Transcript from interview with Michael Saylor and Ross Stevens draft outline
Michael Saylor, CEO of MicroStrategy
Ross Stevens:
-PhD in Statistics and finance at University of Chicago
-Stone Ridge Holdings Group: manages $20B in alterative assets
-started owning Bitcoin in 2015
-New York Digital Investment Group, founded by Ross, who's chairman
-NYDIG manages over $6B of Bitcoin for institutions
-Talk is about Reserve assets
-CEO's most important job is capital allocation
-Stevens: "cash is now a liability, not an asset."
: "A central bank can control the supply of their money. They can't make people value it."
-after outlining Japan and US central banking policy capitulations of Hayami, Powell, and Lagard regarding monetary policy
-"The system itself is the problem...it is so over-levered, so dependant on free money, that just a little huff and puff and the whole thing gets blown down."
-printing money steals time/labor from some people and transfers it to others, no human should have this type of power over other people
Saylor Q: "What does Bitcoin have to do with corporations?
Stevens A: "Bitcoin is not volitile...I now think in Bitcoin...Through the lense of thinking in Bitcoin, Bitcoin is not volatile, fiat is volatile."
-the prices of tuition, real-estate, and other assets are getting more expensive in fiat, but cheaper in Bitcoin
-"What's money? It's technology for making out wealth today available for consumption tomorrow."
-"Money is just a good...we value it not for its own sake, but for its prospective exchange utility: we hope the vessel we choose to store our money in keeps its value long enough so we can trade it in the future for the stuff we actually want. Nobody actually wants green little pieces of paper (or Bitcoin either), we want to trade these things for what we actually want in the future."
Saylor Q: "Why is Bitcoin excellent money?"
Stevens A: "Salability across time and space."
-"The oldest fiat money in existence today is the British pound. 375 years ago, 1 pound was worth 1 pound of silver, today it's worth 174 British pounds."
-The silver did not change, the British pound devalued 99% relative silver.
-Gold did not devalue nearly as much silver, however even gold devalues ~2% per year from mining new gold.
-Bitcoin's supply is completely unaffected by demand, unlike Gold's.
-When Gold price increases, mining supply also increases.
-Gold is also hard to transport. Fiat is better at transporting across space, however final settlement of Bitcoin is faster than fiat.
-"Bitcoin is better at being gold than gold, and better at being fiat than fiat." Bitcoin is just a better money.
Saylor Q: "What about Bitcoin's use of energy?"
Stevens A: Bitcoin consumes a ton of energy, usually energy must be transported to where humans want to use it, but Bitcoin mines can now use remote energy sources to produce value in-situ.
"Bitcoin mining will be the most profitable use of energy in human history that does not need to be located near human settlement to operate. That's a big deal, Bitcoin is going to change the economics of energy."
-"Fossil fuels are already too expensive for Bitcoin mining. I think the only long term profitable Bitcoin mining will be powered by clean energy."
-"I think the net result will be more and more humanity clustering around cheap, clean energy sources. 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. Cheap energy = human flourishing. We can sign all the climate accords we want...they're all irrelevant. What's relevent is for the first time ever we have a huge pull towards clean energy with a profit motive. That's when things change. Beyond the revolution in monetary policy, Bitcoin also represents the biggest catalyst the world has ever known for the development of abundant, clean, cheap energy. And therefor one of the biggest catalysts the world has ever known for human flourishing."
Saylor: "What are you and Stoneridge doing with Bitcoin?"
Stevens: "Our reserves are now in Bitcoin...The only thing we really have to believe is that over the next 10-20 years the dollar will depreciate relative to Bitcoin...The net result has been, is, and will be an enormous competitive business advantage...for us everthing is getting cheaper: paying rent, salaries, M&A, recruiting, it's all cheaper. The stock market is making new highs every day, for us it's on sale."
-Regarding capital allocation: "The decision of whether and how to adopt the Bitcoin standard, I believe that will be the most important decision every CEO makes in the next 10 years. Well under 1% [of CEOs] acknowledge this, but it will be. And whether the actively make the decision or not, they make it, with high consequence."
Saylor: "What are you doing to help others see what you see?"
Stevens: "Today, NYDIG is a full service, vertically integrated, Bitcoin only financial services firm. It took 1200 days to raise the first billion dollars, the last billion took 6 days. A year ago, we had 25 institutional clients, today we have 280, with 96 in the pipeline, we can put 75 institutional clients through per month. We are Vanguardizing this asset class: best product, best price. As we scale, we're driving prices down; our pricing today is 70% lower than a year ago. By the end of the year I'm confident we'll have over $25 billion of Bitcoin."
Saylor: "That's astonishing growth and matches what I suspected."
