Organized & Compiled by: 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
Release Date: December 9, 2024
Background Information
In this podcast episode, MicroStrategy founder Michael Saylor engages in an in-depth discussion with Dave Portnoy about the investment value of Bitcoin. Saylor emphasizes, through sports analogies, that Bitcoin is a fair "game" where everyone has the opportunity to participate and profit. He believes that Bitcoin is not only a tool for wealth preservation, but also a crucial asset for achieving economic empowerment.
Saylor also introduces the concept of "Cyber New York," drawing a comparison between Bitcoin and the historical opportunity of purchasing Manhattan real estate, highlighting its significance in the digital economy. He advises investors to allocate assets reasonably, including investing a portion in Bitcoin, and reiterates the importance of long-term holding.
Finally, Saylor responds to Elon Musk's idea of mining gold in outer space, suggesting that more valuable resources await discovery in space. This discussion provides the audience 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 bought 400,000 Bit, so I want to know what I'm missing about Bit?
Michael: I think we can use a sports analogy to discuss this. First, there are some games you can't participate in, you can only watch. If you just watch the game and the team wins, it means your season tickets will be more expensive next year. But there are also some games you can participate in. You go to the casino and play games, but you know the game is against you. Some games are the casino winning, and you're the loser. Satoshi created a game that is advantageous to the individual. Is Satoshi a real person? Satoshi is a real person, even though he's gone now. Do you know who that person is? We are all Satoshi, now, Dave.
The most important thing is that, like Prometheus giving us fire, Satoshi gave us a game that we can all win. Bit 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. Bit is a monetary network that won't censor the money you send or freeze your account. Its design is such that, on the margin, you're winning this game over time. I feel like, if you had a basketball team, with LeBron James, Michael Jordan, and their digital versions, they could play forever, and you could get on the court and play with them. When they score 100 points and you score 2, but you're all getting rich together, everyone's winning. That's what Bit is like. Everyone can participate. Wherever I go, there's a fan base. In the process, not only are you winning the game, but you're getting rich in the process of winning.
The Investment Motivation of Bitcoin
Dave: That's an interesting description, we talked a little bit about it outside. I always hear Bit supporters say they're buying Bit because they think it's good for humanity, it's not just about making money, it's about the greater good. I'm firmly on the side of making money. By the way, I believe Bit has become too big to fail. Too many people are involved, and that's why it's interesting to me. So, when you're investing so heavily, I think you said you're almost the second-largest Bit holder in the world after BlackRock. Can you give a percentage, as a good investment, financially versus saving humanity, does that make sense? How do you divide that? Do you think this is the best investment I can make, or is this a moral decision?
Michael: I think it's both. I think we have to play the game of life, and half of life is economics. So, whether you like it or not, you have to participate in the economic game. You can put your money in a bank in Lebanon, using the Lebanese currency. The government inflates, the bank freezes your assets, and you fail. In the game of life, you can put your money in any asset in Africa, or you can put your money in Bit. So, the real appeal of Bit is that everyone in the world doesn't want to put their money in some obscure African currency in a bank. But Bit lets you control your own money. Is that equitable? Is that humanitarian? Of course. Is it economically smart? They're connected. If you want to achieve any goal in life, you need economic empowerment. To achieve economic empowerment, you need to be on a network that won't freeze you or censor you, and you need an asset that no one else can devalue, no company can mess up, no country can mess up, and that's what Bit represents.
The "Cyber New York" Analogy and the Investment Value of Bitcoin
Dave: Michael gave me a new analogy before the show started that I've never heard or thought of before. He mentioned "Cyber New York," which is essentially buying real estate on the internet. If you could have bought real estate in New York City in the 1600s and then sold it, that would have been incredibly valuable. I find it interesting that not everyone can easily purchase "Cyber New York," but that's essentially what we're talking about with Bit. If you're willing, can you explain that analogy a bit more?
(TechFlow note: "Cyber New York" is a metaphor used to describe the concept of owning scarce assets in the digital world, especially the internet. This analogy primarily compares Bit and other digital assets to the historical investment opportunity of owning real estate in New York, emphasizing the value and potential of owning scarce assets in the digital realm, just as owning New York real estate historically. This comparison helps people understand the investment opportunity and significance of Bit and other digital assets.)
