Michael Saylor Podcast: Can Bitcoin without cash become a good asset
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The content of this paper does not constitute any financial proposal for investment, and readers are invited to strictly observe the laws and regulations of their location。
In an interview with Natalie Brunell, Executive Chairman of Strategy, Michael Saylor, stated that the recent downward trend in prices of bitcoin was a strong, not a weak, performance. The market is at a stage of consolidation, with early holders gradually cashing out, while institutions are waiting to enter after volatility has declined. The core focus of the interview was “Restructuring the credit market with bitcoin”. In his view, traditional credit markets were “required and under-liquidated”, while bitcoin mortgages could create a stable cash flow without selling cash and mainstream bitcoin into credit and equity indices; companies used derivatives such as ongoing equity financing, futures/options as auxiliary dividends, and sought rating and mainstreaming index eligibility。
Statement: This is a video transcribed version, which was published on September 19, and some of the information may be lagging behind. It does not constitute an investment proposal and does not represent the views and positions of Wu。
Source:https://www.youtube.com/watch?v=CbODA93ByS0&t=195s
Why is it that the market is getting weaker
Michael Saylor: I think there is a natural tide, both macroeconomic and social. Bitcoin goes through a boom and boom, and the mood is soared, that adrenaline is soaring, that it goes into celebration and linear push (as if it were “a journey to the moon”). The prices then receded and sorted out, and many thought that they would rebound quickly, and the result was a shock for some time。
There is always a tendency to feel frustrated in human nature. But I don't think there's anything to be depressed about. The fact is, if you look at Tura far beyond the one-year cycle, bitcoin has risen by about 99 per cent, almost double. What if someone says he's stoked a year up close to 100% of his assets -- should he be happy? Of course. The path to achievement is often more volatile。
As for the reasons behind the recent roll-on, I think it's largely because about 23 trillion dollars of bitcoin is in place"Unbanked"IN STATE, MANY CURRENCY HOLDERS ARE UNABLE TO OBTAIN BTC AS COLLATERAL. WHEN YOU HAVE A LOT OF BITCOIN BUT YOU CAN'T BORROW IT, THE ONLY THING YOU CAN DO IS SELL IT. NOW, BITCOIN'S KIND OF LIKE A "SEVEN GIANT."Magnificent 7) Grade-level start-up companies, where employees are extremely rich on their books but cannot borrow with their collateral and sell. The outside world would ask: "Does the employees sell shares without confidence in the company?" The answer is no – they just send their children to college, buy a house, and support their parents。
SO, THE CURRENT PUSH COMES MAINLY FROM ADVANCED ENCRYPTION OG, AND THEY DO ABOUT 5% DISPERSION OR SOMETHING. THE MARKET IS DIGESTING THE PRESSURE, SOLID SUPPORT, AND VOLATILITY IS DECREASING – A GOOD SIGN. FOR AN ASSET TO MATURE, MORE LONG-TERM CAPITAL (LARGE ENTERPRISES AND INSTITUTIONS) IS REQUIRED TO ENTER; EARLY OGS, BOUGHT AT $10 OR EVEN $1 AT AN EARLY COST, ARE MODERATELY CASHED AND SELF-SETTLING; AND WHEN FLUCTUATIONS DECLINE, MEGA-ENTREPRENEURS ENTER THE FIELD ON A LARGE SCALE. THE PARADOX IS THAT WHEN A MEGA-AGENCY ENTERS AND FLUCTUATIONS ARE REDUCED, THE MARKET BECOMES “SILENT” FOR SOME TIME, AND THE ADRENALINE GOES OFF AND PEOPLE LOSE THEIR MOOD. BUT THIS IS ONLY THE NORMAL LONG-TERM STAGE OF THE MONETIZATION PROCESS。
Would a bitcoin without cash flow be a good asset
Natalie Brunell: I recently participated in a number of activities with TradFi practitioners, and the reasons for not assigning bitcoin were almost identical: there was no cash flow; and some financial institution employees were prevented from buying Bitcoin directly because of compliance. How do you see these concerns? What progress have we made from the point of view of TradFi? What changes are needed to get more people to embrace Bitcoin
Michael Saylor: I believe that many of the most important “property-type assets” in Western civilization – such as diamonds, gold, classical master paintings, land – do not generate cash flows。