Stevens: "All kinds of institutions are adopting Bitcoin: public companies, private companies, hedge funds, private equity funds, credit funds...AAA and AA life insurance companies, AA P&C insurance companies. And these institutions want to do more than just own Bitcoin. Within a year, Americans are going to be able to get a portion of their income annuities and salaries paid in Bitcoin...there's going to be an explosion in Bitcoin-driven financial innovation."
-"What's accerating institutional adoption right now is the view of Bitcoin being de-risked. That's why we're seeing a wall of money coming into the asset class. My partners and I bought more Bitcoin in 2020 than from 2013-2019 combined. As our fiat businesses continued to inflate, I expect we'll buy more Bitcoin in the next 2 years than the previous 8.
-Bitcoin is an asymetric upside asset with negligable chance of going to zero. When you chop off the left tail, the mean explodes; combined with the full-tilt money printing, the US blue-wave, complete global political disfunction: fiat reserves is a hot potatoe, we can't get it out of our hands fast enough and into Bitcoin.
Saylor: "Now that Bitcoin exists, what's chapter 2?"
Stevens: "Chapter 2 builds on Bitcoin the asset and adds Bitcoin the network. In chapter one we reached millions, in chapter two we'll reach billions. Strike, Jack Maller's firm, working with NYDIG, takes my dollars and delivers them to my Milan friend in Euros instantly and for free."
"For the first time in history, we have an electronic bearer asset...and an open-source monetary network, called Bitcoin, that together can achieve cash finality anywhere in the world, anytime...with liquidity in every currency pair you care about. And notice something critical in the transaction: the volitility of Bitcoin was nowhere to be found...because we used the Bitcoin network, not the asset."
"Imagine the total global import/export, [remittance market, and credit card] industries with instant and free international settlement. There will be this virtuous, beautiful feedback loop between Bitcoin the asset and Bitcoin the network. Working together, the Bitcoin specialists NYDIG, Strike, and Lightning are going to get this chapter 2 flywheel in motion and it's going to hum."
Saylor: "That's awe-inspiring, I'm really excited, world changing. Bitcoin as the greatest force for good in the world. What do you think stops so many people from seeing it?"
Stevens: "I think we just live in such a sinnacle age with so many people devoid of feelings of awe beaten out of us. People underestimate the ferocity of the Bitcoin community, for Bitcoin."
"There are two different views of the community: the individualist's view, that money is not the root of all evil, it's the root of all sovereignty. It's the ability to act in the world as we see fit, money is a property right. And since we've traded our time for money, when money is printed our time is stolen. And that is not ok. The second view is the community view: [Bitcoin] is the greatest source of good for the world today, it's an ark. It's designed to help the most vulnerable and unprepared escape the fiat flood. And it's raining outside pretty hard. So let's get as many of those living on society's fringes...lets get them in the ark as soon as possible. Nothing is more important."
"Last March, Keshkari Chair of the Miniapolis Fed, said 'There's an infinite amount of cash in the federal reserve.' Now the guy in charge of the money is telling me the denominator is infinity. I don't need to know calculus to know that my $50,000 divided by infinity is worthless. Why would I hold my savings in something with infinite supply? I may as well go to the beach and exchange it for grains of sand."
"I think Bitcoin is massively underestimated, you underestimated it, I underestimated it, until we go deep down the rabbit hole, it's underestimated. Jamie Diamond calls it a fraud, yet it's much more real than fiat; Larry Fink calls it an index of money laundering, I think it's more an index of money printing. Warren Buffet calls Bitcoin rat poison: that one is shameful because Bitcoin is giving life, not taking it, to tens of thousands in El Salvadore, Pakistan, Venezuala, soon to be millions with Strike, NYDIG, and Lightning, soon to be billions."
"Bitcoin is unstoppable...it's here to stay forever, because it's open source. China, India and Pakastan banned it, it rallied in their faces." I don't think a ban in America is possible, but even if it was banned it wouldn't stop it, it would accelerate it because it's property, and may even be speech because it's code. Confiscation is off the table because with seed memorization, Bitcoin can be stored in your head. "Gold has a vault, you can take the vault. Good luck confiscating my memory.
Saylor: "Given all this, it seems like individuals and corporations are being forced to take action."
Stevens: "Everybody now has a choice: you can stay on the fiat standard in which some people [not you] get to print new [unlimited] units of money; or you can move to the Bitcoin standard, in which no one gets to do that. We finally have a money standard with rules, not rulers. Given that, I've made my choice, you have to make yours."
"I am working tirelessly towards a future with a globally adopted, inflation-proof, common currency for the world. One that billions can opt into as their peaceful weapon of choice."