are trading bitcoin while they're trading security tokens right the connection of bitcoin to shib or dogecoin right this this holds back um a public entity from wanting to get into that space i mean in fact it's it's really the express concern that the sec has about uh approving a bitcoin spot etf right which is they're concerned about the markets where uh bitcoin is trading right and they're concerned probably about what's what's bitcoin volatility coming from it's coming from the cross collateralization of of crypto markets with high leverage trading it off hours right against thin liquidity pools of other security tokens right and so as to ask that clarity comes with regard to the entire crypto ecosystem it's it's going uh to decrease volatility and it's going to increase confidence of large public investors and large public companies that'll be part i think as if we get clarity from fasb or or any kind of improvement in the accounting situation uh that's a that's a plus and there's i mean there's a groundswell of interest right there are 515 letters sent to fazbey on the subject and and there was a lot of commentary from regulators from you know we've got congressmen we've got senators we've got uh auditors we've got big institutional investors we've got big publicly traded companies and they're all opinining on the issue so and i have yet to see anybody i haven't seen any articulation by anyone suggesting that the current accounting treatment is beneficial yeah so it's it's it's broad-based consensus that it's time to take a look at this again so i think that accounting is important i think that you know we just see the barriers with the banks getting knocked down right like at the point that you saw the commentary by the chair of the fdic where she said we're looking for ways to allow banks to hold bitcoin on their balance sheets right if uh if fd ic it used to be we dreamed our dream was one day big banks may actually own bitcoin you know what if all the big banks own bitcoin but now i think we flipped to the to another observation and this is a this is an interesting one in that stable coin working group paper that was released last week not only did they say it's okay for fdic approved banks to hold stable coins they actually said it's required to be an fdic insured bank to hold a stable coin okay so we're we're actually growing up as a crypto industry we're going from unlicensed non-institutional grade corporations that are primarily entrepreneurial and fast-moving to licensed institutional regulated entities and if you look at that isn't the conclusion that the next step i see as a green light jp morgan citigroup bank of america are going to issue a trillion dollars worth of stable coins i mean it's an invitation like it's a green light to every single bank in the world right if you're if you're silver gate or you know anybody that's in the crypto industry now right this is this is kind of um a message i don't think it's that much longer right if you can hold a stable coin as a digital asset it's not that much longer behold before you hold bitcoin as a digital asset and if if the fdic is saying we need to find a way for banks to be able to hold this and if the president's working group is saying you need to be a bank in order to hold this the stable coin then um i think that sometime in the next 12 months we actually start to see large banks getting in the business is this good or bad the like financialization of bitcoin let's talk about and then there's obviously all of these other technologies and assets but i think that there's a group that would argue the more that the asset becomes financialized the more that it gets not just accepted by the licensed organizations but you see legislation or directives that say you have to be fdic insured in order to interface with this stuff they look at that as negative there's other people who look at it as a positive so how do you think about the pros and cons of what i'll just call like the financialization of what were assets that you know many people were attracted to in the beginning because they weren't part of uh the existing system bitcoin is decentralized and it's an asset and it's already gone to 200 million places and you might not like the people that own it right don't they call it the money of enemies yeah right the point is bitcoin's going to people who have politics that you disagree with right it's almost certain so it's spreading at such a rate it's like fire and it's like electricity or mathematics and you can have an opinion do you think it's good or bad for banks to have mathematics it's like we're the only ones with math is it good or bad for people to be able to read and write it used to you know there was a concern that we shouldn't let everybody read and write it's just basic technology it's spreading as fast as it can spread the reason it's superior to gold is because i can snap my fingers and i can withdraw a billion dollars of bitcoin from the bank in five minutes correct okay and the thing that's going to maintain its integrity is the fact that that you can uh you can shift counterparties you can move if you can move 10 billion dollars of an asset out of a jurisdiction i can move it out of miami i can move it out of a bank i can move it out of a country i can move it out of a system it's always going to have more integrity than the alternative so coming back to this it's like okay are you comfortable there are a lot of people that don't think you should have a software wallet on an iphone you should have a hardware wallet right there are a lot of people that think that that um it's better if if what if i don't want your family to have it because i don't like somebody in your family right what if i don't want your small company you have a private company do you own some bitcoin well you know did you sell out now there's a company that's got other corporate interests that has some bitcoin a lot of people don't want a public company to have it why well public companies have shareholders yeah well i don't want a country to have it right i mean a lot of people that are concerned that el salvador uses bitcoin well it might get hijacked by the politicians what if turkey actually starts buying bitcoin do i like it do i not like it the point is it doesn't matter what you think right it's not it's like you sitting and saying i'm really angry that someone else is using arithmetic other than me right it's spreading like wildfire it seems to me that the world's a better place if people have monetary integrity than if they don't have monetary integrity i agree right right um and in this particular case is is this good yeah of course it's good right why is it good it's good because because um what we want to do is fix everything not destroy everything right if you want to fix the bank then they replace their bonds with bitcoin and the capital structure of the bank is better if you want do you want to fix every publicly traded company in the world do you want to fix the balance sheet of apple and google and facebook and amazon if i tell you that they have to do the deal through an fdic insured bank then you either can fix them right there a lot of people don't want to fix them they don't want they don't want apple or google or facebook to fix their balance sheet they don't want them to fix their product but but on the other hand i'm an optimist what do i think i think eight billion people should be uh using bitcoin as a digital asset now there's two ways to do it the easy way and the hard way the hard way is topple every government in the universe destroy every technology company and create my own hardware wallet and my own decentralized well let's rip back to the network destroy every big tech platform destroy every big company and somehow let's build something totally new that's the hard way seems pretty stressful to me what's the easy way the easy way is all the big banks start issuing stable coin a token called the us dollar right a u.s dollar stable coin and we go from 130 billion dollars in stable coins to a trillion dollars of stable coins to 10 trillion dollars of stable coins to 100 trillion dollars of usd and then 8 billion people have a have an iphone or an android phone with a with a wallet and they do 10 20 50 transactions a day at the speed of light on the lightning network on the lightning network and if they and that's the best right a decentralized non-custodial network moving at the speed of light for free next best is they move these things around on the android or the imessage or the whatsapp or the facebook or layer 2 or layer 3 application right that's second best and they do it without toppling every government on earth right like i i can't there's 130 currencies that are floating right now 130. how many do we need well we we certainly could get by the next step with 12 right the cny is not going away and the usd is unless you wish to topple the government of china and the government of the us and the governments of the western world which i don't think you want to do right you got bigger problems if you did right like security and safety and food chaos and it would be a very very painful situation for everyone yeah right like so so if you if you look at in at an optimistic view let's just actually make the world a better place and a win-win for everybody so your thought process is uh this asset which has that monetary integrity that you're talking about it's fully transparent it's a in many cases you can look at it as an automated central bank nobody controls it it just sits there programmatically executing what the code says for it to do that will serve as a global store of value other people will then choose to take their fiat currencies and upgrade the technology doesn't necessarily change their monetary policy but they can then go ahead and digitize or