And so do many of the really important things in our lives: marriage, children, no cash flow, no cash flow for property; the Nobel Prize, no cash flow; and no cash flow for yachts, jets. Much of what is widely regarded as “value” in the world is not judged by cash flows. Moreover, in monetary terms, a “perfect currency” should not have cash flows – a currency defined as high liquidity and strong marketability. If you want something to be a currency, it should not have too much “use value”: For example, gold is more suitable as a currency than silver, precisely because it has fewer industrial uses; when used materials such as copper and silicon are involved, they are not suitable as a currency。
Some people would sayWithout cash, it's not a good investment assetI don't know. This view has evolved mainly over the past two generations. From 1971 to the present, the dominant global concept of asset allocation has evolved into: long-term capital – a debt portfolio of six-quarters – whereby the world understands assets by offering coupons, dividends or profits. Eventually, S& P500 became the dominant benchmark。
If we look at indexed investments, about 85% of index funds are allocated in S& P 500. Many talk about “long-term capital”, thinking about saving value added funds with equity indices (e.g. S& P500 Index). Vanguard commercialized the idea, launched and set fire to Vanguard 500 andIndex FundThe concept. When the idea of a “500-component-only fund” is extremely successful, and S& the P, Vanguard, and the mutual fund industry system is built on this idea, it is unlikely that they will immediately embrace such subversion, more of a path-dependent approach, in the event of a new concept of better subversion. This is a realistic issue。
in an era of dollar-denominated prices, sustained economic growth in the united states, the united states dollar as the world reserve currency, and the absence of a global world war since the end of world war ii (1945), you are in a particular environment at a given point in time. in the language of the differential equation, this is a particular solution that is obtained under established boundary conditions: if all boundary conditions are fixed, the surrogate number will be answered; the solution will be valid as long as these assumptions/boundary conditions are not changed。
However, once the material has been converted from aluminium to steel (the external terms of metaphor change), the original formula no longer applies. At this point, you can no longer use a solution, but go back to a full-blown solution, instead of a schematic look at the matrix formula, and then deduce it from the first principle, like a physicist. In reality, most people have never really deduced anything from the principle of firstness in their lives — they're using what others give us。
When the entire monetary system collapses, this “set-up” approach will fail. In Lebanon, for example, if your bank account is frozen and your currency is zero; in some countries in Africa; or when Argentina experiences a collapse of the currency – even if you hold assets with cash flows – the local currency is almost worthless. Ironically, the traditional notion of “safe and cash-flowing” assets is not safe when prices are set in Naira, Venezuela, the Argentine peso, the Lebanese pound, the Iraqi dinar or the Afghani. And Russia, for example, did the same thing before the sharp devaluation of the rubles in the mid-1990s。
Those who insist on old ideas hold in their hands a “special solution” that works only within a highly stable and closed system. Such a system has not been subjected to stress tests under external pressure and has rarely really faced the challenges of new ideas。Those who truly understand bitcoin often either come from an environment of extreme confusion and collapse of the currency, and are forced to think independently; or are essentially thinkers of the first principle – as scientists question everything and re-engineer。
So the most ironic thing is that the CEO of Vanguard says that bitcoin cannot be invested because it has no cash flow, and the company's first largest shareholder is Vanguard. As Mask said:"The most ironic results are often the most likely."
