michael-saylor-ross-stevens-bitcoin-macrostrategy

MicroStrategy Bitcoin Summit | Macro Strategy with Ross Stevens

Key Takeaways

  • Money is the title to human time. Money printing unfairly steals from the vulnerable to benefit asset owners, increasing wealth inequality and destroying market price signals
  • The un-optional and critical decision facing every CEO in the next 10 years: To go on a Bitcoin standard
    • To make their decision, they only have to believe the dollar will continue to depreciate against bitcoin for the coming decade or two
    • “Bitcoin is not volatile”, everything is on sale in terms of Bitcoin
  • Bitcoin supply can’t be inflated, regardless of demand
    • Additionally, Bitcoin is the first-ever electronic bearer instrument, it can complete 500,000 transactions daily with finality in about an hour
  • Bitcoin can monetize isolated energy sources around the world. Additionally, it puts a profit  motive on developing abundant, clean, cheap energy
  • All kinds of institutions are adopting Bitcoin. Moreover, existing institutions want to increase their allocation, and “Exactly zero clients have walked back their allocation” – Ross Stevens
  • The Bitcoin monetary network allows free and instant global money transfers, with profound implications to industries like import-export and remittance markets
  • Follow the brains before the money. The smartest people and best developers in the world are shifting to Bitcoin

Intro

  • This video interview was part of MicroStrategy Bitcoin for Corporations Summit
  • Ross Stevens is the founder and CEO of Stone Ridge Holding Group, and the founder and executive chairman of NYDIG
    • Stone Ridge manages over $20Bn of alternative investments, check out their 2020 Shareholder Letter
  • Host: Michael Saylor, Founder, and CEO of MicroStrategy and Saylor Academy

Debase the Currency, Debase the Country

  • If a stock certificate is a title to company capital, money is the title to human time. In that sense, a central bank keyboard is a tool that steals human time.
    • Even worse, it unfairly steals from the vulnerable to benefit asset owners, increasing wealth inequality and destroying market price signals
  • The current Fed mandate is to decouple risk-taking from consequences. To that end, the Fed is buying securities at an unprecedented scale
    • For instance, Jerome Powell bought securities worth a day of US GDP, essentially duplicating the collective labor of 315MM Americans with a keystroke.
      • No human should have that power
  • “A central bank can control the supply of their money, they can’t make their people value it” – Ross Stevens

Why Go on a Corporate Bitcoin Standard?

  • Traditional safe assets, such as cash reserves and treasury are now a volatile liability
    • “Bitcoin is not volatile”
    • “I now think in Bitcoin, and it’s very freeing” – Ross Stevens
  • Capital allocation is a CEO’s primary job. For instance, the decision to buy/sell something, or fund or close a business.
    • The un-optional and critical decision facing every CEO in the next 10 years: To go on a Bitcoin standard
  • Great questions are underestimated, ask this “What do you have to believe to be true to move to the Bitcoin Standard?”
    • It’s only necessary to believe the dollar will continue to depreciate against bitcoin for the coming decade or two
    • Additionally, consider the competitive advantage of everything being sold in terms of Bitcoin, while making new highs in USD

Bitcoin is the Best Money Ever

  • Money is a technology for making our wealth today available for consumption tomorrow. Good money is salable across time and across space
    • For instance, the British Pound has lost 99.7% of its value over its lifetime, not salable across time
  • Gold grows at 1-2% annually, while Bitcoin is an asymptotic journey to 0% inflation per year. Consequently, gold depreciates completely against Bitcoin in 50 years
    • Additionally, the supply of commodity money is subject to demand, humans can produce more if the price rises
      • Uniquely, “Bitcoin is the first store of value ever in which its supply is entirely unaffected by its demand”
    •  In that sense, “Bitcoin is better at being gold than gold because it’s more salable across time” – Ross Stevens
  • While fiat money is considered salable across space, it involves credit risks because the final settlement takes days to months
    • Bitcoin is the first-ever electronic bearer instrument, it can complete 500,000 transactions daily with finality in about an hour
    • In that sense, “Bitcoin is better being fiat than fiat” – Ross Stevens
  • In conclusion, “Bitcoin is the best money we have, maybe it’s the best money we’ve ever had” – Ross Stevens

Bitcoin’s Energy Usage

  • Energy is abundant, but not always transportable. Bitcoin can monetize isolated energy sources around the world (E.g. waterfalls, running rivers, natural gas pockets, etc.)
    • “As bitcoin price rises [..], bitcoin mining will be the most profitable use of energy in human history that doesn’t need to be located near human settlement to operate” – Ross Stevens
  • Profitable use of stranded energy will enrich local populations, and allow building infrastructure and settlements
    • Additionally, profit motive acts as a catalyst for developing abundant, clean, cheap energy
  • “Historically, our challenge with energy has been to move the power to the people. Bitcoin will allow us to move the people to the power” – Ross Stevens

Bitcoin Market Insights

  • NYDIG is a subsidiary of Stone Ridge and is a full service, vertically integrated, Bitcoin only, financial services firm
    • NYDIG went from 25 institutional clients last year to 280 today. Based on the order book, NYDIG will have over $25Bn of bitcoin
  • All kinds of institutions are adopting Bitcoin. Moreover, existing institutions want to increase their allocation, and “Exactly zero clients have walked back their allocation” – Ross Stevens
    • E.g. public companies, private companies, hedge funds, private equity funds, credit funds, insurance companies, individual investors
      • “Bitcoin is a one-way trade” – Michael Saylor
  • Bitcoin getting de-risked is driving exponential adoption. It’s well above $500MM market cap, has millions of everyday users and expected billions, and 12 years of uninterrupted network operation
    • Combined with unprecedented money printing and complete political dysfunction
    • “Bitcoin is perhaps the most asymmetric potential right tail asset in the world, in history” – Ross Stevens

Chapter 2: The Bitcoin Monetary Network

  • Bitcoin is both an electronic bearer asset and an open-source monetary network. Together, they achieve global, round the clock, cash finality
    • Imagine sending $1000 New York to Milan, instantly and for free
      • First, Strike takes dollars from your bank account – milliseconds
      • Strike with NYDIG convert dollars to bitcoin – milliseconds
      • Strike transfers bitcoin across lighting network to Milan – milliseconds
      • In Milan, Strike converts bitcoin to Euros – milliseconds
      • Finally, Strike credits the Euros to your bank account, with final settlement – milliseconds
    • Scale this to the global import-export industry, remittance markets, credit card with no merchant fees
      • Worth noting: Bitcoin the monetary network has no volatility, transaction was completed in milliseconds

Bitcoin is Incalculably Underestimated

  • “The ferocity of the Bitcoin community for Bitcoin, I can tell you that is underestimated” – Ross Stevens
    • An individualist view: Money is not the root of all evil, money is the root of all sovereignty
    • In terms of the community: Bitcoin is an arc to help the most vulnerable escape the fiat flood
  • Bitcoin is a monetary system governed by rules, not rulers
    • Governments underestimate how unstoppable Bitcoin is and bans backfire in their face
  • “There is an infinite amount of cash in the federal reserve” – Neel Kashkari, President of the Federal Reserve Bank of Minneapolis
    • Put it this way, you don’t need calculus to know your life savings divided by infinite is worthless, might as well save in grains of sand
  • Follow the brains before the money. The smartest people and best developers in the world are shifting to Bitcoin
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Notes By Mostafa Khaled

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