tokenize the dollar uh uh the euro the end juan whatever currency and then they would basically use the bitcoin network payment rails to have those uh assets fly around the world however people chose but ultimately people would go back to and settle in uh bitcoin as that global store of value partially but it's a it's a more elaborate idea which is my idea is we incrementally upgrade everything everywhere for everybody in the most peaceful least painful least jarring way right so the inc the incremental upgrade means means uh we deploy to 8 billion people to everybody on the planet we deploy digital wallets and the wallet you have a set of currencies and a set of assets and in that wallet in argentina you've got your peso and you've got your dollar as currencies if you want to hold something for a day you hold a peso if you want to hold it for a month you hold a dollar if you want to hold it for a lifetime you hold bitcoin right you've got digital assets bitcoin is the strongest digital asset um is it the only asset no because you've got a company there are buildings there's apple i still like google i want my youtube i like netflix right we need domino's pizza we need bitcoin pizza someone's got to manufacture the cameras that are staring us right now got a microphone we can't just have one asset we have multiple assets we have multiple currencies will all currencies survive no the weak ones the ones that are truly defective will go away 66 countries are dollarized there's 180 countries in the world how many currencies do we really need right we right now it's china and the usd right you might actually collapse down to two but more likely you'll have the yen and you'll have the euro and you'll have the dollar is there any currency in africa that you really want to hold more than the dollar if you had the freedom of choice not really what will you do though you need you you need the local currency for local payments right if there's a strong local government you need the local currency to pay your tax bills because it's mandated by law you need the global the global currency and it's called the us the global reserve digital currency the global reserve currency you need that as a medium of exchange if you want to buy something in argentina from someone in brazil or you want to buy something in africa from someone in venezuela you're probably going to swap dollars right why because there's a hundred million companies pomp that have invested 30 years to create accounting systems and point-of-sale systems to process billions and billions of transactions in those currencies like my company does it i i can actually swap my balance sheet to bitcoin using three people and i can do that in a matter of weeks swapping all of my vendor payments all of my payroll and all of my receivables into bitcoin that would be a billion times harder okay and it's not worth a billion times more stress and effort it's not it's just not worth it right it's an inflationary environment money decomposes into a currency layer which is losing value slow hopefully slowly if your currency lost value one percent a month but your asset gained value at 15 20 percent a year that's stable now do we need to replace it not this decade right i'm not going to speculate 30 40 50 years out but i rather kind of feel like a a more nuanced idea here's a nuanced idea i want to build the 21st century economy on a strong foundation of integrity and trust and thermodynamic soundness and energy pure energy so that means the balance sheet the foundation of every institution should be built on bitcoin but every institution has its own derivative its own security from bitcoin so when you create your company if you want to take your company public you should be able to issue stocks and stock options backed by bitcoin i'm not denying that if turkey goes and they buys billions of dollars of bitcoin they can keep the currency they would be backing the currency with with a hard asset how many institutions are there in the world that need some control like like maybe uh if i said to you can't issue stock in a company is that good for the economy not really if i said no country can print its own currency is that good probably not really right um because the politicians need some power over the currency right i mean unless you come up with a way to generate all the food and all the products that we need without companies and without countries like when you figure that out that's like a utopian idea then maybe you can live with bitcoin only and and the like but in the meantime which is like let's just focus on the next decade because there's no point in solving this problem after the year 2030 right yeah right focus in the next decade the next decade it works like this all the big banks issue usd stable coins what happens the us dollar replaces all the weak currencies and it grows in strength right the u.s dollar can become the daily currency of six billion people and it has been doing that for some time you mentioned the dollarized country right now right now analog dollars and the 20th century banking system is the reserve currency of the world but it's an awful inefficient system right yeah how do you send a hundred dollars to someone on saturday afternoon if they live in africa if you live in south america how send someone to a friend of yours in paris on a tuesday i dare you right so the point right now is the u.s dollar is the world's reserve currency but it's running on on 20th century rails so the u.s dollar should evolve to run on crypto rails it should run on you know we can debate right lightning rails what's up rails you know any other crypto right interesting question but what what we can't debate which is 100 certain is everybody wants to be able to move the money at the speed of light and program it on a computer chip on a saturday afternoon that's that sometimes we get in this uh in this confrontational state where people think well it's bitcoin versus the fed or bitcoin versus the dollar it's not right we can all win right it's a win-win here it's in the best interest of the dollar to move at the speed of light and be programmable and there's a hundred million businesses that want to do business in the dollar and i am the controlling shareholder of microstrategy i found the company i mean there aren't that many ceos that have more power than me if i walked into a room and i ordered everybody in my finance team to convert over all the accounting systems and stop and sell everything and and satoshi's and pay everybody in satoshis you know you understand that uh if everybody didn't quit on the spot it would be a decade and a billion dollars of work and it wouldn't work and by the time i finished the billion dollars of work the company operation would go to zero right it's literally a death sentence for a big institution to attempt to convert over its um its mediums of exchange and its accounting systems for for routine transaction so so right now really the value is to get bitcoin onto the balance sheet as a store value protect shareholder value that's sitting there continue to operate your businesses and you know my understanding of what microstrategy is doing is you basically have uh articulated and highlighted two separate strategies we have a software business that we're going to continue to try to grow uh drive cash flow and serve our customers from a business intelligence standpoint and then we have a treasury strategy which is uh we're going to use bitcoin to protect our purchasing power and our assets that are actually sitting on the balance sheet and those two strategies combined make up the business uh and you know obviously the market has found it incredibly attractive given uh what the stock price has done over the last year or so well if your apple computer right you've got you've got two strategies you can pursue to get in the digital economy one strategy is you just buy 50 billion dollars of bitcoin and three people can do it and if the three people did it then your stock becomes a bitcoin derivative apple stock becomes a bitcoin derivative and if bitcoin moves up at 100 a year right you're generating 50 billion dollars a year of shareholder value three people 50 billion shareholder value right it's very simple strategy the harder strategy is you start building uh bitcoin protocol or lightning protocol into all your other products you can build it into the iphone you can build it in the icloud you can you know you can build it into all of your other services you know and and uh they all have merit and that's an operating strategy and at that at some point that starts to um that starts to uh correlate your revenues to the growth of of the digital asset economy and the growth of bitcoin so and and all that both of those are rational what's not rational what's not rational is um is to require that all your customers pay you in bitcoin and stop taking dollars right right you can control what you do with your balance sheet right and you can control what your strategy is but implementing it on your customers or to rewire all your all your backend accounting systems so and it's unnecessary right it's it's not the right way so like coming back to to my view of the world i mean i i think my view of the world is we want to find the path of least resistance to to fix everything and that means that means uh looking at every single part of the economy every country will be better if they had some bitcoin cities can can be improved if they buy bitcoin if a city buys bitcoin and they issue bonds the bond becomes a bitcoin back bond right it becomes a derivative of bitcoin so i'm not against bonds right i'm not the guy saying we shouldn't have bonds we should have bonds right if the junk bond index is four percent and you can issue a bitcoin back bond at six percent it's good for the people that