What pain do you think exists in the traditional area of fixed earnings and how can it be solved in bitcoin
Michael Saylor: When it comes to the credit market, you will find three features, the first of which is a mortgage-backed security (MBS), which is about 1.5 times the mortgage, and a return of about 2 per cent to 4 per cent. And the French currency credit — endorsed by the government's commitment to “continue printing” — set the so-called “risk-free rate”. For example, Japan is about +50 basis points, Switzerland about -50 basis points, Europe about +200 basis points per year, the United States about +400 basis points per year, and recently it has just been revised downwards by 25 basis points。
Moreover, corporate credit, backed by corporate cash flows – be it high-quality companies like “Magnificent Seven” (e.g. Microsoft, Apple, etc.), high-yielding debt (spam debt) or hard-won companies. It has a credit spread of approximately 50-500 basis points. For example, you buy a corporate debt in Europe, which could be 2.5 percent a year. But real monetary inflation is often higher。
As a result, Japan, Switzerland, Europe, and the United States are, to varying degrees, in a state of financial restraint: the nominal rate of return on so-called "risk-free" French currency assets is lower than the rate of monetary expansion and the rate of appreciation of scarce, popular assets. This is the first challenge. The second challenge is the poor liquidity of these tools (some of which are similar to old-fashioned priority shares), transactional difficulties and even long-term failures, and inadequate collateral. The credit markets we observe are weak and unhealthy. If, for example, you're in Switzerland, you put the money in the bank and you get only 0%, or even 50 basis points, it's hard not to call it "revenue famine." Many markets are eager to generate revenue。
Michael Saylor: On the other hand, there were about 500 people at the floor where I spoke the other day. I said, "Please raise your hand if you have a bank account." Almost everyone does, but if you ask again, "How many of you are in demand or saving more than 4.5 percent a year?" Very little, and then asked, “If the bank account could provide an 8-10 per cent annual interest rate gain, would you like it?” Everyone would like to be there, but who is offering such a long-term interest rate? Nobody。
The opportunity we see in the market is that unless you hold a bitcoin, you have an asset that can be stored for a long timeDigital capitalAND WILLING TO HOLD 30 TO 40 YEARS, OTHERWISE NO ONE WILL GIVE YOU A FAIR, LONG-TERM GAIN. PLEASE TELL ME: WHO WILL GIVE YOU 10% INTEREST FOR THE REST OF YOUR LIFE? YOUR BANK WON'T GIVE YOU THE LONG-TERM INTEREST RATE, THE COMPANY WON'T, THE GOVERNMENT WON'T, MBS ISSUERS WON'T。
Why is 10% of long-term interest rates difficult to establish in traditional systems
Michael Saylor: The reason is that no firm can be sure to generate more than 10 per cent per annum in a stable and sustainable manner over the long term, and that mortgage borrowers cannot afford the same cost. Moreover, well-established Governments are reluctant to do so; they want to pay you well below that level. Vulnerable governments are forced to give higher interest rates, but their currencies and politics are often on the verge of collapse, so you cannot find a reliable national-level borrower who can pay such rates for the long term. And you can hardly find companies willing to do this – most companies’ corporate finance strategy is not “over-debted, well-indebted,” but rather less borrowing to buy back stocks。
We found that bitcoin is digital capital. Bitcoin is rising faster than S& P500. Once you admit that Bitcoin has appreciated faster than S& P 500, and my assumption for the next 21 years is about 29% of its annual compound increase, credit can be created by collateralizing such appreciation assets。
Bitcoin is digital capital that appreciate faster than capital costs; capital costs here can be approximated by S& P500 over the long term. The credit issued as collateral is digital credit. Such digital credit can have longer or shorter periods of time, can set a higher rate of return and can be denominated in any legal currency, as it is stronger (more scarcer, lower inflation)。
There is a key point in the credit market: debt-denominated currencies should be weaker than the “currency” corresponding to the collateral you hold. If you value your debt in a currency with a stronger exchange rate, and you hold a mortgage with a weaker exchange rate, you'll go upside down and go bankrupt. This is common in some countries, where residents borrow in United States dollars but repay in their own currency, which collapses and eventually goes bankrupt。
Thus, we can choose to issue debt in relatively weaker denominated currencies such as the Japanese yen, the Swiss franc, the euro and the United States dollar. In this way, we can assume this currency risk while providing higher returns (similarly)Difficulty debtBut it covers the risk – not 2-3 times, but 5 times, or even 10 times, over-collateralized。
