Compiled & Edited: Deep Tide TechFlow
Guest: Michael Saylor, Founder and Chairman
Podcast Source: Bitcoin Billionaire Michael Saylor Explains To Me Why Everyone Should Be In Bitcoin
Original Title: Dave Portnoy
Broadcast Date: December 9, 2024
Background Information
In this episode of the podcast, MicroStrategy founder Michael Saylor discusses the investment value of Bitcoin with Dave Portnoy. Saylor emphasizes through sports metaphors that Bitcoin is a fair 'game' that gives everyone the opportunity to participate and profit. He believes that Bitcoin is not only a tool for wealth protection, but also an important asset for achieving economic empowerment.
Saylor also introduced the concept of 'Cyber Newyork,' comparing Bitcoin to the historical opportunity of buying Manhattan real estate, emphasizing its importance in the digital economy. He suggests that investors should allocate assets wisely, including putting part of their funds into Bitcoin, and reiterates the necessity of long-term holding.
Finally, Saylor responded to Elon Musk's idea of mining gold in outer space, asserting that there are likely to be more valuable resources waiting to be discovered in space. This discussion provides listeners with profound insights into the future role of Bitcoin.
The Game and Investment of Bitcoin
Dave: We have a special guest today, welcome Michael Saylor, you just purchased 400,000 Bitcoins with your company, so I want to know what I misunderstood about Bitcoin?
Michael: I think we can discuss this through sports metaphors. First, there are some games you cannot participate in, you can only watch. If you just watch the game and your team wins, that means your season ticket will be more expensive next year. But there are some games you can participate in. You go to the casino to play games, but you know that the game is not in your favor. Some games are the casino winning, and you are losing. Satoshi Nakamoto created a game that is favorable to individuals. Is he a real person? Satoshi Nakamoto is a real person, although he is no longer here. Do you know who that person is? We are all Satoshi Nakamoto now, Dave.
The most important thing is that, just as Prometheus gave us fire, Satoshi gave us a game we can all win. Bitcoin is that game. You know, there are some things you don’t want to do on a network that can censor what you say and freeze your account. Bitcoin is a currency network that does not censor the money you send and does not freeze your account. Its design means that marginally, over time, you are winning this game. I feel like if you have a basketball team with LeBron James, Michael Jordan, and their digital versions, they can play forever, and you can step on the court with them. When they score 100 points and you score 2 points, you all become rich together; everyone wins together. That's what Bitcoin is like. Anyone can participate. No matter where I go, there is a fan base. In the process, you not only win the game but also become rich while winning.
The Investment Motivation of Bitcoin
Dave: That's an interesting description, we've talked a bit about it outside. I always hear Bitcoin supporters say they buy Bitcoin because they believe it benefits humanity, not just for making money, but for the good of society. I’m clear that I stand on the side of making money. By the way, I believe I will eventually understand your point of view. I think Bitcoin has become too big to fail. So many people are involved, which is why it's interesting to me. So when you invest so heavily, I think you said you are almost the person with the most Bitcoin in the world after Blackstone. Can you give a percentage? As a good investment, does it make financial sense compared to saving humanity? How do you divide that? Do you think this is the best investment I believe in, or is it a moral decision?
Michael: I think it’s both. I think we have to play the game of life, and half of life is economic. So whether you like it or not, you have to participate in the economic game. You can put money in a bank in Lebanon and use the Lebanese currency. The government inflates, the bank freezes your assets, and you fail. In the game of life, you can put money into any asset in Africa or put money into Bitcoin. Therefore, the real attraction of Bitcoin is that no one in the world wants to put money in a bank of a currency in Africa you’ve never heard of. But Bitcoin gives you control over your money. Is it equal? Is it humanitarian? Of course. Is it economically smart? Both are connected. If you want to achieve any goal in life, you must have economic empowerment. To achieve economic empowerment, you must be on a network that won’t freeze you or censor you, and you must own an asset that no one else can devalue, that no company can mess up, and that no country can mess up; that is what Bitcoin represents.
The Cyber Newyork Analogy and the Investment Value of Bitcoin
Dave: Michael gave me a new analogy before the show started, one I had never heard or thought of before. He mentioned 'Cyber Newyork,' which is about buying property on the internet. How valuable would it be if you could buy real estate in New York in the 1600s and then sell it? I think it’s interesting that not everyone can easily buy 'Cyber Newyork,' but when we talk about Bitcoin, we are actually talking about this. If you want, can you explain this analogy again?