have trillions of dollars locked up in bonds it's good for bitcoin it's good for everybody in the middle right we could say we can take the orthodox draconian view which is bond should go away and bitcoin should replace them overnight but it's not it's not possible but it's not even a better view right yeah a better view is you take your bank and you start handling bitcoin and you take your mobile app and you build lightning into the mobile app and you take your company and and uh and you buy it and you buy bitcoin and the reason i don't really think it's a threat to the bitcoin ethos is because ultimately none of these people can control bitcoin it's like people worry like so i have seven billion dollars or eight billion dollars of bitcoin i don't have any more power anybody else right and and in fact the only sentiment that's grown in my mind as my bitcoin position has grown is i don't want anybody to change it like don't mess it up right so i think that is i'm not threatened if a government buys bitcoin it wouldn't be bad for bitcoin right i'm not threatened if a company buys it if a bank buys it yeah and here i guess there is one there's one point worth making if you're um if your portfolio is 100 bitcoin you don't have any conflicts of interest the you know the debate of whether or not people use square cash app paypal robin hood coinbase binance or buy the etf or buy it through fidelity or nida doesn't really matter to you right it doesn't matter to you whether they buy microstrategy stock to get bitcoin exposed doesn't matter to you right you're just holding the underlying asset if you decide that you want to get in the business of selling hardware wallets or if you run an exchange or if you provide advice and if now you have a conflict of interest so now you're you're a bitcoin entrepreneur and maybe like if you're issuing if you're tether and you're issuing stable coins you don't want jp morgan to issue stable coins it's a conflict of interest right competition right i mean if the feds say you have to get an fdic license now you got to jump through a hurdle now you need general counsels you need to actually pay lawyers you have to do stuff right you have to have nexus you have to have insurance it's harder so so there are a lot of things that are happening in the economy they're good for bitcoin they're just not good for every entrepreneur in the crypto ecosystem and there is a conflict of interest and and that's why like people ask me well are you going to get into other things are you going to are you going to build software well that's conflict of interest you know are you gonna go into bitcoin mining that's a conflict of interest are you gonna you know invest with a counterparty's conflict of interest right so you can do that but those are businesses and they have investment risk and you have competition and you can fail or succeed and the truth of the matter is is it good for bitcoin if jp morgan goldman sachs and bank of america issue 10 trillion dollars of usd stable coins and start handling bitcoin and selling it to all their institutional investors yeah it's good for bitcoin bitcoin's going to million dollars a coin then 10 million dollars a coin and all the people that believed in bitcoins for the last decade are going to have the financial wherewithal to create their own companies to do whatever they want right and and and to express their sentiment it's just not good for the entrepreneurs to compete against the mega caps so let me ask this question uh we recently have seen a bunch of politicians all start to pay attention in various ways so we've got on one side um in the united states most politicians uh started off abrasive so you know without naming any of them uh there's a number that we're very concerned about bitcoin uh if you go back a couple of years we then saw uh obviously china go ahead and ban miners and take a pretty abrasive uh step there but over the last let's call it i don't know eight months seven months uh we've seen el salvador go ahead and make bitcoin legal tender they seem to not only be supporting it as legal tender they also are onboarding people via their this uh app that they've built and also this atm network that they've built they're mining bitcoin and kind of really trying to plug their country if you will into the bitcoin network and then just recently over the last week or two we've seen multiple politicians all at the local level start to become much more uh friendly or embracing of bitcoin so you've got obviously the mayor in miami who has been a very kind of pro bitcoin for a while you've got eric adams who's the new mayor of new york city he now leaning in saying he's going to take some of his paychecks in bitcoin and some of the stuff should be taught in schools et cetera we've also got two kind of smaller mayors one in tennessee and one in i think it's tampa bay uh in florida all kind of leaning into this how do you look at the intersection of bitcoin and politicians and it's just this just a continuation of like bitcoin is good for business and so if it's good for corporations then it's going to be good for the politicians as well or how do you read that situation i think that um one of the great advantages of bitcoin is is it's money of the people it's money for the people and um the combination of the fact that it's permissionless and it's open nobody controls it means everyone everyone can adopt it everyone can engage in it and the proof-of-work network means that you have a large business in bitcoin mining and what is bitcoin mining bitcoin mining is like this it's like your skin it's like it's it's the first line of defense of your immune system right it's what uh makes you healthy the bitcoin mining industry is a 22 billion dollar a year industry right now that means that the protocol is creating a 22 billion dollar subsidy for bitcoin entrepreneurs to go out into the world and find supportive political jurisdictions 22 billion dollars and um per year so when you think about that that means that the miners themselves they ha they have to raise capital but that but um you see the bitcoin miners are ripping today in the market right all their stocks are up yes and they've been very successful you can take a bitcoin miner public you're not going to take a proof of stake validator public right one of the big differentiators is is the miners the miners have to have to use energy and technology but the miners are also recruiting political capital to the network and so i i think that uh what you're seeing here is is um lots of jurisdictions can see the benefit of bitcoin either as sound money right all the holders are political constituency and i i guess we're going to get close to the point where we're going to flip 50 percent of the electorate right there's going to be a bitcoiner in congress there already are there's going to be bitcoiners in the senate they already are and eventually a bitcoiner will be president it's not necessarily because they're going to run on just a bitcoin only ticket but they're going to have grown up they're going to have held the asset and they're going to become the president of the united states and hold bitcoin right it's the most part bitcoin bitcoin's the greatest brand in the history of the world first ch first observation it's the greatest brand in the history of the world what's brand value brand value is monetary premium right the monetary premium of bitcoin is 1.2 trillion dollars right now name another brand that's worth 1.2 trillion dollars right so it's the greatest brand in the world it's the greatest monetary asset in the world i mean i'm not counting the dollar because the dollar is a inflationary asset it's not an investment if you pick an asset that you could reasonably expect to protect you against inflation bitcoin becomes the most popular one other you know other than just like random real estate right just owning land i guess land was maybe the most popular one and bitcoin is is that digital property so how do i buy all these other things in africa or asia or anywhere right it's a very egalitarian asset and that makes it politically uh advantageous right i mean how is it not what politician would say i don't want you to own your own house and i don't want you to have economic freedom right right i mean so i think that the left and the right can both agree on that it's pretty clear it's high velocity money the higher velocity than anything but it's high velocity asset it's a bank in cyberspace but it's a franchise bank so anybody in on earth in any jurisdiction can create their own franchise of the bank and what that means right packs full or you know fill in the blank every crypto exchange in every country on earth when they're selling you bitcoin or exchanging bitcoin they're in essence creating you know uh a franchise bank of bitcoin where they're marketing it so so bitcoin is spreading through two incredibly powerful franchises the bitcoin exchangers who are the bitcoin banks if you will and it's open and permissionless right so there's no you don't have to get a license from the fdic to have a bank in egypt that deals in bitcoin uh and then it's spreading through the bitcoin miners they're the security providers so the security the network operators and the and the bankers are spreading like wildfire everywhere and who's an example well square cash app right i mean that's an example of a bitcoin bank paypal is a bitcoin bank coinbase is a bitcoin bank binance is a bitcoin bank right and uh and when you look at marathon and riot and all these bitcoin miners they're the other side of the network so i think that it's inevitable that more and more politicians uh begin to support the network not everyone will but but um you know the game theory of it is such that the more hostile one regime is the more lucrative it is for another regime