As a result, we can create credit instruments that are less risky, longer-term and more profitable and that are designed as sustainable structures for public distribution (listed on the market), thereby obtaining better liquidity. In summary, it is to provide a smarter, faster and stronger credit product, which is more liquid, less risky and more profitable in the long run。
For any Bitcoin Treasury-type company, the chance is that you have the world’s best collateral – bitcoin, which is digital capital. By issuing digital credit on this basis, you can create the highest quality credit instruments globally. This part of the credit line, on the other hand, is separated from fluctuations and gains, which shift and magnify the interests of ordinary shareholders. So you get it at the equity endZoom in bitcoin."At the end of the debt, the bitcoin is “deployed” as a low-risk, low-volatility, income-bearing asset。
The thing that was referred to as “no cash flow”, we gave it cash flow. Ironically, many investors who prefer traditional credit — those who only want to buy cash flows — would buy bonds or even shares of a losing company, even if the company operated cash flows that could not be covered by interest payments, but they continued to emphasize “at least cash flows”. What we do now is to give Bitcoin a cash flow, to make it a credit asset, so that it can be included in the bond index; and to create a winning stock opening that allows it to enter the stock index. Both paths can be financed on a continuous basis, both as entry points to capital. Through these entry points, capital flows into the Bitcoin ecology, we buy more bitcoin, which in turn provides funding and energy for the Bitcoin network。
Sustainable Priority UnitWhat is it? What are the tailor-made provisions compared to bonds, reversible debt
Natalie Brunell: You point out that capital is now badly priced: collateral in the traditional world is often overvalued and bitcoin underestimated. So you see an opportunity to launch a series of credit instruments -- STRIKE, STRIDE, and now STRITECH. Let's elaborate: many people do not know what the priority shares are. The name is “stock/share”, but in practice it is more like a credit instrument, or even a bond like it, that gives us a return. Can you explain the nature of the preferred shares? In addition, you are issuing permanent preferential shares, and what is the uniqueness of this structure in the market
Michael Saylor: Priority shares are the second category of shares that differ from those of ordinary shares. Ordinary shares represent the ultimate ownership of the company, but usually there is no special priority or guarantee. Priority shares may, on the other hand, agree on dividends: for example, fixed monthly, quarterly assignments, or floating with SOFR (guaranteed overnight financing rate), fixed or monthly. You can write cash flows and rights of return in the preferred shares。
priority shares may also be subject to conversion clauses: for example, one tenth of the unit, one fifth of the unit may be converted to a normal unit or fully transferable. you can give it a certain level of equity, a certain amount of revenue, a higher priority in liquidation, and a higher priority, as well as a guarantee clause, such as a cumulative priority dividend – cumulative if we miss the assignment; or a default penalty. in short, priority units are a common “container”, and you can almost write in the various articles as required。
Natalie Brunell: And it's not a debt, is it? The principal must be repaid as if the debt had expired. You finance through preferential shares without having to repay the principal。
Michael Saylor: Yes, it is usually different from debt instruments, which require repayment of the principal at some point in time. Of course, you can also “deposit” the preferred shares: for example, give the holder the right to sell back, ask the company to buy back in cash; or give it the right to ransom, making it look more like debt。
ON THE OTHER HAND, YOU CAN MAKE IT MORE LIKE EQUITY: FOR EXAMPLE, NON-CUMULATIVE — THE PRINCIPAL NEVER MATURES, DOES NOT GENERATE ACCUMULATED INTEREST OR LIABILITY (STRIDE IS NON-CUMULATIVE) IF THE ASSIGNMENT IS SUSPENDED. THUS, PRIORITY SHARES CAN BE RECONCILED ACROSS THE SPECTRUM FROM VERY MUCH LIKE DEBT TO VERY MUCH LIKE SHARES, WHICH IS A VERY FLEXIBLE FORM OF SECURITIES FOR A LISTED COMPANY。
Michael Saylor: If you're a listed company and you hold a large amount of bitcoin, you can design the securities yourself and then make them public. The first innovation is to "do" this tool; the second innovation is to put it on the market – for example, with a four-letter code (like STRC). The third step of innovation is that once publicly listed, you can also submit a shelf registration. This means that at first you might sell a billion dollars at a one-time scale, and then you could grow almost continuously, for example, 50 million dollars a week; it's like ETF's share increases with the inflow of funds — almost like the larger IBIT, it's “required every day, expanded every day”。
