Dialogue with MicroStrategy founder Michael Saylor: Why should everyone own Bitcoin?

Organized & Compiled: 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 uses sports metaphors to emphasize that Bitcoin is a fair "game" that allows everyone the opportunity to participate and profit. He believes that Bitcoin is not only a tool for wealth preservation but also an important asset for achieving economic empowerment.

Saylor also introduces the concept of "Cyber New York," comparing Bitcoin to the historical opportunity of purchasing real estate in Manhattan, highlighting its significance in the digital economy. He suggests that investors should allocate their assets wisely, including putting a portion into Bitcoin, and reiterates the necessity of long-term holding.

Finally, Saylor responds to Elon Musk's idea of mining gold in outer space, arguing that there will 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 using a sports metaphor. 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 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 against you. Some games are won by the casino, and you lose. Satoshi created a game that is favorable to individuals. Is he a real person? Satoshi is a real person, although he is no longer around. 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. 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. It is designed in such a way that, marginally, over time, you are winning this game. I feel that if you have a basketball team with LeBron James, Michael Jordan, and their digital versions, they can play forever, and you can get on the court and play with them. When they score 100 points and you score 2 points, but you all become rich together, everyone wins together. That's what Bitcoin is like. Everyone can participate. Wherever I go, there is a fan base. In the process, you not only win the game but also become wealthy while winning.

The Investment Motivation of Bitcoin

Dave: This description is interesting; we talked a bit 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 am 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. Too many people are involved, and that's 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 Group. Can you give a percentage? As a good investment, does it make financial sense compared to saving humanity? How do you divide it? Do you think it's the best investment I think, or is it a moral decision?

Michael: I think it's both. I believe 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 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 put your money in Bitcoin. Therefore, the real appeal of Bitcoin is that no one in the world wants to put their money in a bank of an African currency you've never heard of. But Bitcoin allows you to control your money. Is this equal? Is it humanitarian? Of course. Is it economically smart? The two 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 will not freeze you or censor you, and you must have 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 New York" Analogy and the Investment Value of Bitcoin

Dave: Michael gave me a new analogy before the show that I had never heard or thought of before. He mentioned "Cyber New York," which is about buying property on the internet. If you could have bought real estate in New York in the 1600s and then sold it, how valuable would that be? I find it interesting that not everyone can easily buy "Cyber New York," but when we talk about Bitcoin, we are actually talking about this. If you could, could you explain this analogy again?**

(Deep Tide Note: "Cyber New York" is a metaphor used to describe the concept of owning scarce assets in the digital world, especially on the internet. This analogy mainly compares digital assets like Bitcoin to the historical investment opportunity of New York real estate, emphasizing the value and potential of owning scarce assets in the digital world, just like owning New York real estate in history. This comparison helps people understand the investment opportunities and significance of digital assets like Bitcoin.)

Michael: I believe that in certain places, land value can skyrocket. If we stand on land in Miami now, its past price was $10,000 per acre, and now it is $10 million to $20 million per acre. It has increased 1,000 times in less than 100 years. The same goes for the Hamptons and Manhattan. I grew up in Fairborn, Ohio. The land in Fairborn has not increased 1,000 times. Swamp land or land in the Rocky Mountains will not appreciate.

So if I give you an opportunity to buy all the land in Palm Beach, the Hamptons, or Manhattan over 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 was always higher than what the person who sold it to you paid; that was still a good investment. The only thing that slightly slows you down is property tax. But assuming there is 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 Rocky Mountains; it won't appreciate.

Bitcoin is like "Manhattan" on 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. So how much will they invest? If you live in Lebanon, Iraq, or Syria now, the wealth you hold in Bitcoin is safe, while your deposits in local banks may be at risk. If you need to leave a country or escape a crisis, this situation often occurs. In that case, you can keep the wealth you hold 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 use 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 you hold that land that you might become wealthy.

Decision-Making and Psychological Journey of Bitcoin Investment

Dave: You are actually Michael Jordan; you are Jordan in this analogy. If you buy Bitcoin, MicroStrategy, you are continuously buying and will never stop buying.**

Michael: I would buy it at $1 million, and I might buy it at a rate of $1 billion a day at $1 million, because that's what I do. You know, Manhattan real estate was really expensive in 1930; the price in 1930 was much higher than in 1830. I said, "Well, you know, 100 years from now, we will still be buying, and we will pay more. The only question is, can you hold it during that time period?"