right it was a benefit to the united states when china banned the bitcoin right cracking down on bitcoin mining was a gift handed to the west and i've you know i've said it before i think it's worth a trillion dollars right and uh you can see it in the hash rate statistics um i but at some point it's it's so bitcoin mining is the most lucrative use of energy in the world oh that's hands down in the world very provable and very verifiable in the world and it's it's the best use of intermittent energy and the best use of sustainable energy and so when you look at it that way you know you're thinking well shouldn't we expect an avalanche more of political support and the answer is yes and and why is it why is it um stable it's stable because the bitcoin miner is gonna and the bitcoin holders are going to go wherever the politicians support them and they're going to bring their capital and they're going to pay taxes large sums of taxes so the right way to think about bitcoin is bitcoin's creating an opportunity it's an opportunity for your family to save money for a hundred years it's an opportunity to fix your company microstrategy stock is you know hitting 800 right it's an opportunity for your shareholders it's an opportunity for your taxpayers it's an opportunity for your constituents it's it's an opportunity in the media business right i mean nobody wants to talk about anything but bitcoin everyone wants to talk about bitcoin it's an opportunity for twitter it's an opportunity for every mobile app what i think people don't recognize and you and i have talked about this before is um it's the only thing from a strategic standpoint that if you're an individual you can plug in your personal balance sheet right you can start to run your own node you can use this technology if you're a corporation or a financial institution you can plug your business into the network and you can do that in a multitude of ways you can build services that end up facilitating other people to use it or you can mine to support the network you can simply just buy the asset and hold it on your balance sheet but you can plug in it's also true of nation states and foundations and endowments and pension funds et cetera but when you plug into the network you're in essence hiring tens of millions if not hundreds of millions of people around the world that are all now working aligned with you to further your business right i talk all the time about whether you're a restaurant right where we've literally seen examples of many restaurants who have done this all the way up to large pension funds or nation states all of a sudden the the cyber hornets online they begin to rally around you they begin to push you forward they begin to say hey we will support you because you are like-minded like us you are also helping us move this forward but you also get the support of every single minor in the world they'll say we will protect your economic wealth for you and you get the lightning network we will help people actually route these transactions it's just a very unique thing where you're essentially hiring so many people and so much economic value but all you do is you just plug in right you don't have to go meet these people you don't even know who they are it's an it's an excellent political strategy it's an excellent marketing strategy it's an excellent shareholder relations strategy it's an excellent business strategy uh it's i guess there's two thoughts i have here one properly understood i believe bitcoin is digital energy it is pure energy right it's not digital gold that's put a billion dollars of money in a vault and let's sit there for a decade and you can't do anything with it it's it's it's not even digital property digital property is a billion dollars of a digital hotel and i can teleport it from new york to paris and back again and it's maintenance free and indestructible it's better than that it's digital energy because i can decompose the hotel to room minutes and i can i can decompose and recompose this pure energy hotel and rent it out at the speed of light and program it with a million transactions a second you never saw a hotel get programmed with a billion parts a million transactions a second it's literally like a swirling energy mass when you understand that then you see it hasn't eliminated capitalism it's simply the 500 trillion dollar digital energy basis of capitalism it makes sense that you would use it as the foundation to build your family to build your company to build your country to build your city to build your application to build your device you can put it into everything and now once you've done that look you can back up your your family with the balance sheet of bitcoin you'll be rich that doesn't mean you'll be happy there's a lot of rich families that have a lot of messed up problems right you can watch them on television you know you can put it on the balance sheet of your company you know i have you know seven if i have seven or eight billion dollars on my balance sheet that doesn't mean i don't have to get up and go to work and make the software work and sell the software and listen to the customers i'm still in a in a competitive struggle with other like-kind software companies it's all business intelligence software and the same is true with your city right it's half the solution the other half of the solution is you need rational policies at the municipal level the state level and the government level so when you think about it like that right you realize that um it it just it makes sense and it's uh it's going to grow but um what was the second part of your question again in terms of as more and more people plug into this system do we expect not only one the politicians obviously will continue to do this but is there a spillover effect where people actually leave jurisdictions that aren't bitcoin friendly like there's an element of take taxes right there's a carrot and a stick you can drop your tax rates you can incentivize people to move but you also could increase your taxes and literally push people away it's obvious that the incentive to get people to move to your jurisdiction but if people continue to be abrasive is there problems yeah yeah i remember what i was going to say now it's the energy system is an energy network everyone's plugging into it and it makes them more efficient than they would otherwise be but they still have their struggle what's happening is yeah you're benefiting from the rest of the network you can't afford to to lose laser-like focus on your family or company or country right you can't assume that just because you plugged into bitcoin network you can be a crappy retailer or a bad mayor or a bad father right so it doesn't solve that problem every i think we boil down to a simple idea which is everybody's got a balance sheet everybody's got a p l the p l is your operating business you better be the best in the world at that thing the best in the world if you get distracted you know you want to be a good husband you can't have six wives yeah you want to be a good retailer you better know who your customer is you still compete against every retail so your operating business you got to be really laser-like and good at it but by plugging your uh your balance sheet into bitcoin you have hundreds of millions of people guarding your back that are energizing the network and you know it takes me back to a historic observation history teaches us that the winning civilizations the winners in the history of mankind are the civilizations that channel energy more effectively through time and space right and and that means practically speaking right the romans they were good at killing people it's not easy to kill people right i mean to raise an army they didn't show up with bows and arrows and spears they showed up with industrial grade artillery that tossed 50 pound flaming balls of shrapnel at you from 500 meters or a thousand meters away right and a navy so so you see that over and over again right steel trumps iron and iron trump's bronze and that's because and bronze trumps stone right you pick up a stone if you're if you pick up the sharp rock you beat the other guy if you're smart enough to pick up a rock and the other guy didn't pick up a rock you won the fight if you had the had the iron then you beat the guys with the bronze if you had the steel you beat the guys the br with the the iron you ever seen steel forged people don't think about this walk into a steel mill look around what do you think is going on right there they're channeling immense energy right that the fire the heat you know or electric electric rolled steel massive energy into metallic form air power is energy potential energy you get up 50 000 feet you drop someone on someone's head okay what's the channeling part remember the gulf war that you know norm schwarzkopf used to show the videos of the laser-guided bomb and something that's in the clouds dropped the bomb that managed to hit you know a three by three space from 50 000 feet up you know through the wind right so the channeling of the energy through time and space you know and and being better at channeling it that explains why every team wins in sports that's why tom brady wins because the quarterback puts you seen him put the football in exactly the spot you have to put that football in that space in a plus or minus 10 millisecond time spot with the right uh with the right spin on the ball and if you happen to be able to do that you can win and is it random no it's not random there's one but one guy that's better at it than everybody else and and if he didn't have the team they wouldn't win so every winner is better at channeling energy and time and space every civilization every city every company right every investor so the real power of bitcoin is bitcoin is digital energy and until you