(Deep Tide Note: 'Cyber Newyork' is a metaphor used to describe the concept of owning scarce assets in the digital world (especially the internet). This analogy mainly compares digital assets like Bitcoin with the historical investment opportunities of New York real estate, emphasizing the value and potential of owning scarce assets in the digital world, just as owning New York real estate has historically. This comparison helps people understand the investment opportunities and importance of digital assets like Bitcoin.)
Michael: I think that in some places, land value will soar. If we stand on Miami land now, its past price was $10,000 per acre, and now it is $10 million to $20 million per acre. It has risen 1000 times in less than 100 years. The same is true in the Hamptons and Manhattan. I grew up in Fairborn, Ohio. The land in Fairborn hasn't risen 1000 times. Swamp land or land in the Rockies won't rise.
So if I give you a chance to buy all the land in Palm Beach, the Hamptons, or Manhattan in the past 100 years, that would be a good deal. In fact, in 1650, you could buy land in Manhattan every ten years, and the price would always be higher than the price at which the person bought it who sold it to you; this is still a good investment. The only thing that slightly slows you down is property tax. But suppose there’s no property tax, you would buy and hold forever.
Now, if you are African, South American, Russian, or Chinese, it is not easy for you to buy land in the United States. You don't want to own land in Africa, just like you don't want to own land in the middle of the Rockies; it will not appreciate.
Bitcoin is like the 'Manhattan' of the internet, with a total supply of 21 million. All the rich people in the world will want to put some of their wealth into it. So how much will they invest? If you are living in Lebanon, Iraq, or Syria now, the wealth you hold in Bitcoin is secure, while your deposits in local banks may be at risk. If you need to leave a country or escape a crisis, this happens often. In such cases, you can retain the wealth held in Bitcoin, while land, buildings, local currency, or bank deposits may be lost. Therefore, Bitcoin actually represents the most powerful and greatest city in cyberspace, which will become the center of the digital economy in the future.
Interestingly, when you bought one or several blocks of Manhattan in the 19th century, you might not have known how people would utilize that land, but you could imagine that smart people would flock to New York, eager to own that land to build buildings. It is precisely because of holding that land that you might become wealthy.
The Decision-Making and Psychological Journey of Bitcoin Investment
Dave: You are actually Michael Jordan; you are Jordan in this analogy. If you buy Bitcoin and MicroStrategy, you are continuously buying and will never stop buying.
Michael: I would buy it for $1 million, and I might buy at a pace of $1 billion a day at a price of $1 million, because that's what I do. You know, real estate in Manhattan in 1930 was really expensive; the price in 1930 was much higher than in 1830. I said, 'Well, you know, 100 years from now, we'll still be buying, and we will pay more. The only question is, can you hold it during that period?'
Dave: Since you really got involved with Bitcoin, especially during the Covid pandemic in 2020, have you ever had doubts, like 'Did I choose wrong?' Or have you always been steadfast, or thought, 'If I'm wrong, I’ll go bankrupt'?
Michael: In March 2020, we all experienced a major shock. During that time, I often thought, 'Should I move to Miami? Should I enter the stock market? Should I buy Bitcoin? What should I do?' For about six months, I was trying to figure these things out and eventually discovered Bitcoin. Although investing in Bitcoin is not without risks, the risks of other options are greater by comparison, which could lead to rapid or slow death. Therefore, in the next four years, I decided to take some new actions to gradually reduce risks. The government views Bitcoin as a commodity, which eliminates one risk factor. Next, the launch of ETFs eliminated a second risk factor. Then, the support from the Trump administration brought about a reduction of the third risk factor. Then MicroStrategy purchased $250 million worth of Bitcoin at $11,800, but its price then dropped by 20%. In the next week and a half, we lost $40 million.
Dave: What do you do when that happens? How do you do it?
Michael: I’m thinking about how to buy the next $250 million. Because I’m already involved. Once you commit, you cannot back down. I decided I want to win; I know that if I don't participate in this game, I will definitely lose. So, that time was indeed difficult. But then Bitcoin rebounded and broke through its historical peak again. From August 2020 to about a month ago, we raised $10 billion because everyone supported us, we had a strategy, and we committed to it. Then in November's red tide, we raised $15 billion in four and a half weeks to buy more Bitcoin.
So now we have invested $25 billion in this network. But you know, deciding what you want to do, focusing, committing, but in the process, you will get slapped in the face and experience some setbacks.
Views on Bitcoin Investment Advice versus Other Investment Opportunities
Dave: Suppose you are my financial advisor. If my net worth is $100 million, how much percentage should I put into Bitcoin? I have 14 Bitcoins, which is just a small part of my assets, and I don’t need this money in ten years.