SO, WHEN YOU MAKE A PRIORITY STOCK THAT IS PUBLICLY TRADED AND THAT COMPLETES SHELF REGISTRATION, YOU ALMOST CREATE A TYPE OF "TYPE EXCLUSIVE ETF". IT HAS BOTH THE ADVANTAGE OF ETF AND THE BENEFIT OF PROPRIETARY ASSETS — BECAUSE YOU'RE CREATING THIS CREDIT TOOL IN REAL TIME; INSTEAD OF COLLECTING INVESTORS' MONEY, LIKE SOME "SPAM DEBT" ETF, YOU'RE GOING TO BUY PEOPLE'S GARBAGE ON THE MARKET. ETF PROVIDERS SIMPLY ADD A “SHELL” TO THEIR ASSETS; AND WHEN YOU PUT “DIGITAL CREDIT INSTRUMENTS” AS A PRIORITY STOCK, YOU ARE ACTUALLY CREATING A PRIMARY TOOL WHOSE CHAIN HAS BEEN VERTICALLY CONNECTED TO THE BOTTOM ASSET OF BITCOIN FROM TOP TO BOTTOM。
Natalie Brunell: Excess collateral。
Michael Saylor: That's right, under this structure, you can design a 10-fold over-mortgage, an annualized 10% dividend, and permanently pay the priority dividends. When the terms are in place, I'll be able to distribute products on a certain scale。
Strike, Strife, Stride, Stretch, what's the problem
Michael Saylor: So far, we have designed four types of tools. The first one is called Strike. It is based on the idea that 8 per cent of the dividends are issued in nominal terms, 100 per cent in nominal terms and 8 per cent is paid on a continuous basis; and that the holder is given a transfer rate – which can be converted to a regular MSTR unit at 1/10. Thus, if MicroStrategy ' s share price is in the vicinity of $350, the tool is equivalent to an embedded equity value of about $35. In other words, it provides both equity and downside protection through liquidation priorities, and can generate sustained cash flows through dividends. In design, such tools are designed to capture up-to-the-ground at as low a downside risk as possible, while at the same time reaping benefits during the waiting period。
The second is Strife (STRF), with a 10 per cent dividend return in nominal terms. In short, you can interpret it as a "long-term (and even permanent) high-interest instrument" with a face value of $100, paid at 10%. We also put it at a higher level of the capital structure and wrote in the compact that no higher priority shares would be issued than STRF, so STRF will always be the highest priority long-term credit instrument. This is important for “risk-averse” credit investors – because it means that their principal amounts are more protected。
This is a positive factor at the “credit” level, and we can raise our credit ratings in the eyes of investors. When we issued it, it was traded at prices above nominal value, and the increase was significant. The logic of pricing is that, with improved corporate credit, higher market acceptance of bitcoin and higher Bitcoin prices, prices may go back from 85 to 100 (nominal) to 110, 120, 150 and even 200. Since this is a permanent tool, it may well be in a premium for a long time and thus set capital costs for the anchoring of companies. In other words, if you are asking, “How should long-term (equivalent to 30-year-old) debt interest rates be priced by a company with investment-grade credit based on Bitcoin as its core asset?”, the current market price is equivalent to an answer。
The third is Stride. It is designed to eliminate the two agreements relating to the “rules of penalty clause” and “cumulative dividends clause” on the basis of the Strife (STRF) and other agreements. So it's still a 10% dividend/return on face value, but it's changed from an advanced long-term credit to a sub-long credit. The former are more debt-like, higher tiers in the capital structure and lower risks; the latter are closer to equity, lower tiers and higher risks, and are located only above ordinary shares. After the issuance, STRD traded at an effective rate of return of 12.7 per cent; in contrast, the effective rate of return of STRF was about 9 per cent. In this way, there is a credit spread of 370 basis points between the most “safe” and the most “risk” tool。
Some would ask – and a bit counterintuitive – why was Stride twice as large as Strife and more successful? It is clear that it has no accumulated dividends, no penalties, and it is a minor. The answer is simple: they believe in bitcoin and trust the company. At the same time, they want the proceeds. If you put the money in the account, would you rather take 12.7% or 9% of the year? The question becomes: do you believe in the “banks” that trust you? Once you trust each other and the other gives you 12% instead of 9%, you naturally choose the former。
Who else would trust the company? Shareholders themselves. Like who would trust bitcoin? Bitcoinholders. In the end, you choose trust or something. Such tools have two core benefits:
1.FirstIt gives people who believe in companies and bitcoin the opportunity to earn 12.7 per cent of their earnings, which is very attractive to them
2.SecondIt allows companies to continue building collateral assets under Senior tools, which are credit positive: good for Strife, good for Strike and good for everything else. At the same time, it provides companies with a way to scale up and leverage the purchase of bitcoin, which itself has no credit risk to its counterparty。
Theoretically, if the market could take over $100 billion Stride, we would release $100 billion Stride, raise the leverage of the company to 90 per cent, and then buy bitcoin. This compares favourably with the value of the currency, which in turn benefits the “equity embedded part” of Strike. At the same time, because we bought a lot of bitcoin, which means that Strife's mortgage would be 50 times the over-collateral. So, it's credit-friendly, debt-transferable, equity-friendly, bitcoin-friendly, and Stride-holder-friendly – this creates a wheel effect. That's why we launched Stride。