figure it out if i said to you what is digital energy well digital energy is i'm gonna put a hundred billion dollars into this container and then i'm going to do a magic trick and it's not here anymore but guess what i can move it at the speed of light a billion times a second and you can't find it and i can put it into every car and it'll drive every car on the planet for the next two years without fuel sounds like a magic spell but it is a magic spell any sufficiently advanced technology is indistinguishable from magic bitcoin's digital energy the next best thing is electrical energy it's not you know information these are not nearly as good it's a thousand times better than the thing it's replacing a lot of people they can't get their head around it they don't want to understand it the conclusion is if i told you like which country is going to win the war the one that masters air power right the first half of world war ii was air power you know sea power the british would you know control the seas right or how about this nuclear power what could nuclear power do for you right you think you weren't channeling energy right you're channeling energy so now we're talking about digital energy and you would ignore it at your own risk it it doesn't guarantee you win right i put a what's a gun a gun is is channeling with precision right chemical energy or explo explosive energy right it's pretty obvious if you think about it guns germs steel you're channeling energy you know lord help you if you're on the wrong side of that but if i do hand you the gun you'll probably win unless you're stupid enough to shoot your own foot off and there are examples of people that shoot their own foot off in you know in the history of war and the history of civilization but ultimately what history's telling us is the team that is most coordinated that channels energy always wins and bitcoin bitcoin's a good bet just because it's digital energy and the advantage you have versus using metallic energy in the form of gold or using political energy in the form of fiat paper is so much greater that um that the deck is just stacked against everybody else now the question is just who's going to jump on it and how fast which politician which big tech company right if apple gets on bitcoin you know they generate a trillion dollars of additional market cap just on the balance sheet maneuver that's the first trillion if they build it into an iphone you make another trillion if you're smart you have a 10 trillion dollar asset in your cloud and you become a 10 trillion dollar bank if they do it or they don't do it right the world's full of examples of empires topple because they did not embrace a new technology you know the romans the romans needed the etruscans to whiff you know and uh and for the greeks to take their eye off the ball and then you know one thing leads to another and uh when you get enough power you start to you start to become more close-minded if you have enough money and enough power you don't need to learn anything new what we see going on right now is every single powerful person in the world is asked the question what do you think of bitcoin everybody the premier of you know of russia every world leader every major investor every major influencer everybody's got to have an opinion ask yourself the question how many of them spend 100 hours studying bitcoin to form an opinion i don't think there's a single person with a negative opinion that spent a hundred hours studying it i mean i i don't think you're out on the limb there i just think the world's full of people that don't they haven't spent 10 hours studying it and yet if i walked up to you in 1900 and i said i got electricity i want you to put it in your building i want you to put it into your carriage i want you to put it into your ship i want you to you know you you manufacture food you know i want you to use electricity instead of steam power or or mechanical power okay how many people would stop and study it and how many would think they would master it and figure it out with one hour of consideration would you know how to wire uh you know hershey's pennsylvania you know or a meat packing plant you know or a ship with electricity and a hundred hours thousand hours how many hours does it take to figure it out and what are the consequences of not figuring out i think the consequences are over 30 years you go out of business right yeah let me ask this um this idea of moving energy between time and space i think you and i uh unsurprising to the audience uh understand how valuable this asset is we understand how much pristine collateral it provides when you think about uh bitcoin there's a price that is attached to it and the price goes up and down on a daily basis it's priced in u.s dollar terms um there are short-term reasons why to pay attention to the price especially if you're holding on a balance sheet of a publicly traded company like we talked about but when you look out over the long term i've heard you say things like uh it's going up forever uh do not sell your bitcoin and other things that uh i don't want to make an assumption but insinuate that you are going to hold bitcoin for your lifetime how do you think about price in that equation do you worry about it do you think about uh what it will be worth in us dollar terms in the future like how do you think about price i think the only thing you got to do is figure out how much of it you can buy and the reason to stop buying it would be you're buying it with leverage or or with um with a mark-to-market loan that could cause you to get forced liquidated so if you had a million dollars sitting around you just buy bitcoin and hold it wait you know can you borrow 10 billion can you borrow 10 million dollars to buy bitcoin i i wouldn't buy it at 20 x leverage or 10x leverage or even 5x leverage or something uh because the significance of prices you look at the volatility and you ask what's the what's the likelihood that it will trade down 50 and i'll get a margin call and force liquidated if you have margin debt you can theoretically get a margin call if you have long dated debt you know uh if you have a seven year loan we have a seven year loan and we bought five hundred million dollars of bitcoin at thirty six thousand dollars a coin what's the odds it'll be 36 000 a coin in seven years you know i'm not so concerned about it so i i i think uh the way to think of it is here's my model for bitcoin bitcoin's price is going up because of inflation safedeen says 14 right we know that in the absence of everything else if you had um if you had complete adoption if eight billion people had bitcoin and they and we had world currencies and the us dollar was the world currency and we inflated it 14 a year then you would think bitcoin would go up 14 every year as the currency kept getting inflated so so the price of the dominant monetary network or dominant monetary asset goes up by inflation and the second the second dynamic is adoption there's a rip right that if there's a hundred billion dollars of demand for bitcoin then it's going to go up faster than the 14 because there's a short squeeze as people are trying to buy the stuff faster than the market wants to sell and if you went from one percent adoption to two percent adoption you could imagine that the price could double just because the adoption doubled even in no inflation right correct and then the third uh driver is utility if um this is common sense right you ever send bitcoin to anybody else on the main chain and you want to send 37 bucks and it takes you an hour and you got a fee and then when cash app came out said you could just send it by a hashtag or you know or you get a lightning that's the proprietary way called layer three and the layer two lightning ways i got a lightning wallet and i zap it for one satoshi in a split second remember the big smile that brings to your face it's pretty fun okay did it not make you think that bitcoin is more valuable like bitcoin's utility explodes if i can move the money at the speed of light on the layer 2 or the layer three and if i can do a billion transactions a day or let's take el salvador right three million people download a wallet and they start doing remittances is there demand for bitcoin sure there is right so so as the technical utility increases as we go from and by the way the technical utility drives and feeds back into the adoption right because there's three million people in el salvador that now have maybe a bit of bitcoin or the ability to buy bitcoin in a split second that couldn't buy it six months ago so if you look at a world going from 100 million people with what's low utility i buy it i hold it for 100 years that's low velocity 100 million adoption 200 million and i move it every year 400 million 800 million 1.6 billion as the user count increases that's going to drive things but the adoption's not just user count right like if you're building the model you would say well how much money people talk about they talk about uh bitcoin and network fx and metcalf's law okay again if you're just looking at it in a cursory way you're saying oh metcalfe's laws apply but if you're thinking a bit deeper about it you're thinking you know newton's law is a pie right astrophysics supplies if you bring a hundred billion dollars to the network and you're one person that's more important than if you brought a dollar to the network and you're one person and so you have to you have to do a dollar weighted assessment of adoption right and and you would almost say the value of it is a function of the total amount of capital plus the velocity right what's what's the amount of money that shows up what's the velocity of the money that shows up what's the utility of the money that shows up and when you think about it that way it becomes pretty clear that