Tech industry veteran entrepreneur Michael Saylor recently mentioned in an interview with Jordan B. Peterson the connection between Bit and COVID-19, stating that the "dollar is likely to collapse," and therefore converted all $500 million of MicroStrategy's (now renamed Strategy) cash into Bit, a rare move on Wall Street. He also noted that while things seem to be going well currently, there are potential risks to overcome, and Strategy's efforts are more extensive than what is visible from the outside.
Dollar Diluted, Cash Becomes a Hot Potato
In the channel of famous Canadian clinical psychologist Jordan B Peterson, Michael Saylor was interviewed for about an hour and a half. In the video titled "A Billionaire's Understanding of Surviving a Dollar Crash," Saylor explained his perception of the dollar system's collapse, directly stating that the dollar will definitely collapse in the future, and Bit is the only solution.
He explained that he found this answer and gained his current understanding of Bit and the monetary system during COVID-19, discovering the truth by reading Bit books during that time of total collapse.
According to the economic indicator St. Louis Fed M2 data at the time, the dollar supply surged 27% in eight months in 2020. From April to December that year, the S&P 500 rose 46%, with high valuations making true hedging difficult. Bloomberg Terminal data showed that US companies had over $4 trillion in cash at the time, with annual interest rates below 1%, underperforming the official 2% inflation and struggling to cover actual expenses like rent and insurance. All these economic realities became Michael Saylor's inspiration:
This is not about fighting COVID, but about fighting monetary collapse. If you sit idly by while cash depreciates, the company is experiencing chronic bleeding.
At the time, I saw Miami Beach, I saw no vehicles on Collins Avenue, except for Amazon trucks, which made me angry... I saw we were taking the world back to the Stone Age.
I had $500 million in assets, and interest rates had dropped to zero. Powell went on TV and said, 'We have lowered interest rates to zero, and I'm not even considering raising rates before 2024.' But my observation was that my assets were now non-productive.
After watching all the podcasts of early crypto developers, I started looking for books. I read 'The Bitcoin Standard', and I was 'drawn down the rabbit hole'... My conclusion was that the solution is a non-sovereign value storage tool, of which gold was once the best.
Gold's Big Problem
As for why Bit and not gold, Michael Saylor explained that gold is difficult to transfer instantly, and is still being continuously mined, which is different from Bit's "less mining over time". He even believes that gold's value preservation cannot keep up to a sufficient extent.
He mentioned that even if you own 100% of the gold supply, miners still produce 2% more gold annually, meaning the supply will double in 36 years. The conclusion is that you only own a quarter of the gold supply 30 years later, and its relative scarcity increases as you hold it.
Gold is essentially (relatively) inflating. Although gold is called a 'sound money' and is the best currency in Austrian economic thought, it is not a perfect currency.
What if someone designed digital gold? If I, you know, now we go back to what engineers say, can you perfect gold?
Predicting the Inevitable Collapse of the US Dollar
What is inflation? Inflation is a vector. Everything in this room has a different inflation rate, and if I move this room to Toronto, its inflation rate would be different...The government wants to calculate inflation by establishing a consumer goods market basket, and their trick is to constantly change the items in the basket, which they call "hedonic adjustment".I create a commodity basket with goods that are unlikely to rise in price when printing money, and then I put it in the basket. The only real inflation is in stocks, inflation on Amazon stocks in March 2020...
Throughout human history, in most political jurisdictions, currency collapses once every 30 to 40 years. The US dollar, as the victorious currency of the 20th century and the world's best currency, has lost 99.9% of its value, inflating at a rate of 7% annually...Central banks continue to print money, effectively forcing interest rates down... When COVID lockdown happened, Jerome Powell turned and lowered interest rates, continuously lowering them, quickly bringing rates from 250 basis points to zero..In the summer of 2020, all stocks recovered, like "Oh, we went through a crisis, but we solved it by lowering rates to zero, we printed money, and stocks recovered."When interest rates drop to zero, the price-to-earnings ratio of any cash-generating company doubles or triples, and real estate capitalization rates also double...◦The government printed money, and we experienced hyperinflation, not in consumer products, not in production products, but in financial assets."It's obvious that operating companies are discriminated against, people doing real work are discriminated against. I want to be those who own things, but I don't want to own sovereign debt. If I own Treasury bills, the government has already told me that Treasury bills are worthless, so I'd better find something else to own.
High Leverage Brings Risk
Saylor's statement that "holding legal tender is like sitting on a melting ice block" still circulates in communities today. Five years later, Strategy transformed from a software supplier to a Bit vault, perfectly proving his choice. If Bit continues to rise in the future, this "monetary war" pioneer may continue to lead; if the market reverses, the leverage effect will also magnify pressure, testing the resilience of this model.
However, behind the glory lies volatility concerns. If Bit is halved to $54,000, the company will suffer about $31.5 billion in unrealized losses, and convertible bonds may trigger additional collateral. Standing at the crest of the times, while everyone now sees Saylor as a prophet, many are waiting for him to fall from his high position.
