Michael Saylor Bitcoin

Michael Saylor: Bitcoin Dematerializes Money | The Stephan Livera Podcast

Check out The Stephan Livera Podcast Episode Page & Show Notes.

Key Takeaways

  • Software dematerializes products and services; Bitcoin dematerializes money
  • Find a $100Bn digital network that is dematerializing some essence of society
    • Buy it when it’s 10 times bigger than the next biggest competitor and sell it when it becomes 10 times bigger than that
  • Consumer Price Index (CPI) is a misleading metric, a basket of cherry-picked goods that aren’t going to increase in cost
  • “It took me about 15 hours of research to determine Bitcoin was the best money ever invented”
    • Additionally, “It took me about 15 minutes to figure out that Ethereum was still in its developmental venture capital stage” – Michael Saylor
  • Investing 1% of your portfolio in Bitcoin is a pointless move
    • Being the scarcest digital asset there is, Bitcoin will have a positive real yield of 10-20% just based on currency debasement
      • “Why would you take 99% of your assets and invest it in something that’s losing 10% a year for the next decade?”

Books, Resources, and People Mentioned

Memorable Quotes

  • “Once you understand Bitcoin, you just have this horrifying feeling that you’re short”
  • “Move forward in life carefully and responsively, because people’s livelihoods are in your hands”
  • “Inflation is a vector. Inflation is not a scalar.”
  • “It took me about 15 hours of research to determine Bitcoin was the best money ever invented”
  • “Who are these people that are selling this to me? Why would you ever sell this?”

Intro

Winning in the Digital World

  • Software dematerializes products and services
    • A few examples: Mobile money, photography, music, identity, medicine, education, etc.
    • This was accelerated in 2020 with the move to remote work
  • The key was to buy a $100Bn digital network that is dematerializing some essence of society
    • Buy it when it’s 10 times bigger than the next biggest competitor and sell it when it becomes 10 times bigger than that
      • Meanwhile, listen to all the conventional thinkers tell you why it won’t work
  • Bitcoin is the dominant digital network dematerializing money

CPI is a Lie

  • One can group products, services, and assets into 4 buckets:
    • Deflationary, anything that can be dematerialized into a phone or mass manufactured by a robot (think video, music, information, generic drugs, and commodities)
    • 0-2% inflation, property in secondary markets, manual labor, branded consumables, etc. 
    •  6-8% inflation, luxury, and scarce products, elite medical care, Ivy-league education, etc.
    • The horrifying 8-24% inflation, equities, debt, prime luxury property, and scarce art
    • Additionally, there is Bitcoin which is inflating faster than 25%, the scarcest of all assets imaginable
  • The media focuses on the Consumer Price Index (CPI) as an inflation measure
    • In reality, CPI is a basket of cherry-picked goods that aren’t going to increase in cost
    • “Inflation is a vector. Inflation is not a scalar.” – Michael Saylor

Money Printer Goes Brrrrrrrr

  • A 10% annual currency debasement on MicroStrategy’s $500MM cash reserve would mean a $50MM yearly loss
    • Moreover, “You can make an argument that we have a 20-25% or more debasement of the currency this year” – Michael Saylor
  • Bond and equity prices went up during march of 2020 as a result of Fed intervention
    • “I just watched a V shape recovery on wall street and a non-recovery on main street” – Michael Saylor
  • It was always a reasonable expectation that hard work and saving money to earn interest
    • However, “Somewhere along the line, the banks became broken and defective and they stopped doing their job of giving you risk-free yield”
      • As a result, people are required to professionally understand investing, instead of just having the ability to just save their money

Convincing the Board to Buy Bitcoin

  • Many directors, managers, and investors already own Bitcoin privately
    • Don’t be afraid to approach people, they could already know more than you think
  • It’s important to make sure everybody has the same information and to understand their thoughts (Check the resources above)
    • Then go through the legal, accounting, finance, and control issues
  • When it comes to investing $425MM in Bitcoin, surprises are unwelcome
    • “Don’t surprise me with something beautiful and elegant and risky and complex that may or may not work”
    • “Move forward in life carefully and responsively because people’s livelihood are in your hands” Michael Saylor

What About Gold?

  • “I concluded that crypto was at this point in time, somewhere between 10 and a 100 times, better than gold, but over time would be a thousand to a million times better than gold.”
    • “Gold as a store value, rationally, will be eaten by Bitcoin. And even if it isn’t eaten, it’s already defective by 21st century standards.” – Michael Saylor

On Ethereum

  • “It took me about 15 hours of research to determine Bitcoin was the best money ever invented”
    • Additionally, “It took me about 15 minutes to figure out that Ethereum was still in its developmental venture capital stage” – Michael Saylor
  • Ethereum doesn’t yet have a clear value proposition and isn’t yet a finished product
    • Thus, “It would be inappropriate to use ether as a store of value for a corporate or an institutional treasury” – Michael Saylor
    • That said, it has great potential as a decentralized app platform
  • Complexity kills, and Ethereum is trying to do too many things at once
    • Unlike centralized applications, Crypto protocols have to be built and released into the wild to survive. Tinkering with it resets The Lindy Effect
      • Thus, KISS: keep it simple, stupid
      • “It doesn’t take a rocket scientist to figure out that when you make something, when you make software more complicated, there’s more things to break and there’s more attack surfaces.” – Michael Saylor

Time is the Ultimate Stressor

  • Bitcoin’s price is back at 2017 levels, but with bigger infrastructure and, fewer risks
    • That said, yearly capital gains tax on Bitcoin would have a negative effect on Bitcoin
  • The Bitcoin network will utilize the advent of quantum computing to become more secure and efficient, a healthy response
  • Except for Bitcoin, all assets institutional investors could buy shot up 20-25% by June of this year (e.g. real estate, big tech, equity, gold, etc.)

Bitcoin isn’t Speculation

  • Paul Tudor Jones recently announced investing 1% of his portfolio in Bitcoin, a hedging move that offers no progress – here is why
    • Being the scarcest digital asset there is, Bitcoin will have a positive real yield of 10-20% just based on currency debasement
      • “Why would you take 99% of your assets and invest it in something that’s losing 10% a year for the next decade?”
      • “I just can’t see how you could say that you understand Bitcoin and then at the same time say you’ve decided to speculate in it or that you’re putting 1% of your wealth in it.” – Michael Saylor
  • “Once you understand Bitcoin, you just have this horrifying feeling that you’re short” – Michael Saylor
  • It took 8 days and 160,000 trades to accumulate $425MM worth of Bitcoin
    • “And all the time, all I can think is who are these people that are selling this to me? Why would you ever sell this?” – Michael Saylor
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Notes By Mostafa Khaled

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