The last paragraph is Stretch. And it started from the point of view: a lot of people say that I want fixed returns, like raising 5% of the bank rate to 10%, but I don't want to fluctuate. I don't want the principal market price to fluctuate for $10. If I buy it at 110 and then I fall to 105 because of interest rate changes, it's a year's interest loss. We therefore hope to find a solution that will anchor the price near the $100 nominal value, keep the volatility as low as possible and extract the proceeds。
So the central idea of Stretch is that we don't have long-term risks. It's a long-term product like Strife, and it's equivalent to 120 months of long interest rates, which can cause the price of principal to fluctuate significantly around the face value. In fact, for each 1 per cent change in interest rate, the principal price may change by 20 per cent if the target is assets of 20 years of age. So we're going to strip it all -- not 120 months, but a month. When you strip the long term, you strip the volatility; after all, 30-year bonds are much more volatile than a one-month asset。
We need to reduce volatility by stripping off time. To that end, the product pattern must be changed to monthly rather than quarterly, so we change the dividends to monthly cash transfers and introduce floating monthly dividends. It's the first time a company has issued it in modern capital markets"Mostly floating dividends."Priority shares. We call it Treasury Prefered. This is what we invented on AI -- I designed it with AI. No one would have thought of doing so before, as there was no such design supported by a bottom asset. But Stretch, it's not a zero-floating high-interest call account, and it's not gonna be able to deposit $1082.32 today, and it's gonna be $1082.32 tomorrow. But it's pretty close: you can put in the funds that need to be held for a year and take 10% of the dividends with very low volatility; if you need to get the money back, you can sell the principal in the secondary market。
This is more like a currency-based market instrument backed by a bitcoin. Of course, it will not reach the low volatility of real money market funds, but its goal is to compete for the short end of the interest-rate curve with the endorsement of bitcoin。
You promised not to sell bitcoin, so where did the bitcoin-supported dividends come from
Michael Saylor: We now have about $60 billion in these priority shares. We pay about $600 million a year in dividends. The company's business value is about $120 billion, and we sell about $20 billion a year. So you can understand: we basically sell the first $600 million in common shares of this, to pay for dividends, and the rest of the $20 billion, we buy more bitcoins。
in other words, we are raising funds at an extremely fast pace in equity capital markets. about 5 per cent of equity fund-raising is paid out of anearmark, and the rest is used to raise bitcoin. in the event that we are unable to sell shares for certain reasons, we are in possession of a large amount of bitcoin, which can be countered by issuing credit-type instruments or selling derivatives。
For example, we can sell bitcoin derivatives – we can sell bitcoin futures against a hedge, or we can sell a bourgeois future. Besides, there's a name"Staff trade."By using the spot bitcoin in your possession as collateral to sell the futures against the cash, you can earn the basis difference. Therefore, the company pays dividendsThe main way to do this is to keep selling regular shares; secondary methods include selling derivatives on bitcoin. In addition, credit markets are open to us, and we can access different credit markets from time to time for financing。
Natalie Brunell: Is the goal of all these tools getting credit ratings from mainstream rating agencies? What does that mean
Michael Saylor: Yes. Our goal now is to make the company the first Bitcoin Asset Bank company to receive an investment-grade rating, and more broadly the first investment-grade encryption firm; and to rate all the tools we issue to rating agencies, which will require extensive meetings and communication, but I am confident that they will eventually be achieved。
Why is it still not included in the PS 500
Michael Saylor: S& P500 has a set of inclusion criteria that we did not meet until this quarter. We have not met our standards in the past five years. You have to be profitable and meet a series of conditions. I believe that we will not qualify until we have applied fair value accounting. The second quarter of 2025 is our first eligible quarter. We do not expect to be included in S& P 500 when we first qualify. Tesla was not included when it first became eligible。
We are sort of a subversive new company, which is also a subversive new asset class. For a traditional committee that tends to avoid risk and to go for billions, hundreds of billions, or even trillions of dollars, it is entirely reasonable to wait several additional quarters. They'll probably say, "Let's see what happens in the second quarter. If the business continues to show continuity after two to five quarters...”