Dave: Since you really got involved in Bitcoin, especially during the Covid pandemic in 2020, have you had doubts, like "Did I make 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 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. While investing in Bitcoin is not without risks, the risks of other options are greater, potentially leading to a quick death or a slow death. Therefore, over the next four years, I decided to take some new actions to gradually reduce risk. The government views Bitcoin as a commodity, which eliminates one risk factor. Then the launch of ETFs eliminated a second risk factor. Later, support from the Trump administration brought a reduction in a third risk factor. Then MicroStrategy bought $250 million worth of Bitcoin at $11,800, but then its price dropped by 20%. In the next week and a half, we lost $40 million.

Dave: What were you doing when that happened? How did you handle it?**

Michael: I was thinking about how to buy the next $250 million. Because I was already involved. Once you commit, you can't back down. I decided I wanted to win, and I knew that if I didn't participate in this game, I would definitely lose. So, that time was indeed very difficult. But then Bitcoin rebounded and broke through its previous all-time high. 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 the red tide of November, 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 and Other Investment Opportunities

Dave: Suppose you are my financial advisor. If my net worth is $100 million, what percentage should I invest in Bitcoin? I own 14 Bitcoins, which is just a small part of my assets, and I don't need this money for ten years.**

Michael: I would suggest you divide your funds into several parts, investing in scarce and desirable real estate where you want to live. This way, you will like the place. Then, I suggest you put a portion of your funds into a large tech stock portfolio, possibly the "Great Seven" (Deep Tide Note: usually refers to the seven largest tech companies by market capitalization: Apple, Microsoft, Amazon, Google, Facebook, Tesla, NVIDIA) or other stocks you like. Next, you can take out a portion of your funds, perhaps between 10%, 20%, or 30%, to buy digital assets like Bitcoin. About 2% can be seen as an insurance policy; you won't get rich from flood insurance on your house; 10% is a participant's ratio, while 20% or 30% might yield considerable returns. Of course, if you are a strong supporter of Bitcoin, you can also raise the percentage to 50% or 75%. But in that case, you are really focusing on Bitcoin investment.

Dave: Many people ask me this question, and I have asked many people. Do you only invest in Bitcoin? What are your views on other cryptocurrencies? We know your views on Bitcoin, but what do you think about other coins and everything that is 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 priced right, and that 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 participate. I have no negative views on these investments.

But I want to emphasize that if you just want to hold a portion of your funds long-term without worrying about the future, what you need is a globally dominant economic protocol or capital protocol, and that is Bitcoin. Therefore, I think Bitcoin is like a way of saving. I just want to save my money without external interference, while all other investments are games you are playing as an investor, and you need to make your own decisions.

The Role of MicroStrategy

Dave: MicroStrategy is a Bitcoin company; do you look at Bitcoin charts every day? What does a day at MicroStrategy look like?**

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 in retirement accounts. Therefore, they need to buy shares of companies. Sometimes, people buy our stock because they have to invest in a company rather than directly buy Bitcoin. So some people choose to buy our stock precisely for this reason.

There are also some investors who are bond investors who want to gain upside potential but do not want to take on downside risk. So how can they 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 in a crash. So some people want to enjoy the upside potential while having downside protection.

What MicroStrategy does is provide bonds and stocks. Additionally, our stock's volatility is twice that of Bitcoin, and it usually performs better than Bitcoin. There are many hot money speculators and options traders who want to achieve 10 times leverage. They may not want to buy Bitcoin directly or want to sell call options 30 days out, paying 200% interest. Therefore, many traders have their own strategies, and no publicly traded company on regulated exchanges 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 provide people with this high-volatility asset, whether it's 2 times, 0.5 times, or 10 times 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 this just nonsense?**

Michael: He will reach outer space. But when he gets there, he won't mine gold because the value of gold won't be that high; there will be many more valuable things to discover in outer space.

Investment Time Advice

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 shortest 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 are looking for returns in four months, four weeks, or four days, you might feel anxious. If you have four years, you are fine. If you can hold for 10 years, you will look like a genius. Therefore, my advice is to join the Bitcoin movement.

Host Summary

Dave: Michael has 400,000 Bitcoins, and I find that a bit shocking. I have never met someone like him. He mentioned that he really likes the analogy of cyber real estate; you can buy real estate, and it will always appreciate. Not everyone can buy real estate in these prime 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 view 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 said: support your team. You will have people like Michael who will keep buying Bitcoin. Additionally, there are other stocks; he mentioned that the S&P 500 is somewhat similar. If you buy stocks, they will always go up; that's the first rule of trading.