Michael: I think in some places, land values skyrocket. If we were standing on land in Miami, the price in the past was $10,000 per acre, and now it's $10 million to $20 million per acre. That's a 1,000x increase in less than 100 years. The same thing happened in the Hamptons, Manhattan. I grew up in Fairborn, Ohio. The land in Fairborn didn't go up 1,000x. Swampland or land in the Rocky Mountains won't go up.
So, if I gave you the opportunity to buy all the land in Palm Beach, the Hamptons, or Manhattan over the past 100 years, that would have been a good deal. In fact, in 1650, you could have bought land in Manhattan every 10 years, and the price was always higher than what the person you bought it from paid, and that's still a good investment. The only thing that slowed you down a bit was property taxes. But assuming no property taxes, you would have bought and held forever.
Now, if you're African, South American, Russian, or Chinese, you don't easily get to buy land in the US. You don't want to own land in Africa, just like you don't want to own land in the middle of the Rocky Mountains, because it won't appreciate.
Bit is like the "Manhattan" of the internet, with a total supply of 21 million. All the wealthy people in the world will want to put a portion of their wealth into it. How much will they put in? If you're living in Lebanon, Iraq, or Syria right now, the wealth you hold in Bit is safe, while your deposits in the local bank may be at risk. If you need to leave a country or escape a crisis, which happens often. In that case, you can retain the wealth you hold in Bit, while land, buildings, local currency, or bank deposits may be lost. So, Bit actually represents the most powerful, greatest city in the digital realm, which will become the center of the digital economy in the future.
Here is the English translation:Interestingly, when you purchased one or a few blocks in Manhattan in the 19th century, you may not have known how people would use that land, but you could imagine that smart people would flock to New York, eager to own that land to build structures. It is precisely because you held that land that you may have become wealthy as a result.
The Decision-Making and Psychological Process of Bitcoin Investment
Dave: You are actually Michael Jordan, and you are the Jordan in this analogy. If you buy Bitcoin, MicroStrategy, you will keep buying and never stop buying.
Michael: I would buy it for $1 million, and I might buy it at a rate of $10 billion per day, at a price of $1 million, because that's what I do. As you know, Manhattan real estate was really expensive in 1930, much more expensive than in 1830. I say, "Okay, you know, 100 years from now, we'll still be buying, and we'll pay more. The only question is, can you hold it during that time period?"
Dave: Since you've actually been involved in Bitcoin, especially during the 2020 Covid pandemic, have you ever had doubts, like "I made the wrong choice"? Or have you 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 wondered, "Should I move to Miami? Should I get into the stock market? Should I buy Bitcoin? What should I do?" For about six months, I was working hard to figure out these questions, and eventually I discovered Bitcoin. While investing in Bitcoin is not without risk, the risks of the other choices were greater, potentially leading to a quick or slow death. So over the next four years, I decided to take some new actions to gradually reduce the risks. The government's classification of Bitcoin as a commodity eliminated one risk factor. Then the launch of ETFs eliminated the second risk factor. Later, the Trump administration's support brought a third risk factor reduction. Then MicroStrategy purchased $250 million worth of Bitcoin at $11,800, but its price subsequently fell 20%. Over the next week and a half, we lost $40 million.
Dave: What were you doing when this happened? How did you handle it?
Michael: I was thinking about how to buy the next $250 million. Because I had already committed. Once you've committed, you can't back down. I decided I was going to win, and I knew that if I didn't participate in this game, I would definitely lose. So that period was indeed very difficult. But then Bitcoin rebounded and broke through its all-time high again. From August 2020 to about a month ago, we raised $10 billion because everyone supported us, we had a strategy, and we were committed to it. Then in the November rally, we raised $15 billion in four and a half weeks to buy more Bitcoin.
So now we have $25 billion invested in this network. But you know, deciding what you're going to do, focusing, committing, but in the process you'll get slapped in the face, you'll experience some setbacks.
Advice on Bitcoin Investment and Views on Other Investment Opportunities
Dave: Assuming you are my financial advisor. If my net worth is $100 million, what percentage should I invest in Bitcoin? I have 14 Bitcoins, which is just a small portion of my assets, and I don't need this money for ten years.