Seriously, if someone were to adopt a new concept after four quarters of performance, it would already be seen as quite innovative and progressive. Many times people wait three to five years to admit something. So I don't expect to be included in the first quarter. I believe that we will not be included until several quarters, when we have a track record of performance that can be validated by industry. In fact, S& P has integrated Coinbase and Robinhood into the component units. I don't think they exclude encrypted asset classes or bitcoin and digital assets. It is just that exchanges have existed for centuries, and their history is longer and easier to understand。
And the so-called "bitcoin Treasury" is a new species in an explosion, very revolutionary. I defined the starting point for the entire Treasury industry as November 5th, 2024. Now we've been going through about three quarters, and we've become very clear that this is a kind of legally compliant and independent new company, as the market can also see, and in 12 months, the number of industrial companies has grown from 60 to 185, and the industry is growing at a high rate。
Natalie Brunell: We did grow to close to 200, but some of them, as you can see, have their net value (NAV) premium shrunk, and there was some integration. Can we talk about the market reaction outside the bitcoin circle? Do they see BitcoinTreasury as the future “institutional level” configuration? How do they value these companies? Do you still see the slow pace of adoption? Will there be any catalyst to change that
Michael Saylor: I think the market is still learning. I just spoke to 25 investors and I asked them, "How well do you know this? For example, "Tell us about bitcoin; will bitcoin be banned?" – We do have to start from the beginning: no bitcoin was banned in 2023. The entire encryption industry will then be combed and the various credit instruments explained and the interests explained. Overall, most market participants are still in the process of making amends。
For example, it's like in 1870, when people started refining crude oil, and there were new companies coming up around "What Oil Can Do." Subsequently, the idea of an accumulant or polycarbonate (Lexan) was proposed, and various petrochemical materials and products, such as scrubbers, ammonia and nylons, appeared. Some talk about kerosene, others advocate the use of diesel or gasoline, and others talk about asphalt. All the investors sat together and asked, "Is this a good idea?" How big is this business? They're still wondering, "How big can kerosene be in 180 countries?" By the way, the first generation of kerosene applications is lighting – first lighting, then engine fuel, then heating oil, then aviation kerosene, and now even rocket fuel。
So I think it's very early in the industry, and companies are learning how to tell themselves what they are doing, and are determining their business models; investors are trying to understand these models and industries; and regulators are dynamically evolving rules – all happening in real time. This is a "digital gold rush." During the decade of 2025-2035, there will be a large number of different business models, products, and companies that will make a lot of money, make a lot of mistakes, and produce a lot of wealth – that is, market noise and confusion。
What kind of “peaceful” coordination mechanism could Bitcoin provide in the context of the fragmentation of public opinion and society
Natalie Brunell: The past week has been a heavy week for many people. This country seems to be tearing apart more than ever before, attacking and ripping each other apart on the Internet. Do you have anything to say? Because you obviously found a lot of hope in bitcoin, and you always stress how it empowers individuals. There is nothing like bitcoin that benefits both the rich and the poor. I think we need a message of hope now, especially in the aftermath of Charlie Kirk's assassination。
Michael Saylor: The message I want to convey is that we have a much greater consensus than the mainstream media makes you believe. In the case of the Bitcoin community, there are often bipartisan rivalries within the community. When I go online, public opinion can be very intense, colourful and emotional; people can be held hostage and furious with me; and one group of developers will be inexorably angry with another. But ironically, we actually agree on 99.9%。