as we march from one use case to a thousand use cases like you know holding it is one thing least lending it out for yield is another thing what if i put a lien on it what if i can lock it up for five years what if i can you know what if i can create a trust what if i gave you a trust that's good for the rest of your life in the life of your firstborn child for the next thousand years and it's an app and i just fund it with two bitcoin and you can't ever sell the bitcoin but you can live off of the yield of the bitcoin for the next thousand years it's an application right i can create insurance policies i can create trust funds i can what if i gave you a car a tesla car and i put a bitcoin in the car and the car refueled itself forever and maintained itself it's a self-maintaining car more valuable than a non-maintaining car right it's like something it's like i hand you uh something with an endowment right yeah so as as that happens as you get more money flowing on the network and more people flowing on the network and more utility flowing on the network the price goes up and uh does it go up forever but why yeah because as i said it's the language of money what's that mean it's like english right how long's been around long time it's like it's like it base 10 math right like they're here's the thing about it right people don't get this part bitcoin is is is math but it's a type of math it's like base 10 math the bitcoin protocol is a protocol for money now i hand it to you you can either say great this is the dominant protocol for money this is the winner and i'm going to buy as much of it as i can or you can keep trying to commercialize base 16 math and base 32 math and base 2 math and base format and you know the base 16 math base 10 math is not the only mathematical protocol any more than the metric system is the only system of measures it happens to be one that we adopted there's no reason to think it doesn't last a thousand years could last 10 000 years right and that's the part that uh that people don't get so when i say it's going up forever i'm saying well if the will the technology get better obviously will uh will adoption increase well i guess you could say it gets pegged out when adoption is eight billion people when everybody's adopted it technology keeps advancing inflation continues in whatever other currencies exist and at some point theoretically if all the other weak currencies failed right you think we go from 130 currencies to 100 to 30 to 12 to 10 to maybe one day there's the dollar in the cny you're down to two and then maybe we decide to throw away the dollar and the cny we get enlightened and we just use satoshi's yeah and you get the perfect austrian economics hard money perfect thing maybe it doesn't matter to me if we do we don't but let's say we did well then it goes up with the productivity of the civilization right right if the civilization is is got five percent productivity growth and everybody's adopted the same money then you've got five percent growth and until that you're going to have faster than the productivity growth because you're going to get these these rips these uh these accelerations from technology and adoption and fiat inflation in in the in the frame of reference right it's useful to see the frame of reference right is your frame of reference the peso is it the boulevard is it the us dollar and in that frame of reference then the the price is going to adjust my brothers are going to join us here in a second to ask a couple of questions sure uh but um my last question for you uh on this topic is when you think about microstrategy we always talk about microstrategy right because that's the company that you run but a lot of people will forget you actually made a very large personal bitcoin purchase as well do you think about a difference in the decision making between a person optimizing for this as like a balance sheet strategy versus a corporation or do you see those as the exact same thing i think for a person you just you just say how much money do i want to store for the next decade or maybe hold for life how much how much long duration property if i said i said you're going to invest something for the next 30 years and give it to your grandchildren hold it in the family the family endowment i would put that amount of money in bitcoin right the rest of your money is an investment you're betting on apple versus facebook or it's a speculation i want to speculate on doge versus ship because it's fun or i want to gamble on the outcome of the super bowl because i think i know and it's fun okay um and i think that that all personal money falls into those three categories it's either an investment it's a speculation or it's a it's an endowment of a savings account um for a business that's different because some businesses are traders if you're a trader if you think you can out trade someone else you're a business you better be thinking about it 60 hours a week you better have proprietary computers and proprietary models and know the markets and the arbitrages then you could trade maybe i mean citadel trades renaissance trades i mean other people trade goldman sachs trades so i i think they can be traders and then also when you get into business right businesses have other options like maybe they can raise capital they can issue equity they can issue debt they're publicly traded i i have an army of lawyers and accountants so that i can do that you don't as a family so so businesses don't have the same financing capabilities sorry people on the same financing capital as the businesses do and then your business has strategic assets if your fidelity and you have trillions of dollars of fixed income you can build it into your bonds if you're a bank you can build it into the bank if you have a mobile app you can build it in a mobile app if you build phones or devices you can build it into the device one thing i think with the business is clear is you just should be laser like focus and you should think that when the dust settles i need to be the best in the world at what i do right like for example it wouldn't be a good idea for me to go into business competing with fidelity right they have 11 trillion in assets i'm not go you know like i'm not going to launch a bitcoin investment fund right i'm not i mean it's not for me i'm not going to go in business against you know square or paypal either just because i think it's a good idea so businesses need to be laser-like focused on competing and growing and in a creative fashion for their shareholders and also businesses have shareholders to manage and shareholder relations and so so there's that phrase you know if we want to go far we need to go together and so for a business it's very important of shareholder alignment would you rather have 10 billion dollars of capital and get a 10 return or no capital and get a 30 return right so a business has to keep their capital aligned and so a lot of times they'll do things that are either optimized for their shareholders or they're optimized for their other constituencies and businesses have uh regulatory nexus right like there's certain things that i can't do if i'm a bank in china right or if i'm a bank in the u.s i can't so so businesses have compliance issues and individuals don't so that's how you think about that you don't know this but uh my two brothers run the best business share research team which is a very clever thing that they came up with uh they also run a union that i've busted like 20 times uh what questions do you guys have hopefully by the end of this we're going to get uh michael to join the union this will be our recruiting bitcoin's a monetary union he's in some monetary union you should join eventually everybody else will we're convinced what questions do you guys have uh so i listened to the entire interview fantastic awesome stuff but i have to ask one question around volatility so you mentioned earlier you own microstrategy owns or holds uh over a hundred thousand bitcoin i think you've mentioned in the past how much you personally hold uh but there's days where bitcoin is obviously appreciated drastically over the last year 10 years et cetera but bitcoin also went from 65 000 call to 30 000 or 32 000 this year what's going on on days where you're looking on paper and and it's going you know hundreds of millions of dollars at some points down look i'm running the business just like any ceo is running the business like if you were to ask jeff bezos you know what are you thinking about on days when amazon stock is down it would say i'm not thinking about it i'm thinking about fix the business run the business and the stock will take care of itself and that's what i think i'm i'm looking out for seven years right i'm i'm saying how do we educate more people on bitcoin what's my next deal that i'm going to do i mean if if if my stock is down i'm going to issue debt if my stock is up maybe i can do a convert right what about the software business how are we going to deliver the best quarterly results we can deliver you focus on the things you can control so if i can control it i'm going to do it and the short-term volatility you know you can't control and so you just wait you you gotta figure that in seven years the market will sort itself out in seven months it likely will sort itself out and seven and if you want to drive yourself insane then you zoom in and if if i zoom in close enough if i just look at 0.001 percent of your face for 18 milliseconds i bet i can find some protozoa bacteria crawling around somewhere and it'll freak me out right if i if i want to right like it's you're driving yourself to apoplectic fits by by inducing this anxiety so the way i look at volatility is actually the truth is i just say this it's a benefit volatility is the price you pay to get 10x the performance