Michael: I would suggest you divide your funds into several parts and invest in scarce and desirable real estate where you want to live. This way you will enjoy the place. Then, I suggest you put part of your funds into a large technology stock portfolio, possibly the 'Great Seven' or other stocks you like. Next, you can set aside a portion of funds, maybe between 10%, 20%, or 30%, to buy digital assets like Bitcoin. About 2% could be viewed as an insurance policy; you won’t get rich because of flood insurance on your house; 10% is a participation proportion, while 20% or 30% could yield considerable returns. Of course, if you are a firm supporter of Bitcoin, you could increase that proportion to 50% or 75%. But in that case, you are really focused on Bitcoin investment.
Dave: A lot of people ask me this question, and I have asked many people too. Do you only invest in Bitcoin? What do you think about other cryptocurrencies? We know your view on Bitcoin, but what do you think about other coins and everything that’s happening?
Michael: My view is that Bitcoin is like a protocol asset with no issuer. Regarding other investments, I think that building might be worth buying, that Picasso might be fairly priced, and buying some NVIDIA stock might also be a good choice. These are all countless investment opportunities, and you have to become an expert. If you have the expertise to participate in these investments, then you should. I have no negative views on these investments.
But I want to emphasize that if you just want to hold part of your funds long-term and don't want to worry about the future, what you need is a globally dominant economic agreement or capital agreement, and that is Bitcoin. Therefore, I think Bitcoin is like a way of saving. I just want to keep my money without external interference, while all other investments are games you as an investor are playing, and you need to make your own decisions.
The Role of MicroStrategy
Dave: What is a day in the life of MicroStrategy like? Do you all look at Bitcoin charts every day?
Michael: There are many investors in the world who cannot buy Bitcoin. For example, in the UK, they are not allowed to invest in Bitcoin within retirement accounts. Therefore, they need to buy shares of companies. Sometimes, people buy our stock because they must invest in a company and cannot directly buy Bitcoin. Therefore, some people choose to buy our stock precisely for this reason.
There are also some investors who are bond investors looking for upside potential but do not want to take downside risk. So how can one gain the upside potential of Bitcoin while having downside protection? I need a bond issued by a company that is completely related to Bitcoin. If Bitcoin crashes 90% tomorrow, the bond will still pay interest. But if you bought $100 million worth of Bitcoin, you would lose $90 million when it crashes. So some people want to enjoy the upside potential while having downside protection.
What MicroStrategy does is provide bonds and stocks. In addition, our stock is twice as volatile as Bitcoin, and typically performs better than Bitcoin. There are also many hot money speculators and options traders who want to achieve 10x leverage. They may not want to buy Bitcoin directly or want to sell call options 30 days later, paying 200% interest. Therefore, many traders have their own strategies, and no publicly traded company on a regulated exchange in the U.S. can implement these strategies.
Thus, MicroStrategy has become a bridge between traditional capital markets and the global offshore crypto economy. We offer people this high-volatility asset, whether it's 2x, 0.5x, or 10x leverage; it's an interesting business.
Views on Elon Musk
Dave: Last question, will Elon Musk reach outer space and mine gold from space, then bring it back to Earth, or is that just nonsense?
Michael: He will reach outer space. But when he gets there, he won't mine for gold, because the value of gold won't be that high; there will be many more valuable things to discover in outer space.
Advice on Investment Timing
Dave: When you mention 100 years, is 10 years a long enough time to invest?
Michael: If you plan to hold your capital for 10 years, then Bitcoin is a good choice. I think the minimum holding period should be four years. Currently, the price of Bitcoin is $100,000. No one has lost money by buying Bitcoin, and no one has made money by shorting Bitcoin. So if you're looking for returns in four months, four weeks, or four days, you might feel anxious. If you have four years, you're fine. If you can hold for 10 years, you will look like a genius. Therefore, my advice is to join the ranks of Bitcoin.
Host Summary
Dave: Michael owns 400,000 Bitcoins, which I find a bit shocking. I've never met someone like that. He mentioned that he really likes the analogy of cyber real estate; you can buy real estate, and it will always appreciate, and not everyone can buy real estate in these premium areas, but everyone can buy Bitcoin. I like this point; it resonates with me and makes a lot of sense. Supporting a sports team is exactly how I see Bitcoin. I believe in Bitcoin, not because I believe in all the different moral visions or egalitarianism; I don’t believe in that. I believe people will become wealthy. That’s what he means: support your team. You will have people like Michael who will keep buying Bitcoin. Plus, there are other stocks; he mentioned that the S&P 500 is also somewhat like this. If you buy stocks, they will always go up; that's the first rule of traders.