WHEN YOU GO DEEPER, YOU FIND THAT INFLAMMATORY CONTENT IS MORE LIKELY TO SPREAD; RUMOURS RUN FASTER THAN THE TRUTH; EXTREMIST POSITIONS SPREAD MORE STRONGLY IN CYBERSPACE, IN X AND IN THE WIDER ECOLOGY. EVEN I HAVE NOTICED THAT, EVEN DURING THE MOST SUCCESSFUL PERIODS OF COMPANY PERFORMANCE, ONLINE HATE AND TOXICITY MESSAGES ARE OFTEN THE HIGHEST. I'LL LOOK AT THE ACCOUNTS THAT PUBLISH NEGATIVE, HATEFUL, BLAMEFUL。
I often see that it's not a real person. I've never interacted with anyone, only 300 fans, and I don't have any concerns. One more look and you'll realize that this is a robot account. A lot of online toxic and inflammatory behaviour, in fact, is Internet guerrilla marketing: for example, someone who emptys my company's stock would pay for a digital marketing company to create a mass of robots to publish a large amount of malicious, negativity, cynicism and an illusion of “resisting”. The same is true in the political sphere: many of the “emotional mobilizations” are actually paid water forces, with people paying for people to go to the streets and posts. The mainstream media then pointed the camera at those paid protesters or false robots, saying to the camera, “Online crowds of people” or “someplaces of crowd excitement”, to millions of people, creating images of social disorder and popular resentment. Unfortunately, when you zoom in on false protests, there will always be a small number of people who are incited to violence, and that will become a reality and a tragedy。
I'd like to say to you that maybe that's the tragedy:Kirk Event– The warning is that there are mechanisms in society that are dedicated to “making opposition” failures, and that they live by magnifying division. As long as we operate on these “separated amplifiers” and turn them off, people can come back together – and turn off the toxic amplifiers。
And one thing is to learn to tell: if you read 37 negative comments, you think everyone hates you. I often think online that everyone hates everything I do; but back in the real world, I've never met a person who is disgruntled in person. You'd ask, "Why does everyone on the line look happy while everyone on the line is so unhappy?" It's because of camera selection. There's a saying, "Bleeding is the headline."
Natalie Brunell: Yes, I know the news industry too well。
Michael Saylor: So the camera is always looking for "social unrest." But my point is, many of the upheavals are "paid for." Some create unrest in cyberspace and in reality also; then unhealthy media expand and spread. The public is actually tired and increasingly alert – the growing mistrust of these systems is that society’s immune mechanisms are being activated. Overall, this will catalyse more positive behaviour and constructive public engagement. I am confident and optimistic: over time, we will move towards a healthier world and a healthier political community. But the premise is: don't believe everything you've been told, don't believe everything you've read and learn to think independently。
At the same time, don't interact with your own time line when you find a pile of robotic accounts that magnify toxicity. Just like when you see 52 people on the corner of the street who are hired to protest, don’t go up there to argue – they're paid mercenaries, you can’t convince them that they should be hired. We have seen a lot of similar scenes in the encryption industry: when Greenpeace and Sierra Club claim that “bitcoin is not environmentally friendly,” you cannot persuade them – it is not a genuine discussion or feedback, but a pay protest. I hope that society will look at the consequences of paying protests and move back。
Natalie Brunell: After all, bitcoin is more like a peaceful change: It may deprive the power structures that profit from “care business” of their sources of financing and shift value to a more peaceful system that benefits the general public. That's basically what I'm inspired by your "bitcoin to bring hope."。
Michael Saylor: That's what we've been saying all along, Bitcoin is a peaceful, fair way that allows us to resolve our differences. As more people adopt it, peace will spread, equity will spread, real proliferation will spread and toxicity will fade。