of the s p if it wasn't volatile then would i have been able to borrow 2.2 billion dollars at one percent interest and buy seven and a half billion dollars worth of it starting with 250 million in capital like i i like the fact it's hard i like the fact it's scary i like the fact it's volatile what you really want this is what you should hope for in life you should hope that you can see the future and you have a very strong opinion about the future but that everybody else disagrees with you and they're getting bounced around it's a bumpy ride it's like i'm taking you on a bumpy ride down the road i'm going to bounce you this way in that way and in five years then there's a pot of gold at the end and there's only two seats and there's 10 people and only two of you get on so the two of you guys you're like oh there's pot of gold at the end i'm sorry part of bitcoin at the end part of bitcoin at the end yeah you're like okay well we'll sign up for the bumpy ride what else do we got to do and everybody else is like fat dumb and happy and they've all got plenty of everything and they're comfortable in their life and they're like well that doesn't look like a very comfortable ride it's like you know a jeep and it's a desert and it's a bumpy ride we'll sit this one out can you just bring it to us and and it's you know what i said tongue-in-cheek about the fdic statement it's like when every bank can hold bitcoin on their balance sheet well then every company is going to borrow hundreds of billions and trillions of dollars against their bitcoin every bank's going to buy trillions of dollars of bitcoin the price is going to the moon you're not going to afford the bitcoin when i make it you know a smooth passage you're going to wait until there's a train or a plane that flies across the country or you're going to get in a wagon and you're going to go west young man right so i i'm like the joke of course is it's volatility but it keeps going up people like well how how else do you want it to go up right i mean like it's it's going up with volatility so i think it's a it's a benefit because it it's volatility that pays off everybody that does the research and has any conviction and it disproportionately benefits people that want to make the investment in the new world and uh and it transfers wealth away from people that are afraid of volatility it's not really afraid of volatility it's i mean amazon was volatile right i mean a lot of people made a lot of money on amazon a lot of people made a lot of money even venture capitalists you know accept extreme amounts of volatility i think here you have an example of a liquid publicly traded asset which is volatile but in fact it's still misunderstood by 98 of the public investors so it's an asymmetric opportunity to buy something which is no less risky than investing in a big tech company but um but much less understood and i think probably the sharp ratios would actually bear that out because we looked at volatility and adjusted yield john what questions you got yeah nice to see you again michael um so you have mentioned and i tend to agree that bitcoin is digital gold and it's a store of value i'm curious what you're thinking is behind people uh companies and other countries using it as a medium of exchange we've seen el salvador adopted what are your thoughts around that i i really think that that for the next decade this the screaming home run architecture is digital currency as the us dollar on top of digital asset as btc and i think that every country really wants to move dollars around as the medium of exchange because 100 million companies have their accounting systems wired for dollars and i think they want to use the store of value and i i think if you had a hundred dollars and 99 are invested in bitcoin and one dollar is invested in the usd you have 99 of the benefit in fact it's not even that it's like you don't have to give up anything if you have a million dollars you put a million dollars into bitcoin and you borrow a hundred thousand dollars in usd a stable coin and then you pay your bill in the usd while the bitcoin appreciates so the net balance sheet ratio is a hundred percent bitcoin but it doesn't make the currency go away right like micro strategies got more than 100 of its balance sheet in bitcoin but we still use the currency so i what i think will happen if you really want uh bitcoin adoption to take off you don't want to squeeze out the stable coins i think that the usd stable coin is actually going to drive the explosion in bitcoin the the use case of stable coins up until now has been uh crypto exchanges settling offshore right there's they're settling crypto exchanges we didn't use stable coins at microstrategy for anything we don't use stable coins to buy bitcoin right so what you want is you want eight billion people to use a stable coin to buy coffee and you also want amazon and general electric and apple to remit cross-border treasuries in stablecoin and why would you do that because you can move money at the speed of light on saturday afternoon for free and right now microstrategy can't move money cross borders at the speed of light for free would we uh move usd by a stable coin yeah would we move bitcoin well we might flash it into bitcoin for a second move it in another second flash it back into usd right all uh you know strike you know strike and jack mullers we might do that but i actually think that what the world wants not just the world every consumer kind of every consumer in south america africa would love to have dollars in their wallet they would also love they know that now everybody knows that now that's 100 right everybody knows they want dollars in their wallet now so the us dollar could spread to six billion people it would spread to eight billion people the chinese didn't block it right it'll spread to all eight billion people now they don't all know they want to hold their life savings in bitcoin but that's growing at a massive rate that's spreading like a virus every government knows they want to control their currency the strong governments will the us will the chinese will the eu will the weak governments won't right afghanistan you know and uh you know venezuela and places with hyper inflation zimbabwe they will lose their currency privileges because they're weak and who will they lose them to to the dollar right so what i think is happening is you're just going to see an explosion in the dollar an explosion in bitcoin an explosion in demand for money moving over lightning rails if you could move stable coin over lightning rails that would accelerate the growth of lightning right yeah the killer the killer application i want on my phone is a lightning wallet with usd stablecoin and then bitcoin and to be able to move either of them at the speed of light in a programmatic fashion and i think they both win who loses and this is the key like we i there's too much the dollar must lose so bitcoin can win no who loses is weak assets and weak currencies can you think of a weaker asset than bitcoin every other investment asset right especially gold silver commodities land stock weak value stocks and then and big tech stocks they're all weaker assets so you see money flow from there's 500 trillion of them by the way right we have 500 trillion in weak assets if you got the 10 trillion from gold we'd be up by a factor of 10. so i think that uh weak assets flow to the strong asset and then weak currencies how many how many currencies in the world are weaker than dollar name one currency fiat currency in the world stronger than the dollar none they're all weaker cny is weaker every african currency every asian currency everything so 180 nominal currencies one a lot of them are pegged to the dollar 130 floating currencies they all they all can be replaced with the dollar so who wins uh western banks western technology companies western hardware devices the western world the united states western europe who wins everything embraces bitcoin right who loses you know the nation of gold right i mean you want to declare a war on something declare a war on gold they don't have an army they don't have an air force there's no politicians running for office of president of gold there's there's there's no city state country no one is crying thinking that their way of life will come to an end if gold got demonetized so i you know if i had won one request from the bitcoin community my request would be focus your guns on gold ultimately gold is being demonetized this is not speculation on the part of michael saylor you have all the stats it's been demonetized for the past decade right it doesn't have a country it doesn't have an army it doesn't collect taxes there's not a single person on earth that is going to lie down in front of a tank to defend the nation of gold and yet gold is the enemy because gold is a dumb rock sitting you can't mortgage your gold you can't lean up your gold it's hard to rent your gold or license it or develop it further you know gold is not big tech you can't put gold on an iphone so ultimately what you have is there are two things that should succeed and grow the us dollar if you live in the united states and you believe in western values and freedom and justice right and western law and the progressive movement you want the us dollar to grow and you and instead of saying well the dollar is like a problem to save and forget about that just point out that if you live in africa and asia you would give your left arm to trade in dollars right so the dollar should expand on on uh lightning rails and bitcoin should expand and they go together and we all win there's no i mean we all win right the world's a better place every company everybody wins if you're going to compete by the way if you're going to compete with square cash app then you might lose if you're going