Michael: I would advise you to divide your funds into several parts, investing in scarce and popular real estate where you want to live. That way, you'll enjoy the place. Then I suggest you put some of the funds into a portfolio of large tech stocks, maybe the "Big Seven" (TechFlow note: usually referring to the seven largest tech companies globally by market cap, including Apple, Microsoft, Amazon, Google, Facebook, Tesla, NVIDIA) or other stocks you like. Next, you can take a portion, maybe 10%, 20%, or 30%, to purchase digital assets like Bitcoin. About 2% can be seen as an insurance policy, you won't get rich from your home's flood insurance; 10% is a participant's share, while 20% or 30% may bring significant returns. Of course, if you are a staunch Bitcoin supporter, you can also increase the proportion to 50% or 75%. But in that case, you would really be focused on Bitcoin investment.
Dave: Many people have asked me this question, and I've asked many people as well. Do you only invest in Bitcoin? What are your thoughts on other cryptocurrencies? We know your views on Bitcoin, but what are your thoughts on other coins and what's happening?
Michael: My view is that Bitcoin is like a protocol asset without an issuer. As for other investments, I think that building may be worth buying, that Picasso painting may be priced appropriately, and buying some Nvidia stock might also be a good choice. These are 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 what I want to emphasize is that if you just want to hold a portion of your funds long-term without worrying about the future, then you need a globally dominant economic protocol or capital protocol, and that is Bitcoin. So I think Bitcoin is like a way of saving. I just want to preserve my money without external interference, and all other investments are the games you as an investor are playing, and you need to make your own decisions.
The Role of MicroStrategy
Dave: MicroStrategy is a Bitcoin company, do you guys look at the Bitcoin price chart every day? What is a typical day like at MicroStrategy?
Michael: There are many investors in the world who cannot buy Bitcoin directly. For example, in the UK, they are not allowed to invest Bitcoin in their retirement accounts. So they need to buy the company's stock. Sometimes, people buy our stock because they have to invest in a company, and they can't buy Bitcoin directly. So some investors choose to buy our stock for this reason.
There are also some bond investors who want the upside potential of Bitcoin, but don't want the downside risk. How can they get the upside potential of Bitcoin while having downside protection? I need a company-issued bond that is completely tied to Bitcoin. If Bitcoin crashes 90% tomorrow, the bond will still pay interest. But if you buy $100 million worth of Bitcoin, you'll lose $90 million when it crashes. So some people want the upside potential while having downside protection.
What MicroStrategy is doing is providing bonds and stocks. Additionally, our stock volatility is twice that of Bitcoin, and our performance is usually better than Bitcoin. There are also a lot of hot money speculators and options traders who want 10x leverage. They may not want to buy Bitcoin directly, or they want to sell 30-day call options and earn 200% interest. So many traders have their own strategies, and there is no publicly traded company in the US regulated exchanges that can implement these strategies.
So MicroStrategy has become a bridge between the traditional capital markets and the global offshore crypto economy. We provide this high-volatility asset to people, whether it's 2x, 0.5x, or 10x leverage, and it's an interesting business.
Views on Elon Musk
Dave: One last question, will Elon Musk reach outer space and mine gold from outer space, then come down to Earth and bless us with abundance, or is this just nonsense?
Michael: He will reach outer space. But when he gets there, he won't go mining for gold, because the value of gold won't be that high, and there will be many more valuable things to discover in outer space.
Advice on Investment Timeframe
Dave: When you mentioned 100 years, is 10 years long enough for an investment?
Michael: If you plan to hold your capital for 10 years, then Bit is a good choice. I think the minimum holding time should be four years. The current price of Bit is $100,000. No one has lost money by buying Bit, and no one has made money by shorting Bit. So if you're looking for returns in four months, four weeks, or four days, you may feel anxious. If you have four years, you're fine. If you can hold for 10 years, you'll look like a genius. So my advice is to join the Bit bandwagon.
Host's Summary
Dave: Michael has 400,000 Bits, which I find a bit shocking. I've never encountered such a person before. He mentioned that he really likes the analogy of Cyber Real Estate, where you can buy real estate, and it will always appreciate in value, and not everyone can buy property in these prime areas, but everyone can buy Bit. I like this point, and it resonates with me, and it makes a lot of sense. Supporting a sports team, that's exactly how I feel about Bit. I believe in Bit, not because I believe in all the different moral visions or egalitarianism, I don't believe in that. I believe that people will become wealthy. That's what he's saying: support your team. You'll have people like Michael who will keep buying Bit. Additionally, there are other stocks, and he mentioned that the S&P 500 is to some extent the same. If you buy stocks, they will always go up, that's the first rule of trading.