to compete with twitter you might lose if you're going to compete with the united states of america you might lose my advice is you don't got to destroy the banks you don't have to topple a government you don't have to crush a currency you don't have to stop a regulator you don't have to you know eliminate paypal right you don't have to compete with all of them you can buy bitcoin you want to compete with something declare war on a dead rock right declare war on the rock right the rock has been losing for a while now and after you're finished declaring warren the rock declare war on on uh dead property right dead money right what a low velocity not i don't want to hold 500 acres in the middle of nowhere as a store of value i don't want to hold five tons of rock as a store of value i don't want to monetize these things so if you start thinking that way and you think i just want to take my monetary energy put it into digital energy and then i want to partner an ally with everything i find admirable every great company every great politician every great country right every great technology just be positive be constructive and and we all go and we win together the world will rebuild itself right it's going to rebuild itself i would like i would prefer that it rebuild itself in a peaceful constructive cheerful fashion as opposed to you know someone's got to lose so i could win i don't think everybody can win right if we invent electricity and we invent math and we invent fire isn't it highly likely the entire human race is better off because of math fire and electricity right i think right we can we can all win together and so that's that's the way i see that before we finish up uh we've been going for two hours but i know you and i could talk about this all day uh if i just give you the floor to finish when somebody says to you why bitcoin what's your you know two three four sentence answer as to why has michael saylor uh who had every option in the world to buy an asset put on your balance sheet or personally invest in why bitcoin because the most i'd start by saying the human condition is elevated via the channeling of energy and every great advance was a new form of energy via metallic energy in the form of steel or electrical energy or chemical energy and uh and bitcoin is the next evolution of that right so the first reason is it's compelling um [Music] and critical to the events of the human race the second observation is every successful investment idea in the 21st century was a digital transformation digital transformation of music digital transformation of of uh entertainment digital transformation of books digital communications bitcoin's the digital transformation of everything else everything that didn't get tran that didn't get transferred uh transformed in the in the first in a chapter of the mobile wave comes next so now we have digital transformation of gold digital transformation of property and digital transformation of energy and for the first time in the history of the human race you can literally take energy transform it into something in cyberspace store it forever move it at the speed of light program it and eliminate the friction that that is applied to to that energy when it takes another form economically energy is capital right we we use the phrase capital if you've got digital capital it's the digital transformation of capital and capital is half of everything if you sum up every piece of property every corporation the value of everything it's all capital you capitalized it so if i capitalize everything and i stored it in 20th century instruments i would store it i would store them in equity securities and bonds and and titles to property in the 21st century i have the chance to capitalize the entire world economy and put it in a digital token we call bitcoin so why why and buy it because because uh it's half of everything right it's hot it's literally half of everything and it is the platform it's the it's the foundation upon which we build the 21st century economy you could say 21st century cyber economy but if you want to fix everything in the world if i could eliminate the friction move everything at the speed of light make it immortal oscillate it at 60 megahertz or faster you know execute a million transactions a second and make it infinitely intelligent wouldn't you think that uh that would be a good idea right the future capitalism there's not very many people who believe in this more than i do but uh you may be one of them because i think you and i see eye to eye on all of this so i appreciate you taking the time to come in here uh i appreciate you two sitting around and watching this entire thing coming and asking some questions they'll be taking virtual laps for weeks now because you even hinted at the fact that you may be open to joining their union uh i appreciate everyone uh watching at home uh please make sure you like the video subscribe to the channel thank you to sofi for sponsoring the best business show and uh we have lots and lots to go over after this conversation but uh we'll be back tomorrow and uh i think that's it go follow michael on twitter i don't know if we've got anything else i don't know if thanks for having me i don't know if you need any more twitter followers but i got one more question oh we talk about don't ask me what the price is going to be no i won't ask you i'm not tired of that question no we talk about bitcoin being good for business all the time and i think part of that is obviously the price has appreciated so anyone who has been involved has uh has benefited from that but part of it is also just the community aspect of it right and how powerful that is is there a specific point in time where you were like holy crap like this is wild these people are really strong they're really passionate you know i think that every single month that's gone by i've just been more impressed with the community ethos i if you look at our press release when we first bought bitcoin and we said why we bought it uh one of the lines we put in the in the press releases were persuaded by the community ethos but by the community itself that um that this is digital gold and it's harder and it's smarter and it's stronger and it's faster than gold and i think that came out of all my research before we actually made that announcement and there the way you figure out the community's passionate is you do your research and you study all the influencers you look at all the podcasts and you read all the books and you couldn't come to any conclusion other than the the asset is differentiated based on the community ethos i even i even tweeted this i made this point and i guess i elaborated right now i said you know the character of the asset determines the decision the dust sorry the character of the of the owners determines the destiny of the asset right the character of the people that own something if you own like joe random yo-yo coin and you're owning it to flip it on saturday night depending upon which way a football game goes okay that's the the destiny of the asset right it's going to be short-term because the people are short-term if the whenever you buy anything you gotta ask yourself the question what's the character and what's the intent and what's the strategy or the belief system of the people that are buying the thing that i'm buying if i buy real estate in new york right you'll eventually sell it to someone else who swears that new york is the apex city people that love new york their opinion is there is no other city on earth where you could go everything is a step down they have a view of new york as mount everest and they're living at the top of it and everything if you were to say have you ever considered moving to another city they recall in horror you know kind of like new york is like the rome of 100 a.d and there's rome and then there's barbarians okay so that's the character of the asset owner what's the character of people that own bitcoin if you have if everybody bought it because because they intend to hold it forever isn't that the kind of asset you want or if i told you people bought it because they liked the monogram the you know this they own that dog well how many dog coins are there 48 or something well if you bought the 47th dog coin then the 49th dog coin is eventually going to demonetize you so i i think that's been very clear from the beginning uh bitcoin had the immaculate conception right i mean you can't recreate this again how do you have a an open sourced you know asset that was never pre-mined that was never ico'ed that no you know no one thought would be that until it became that right so i i think that um i think that my conviction grows with time but it's pretty evident in august all right so what's your print knobs do you have a price prediction it's going up forever all right listen i appreciate everyone coming i thank you very much michael yeah uh you uh you've got a whole bunch of stuff you guys spending your time on so i appreciate you coming here hanging out with us and uh anyone's got any questions go tweet at michael he probably will not respond but he'll at least read it so uh see you guys tomorrow have a good one thank you you

Channel: Anthony Pompliano

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Keywords: bitcoin news, crypto news, anthony pompliano, financial news, cryptocurrency news, bitcoin price, bitcoin analysis, business news, btc price, michael saylor interview, michael saylor live, michael saylor debate, michael saylor latest interview, michael saylor bitcoin prediction, michael saylor, btc, btc news, bitcoin interview, bitcoin, michael saylor bitcoin, microstrategy bitcoin, michael saylor microstrategy, anthony pompliano bitcoin, bitcoin price analysis

Id: c3E91-RGjQE

Length: 145min 40sec (8740 seconds)

Published: Mon Nov 08 2021