Dialogue with Bitcoin veteran Jack Mallers: Dollar Crisis, Bitcoin as a Store of Value, and 21 Capital

Source: ++The Dollar is Rapidly Depreciating! Bitcoin Pioneer Jack Mallers: Currency Crises in Various Countries! 42,000 Bitcoin Aircraft Carrier!++

Compiled by: Daisy, ChainCatcher

Editor’s Note:

This article is compiled from a video interview between Jack Mallers and hosts David Lin and Bonnie Chang. Jack Mallers is the founder of the Bitcoin payment platform Strike and co-founder and CEO of the investment firm 21 Capital, dedicated to promoting the practical application of Bitcoin in global payments and capital markets.

In the interview, Jack delves into the logical foundation of Bitcoin as a global store of value, analyzes new metrics such as "Bitcoin per Share (BPS)" and "Bitcoin Return Rate (BRR)," and points out the essential differences between 21 Capital and traditional ETFs. He also shares how Strike flexibly builds products based on local needs in different countries, as well as the political and macroeconomic background behind the institutionalization of Bitcoin.

The following content is a compilation of the interview.

TL;DR:

1. The essence of currency is a tool for storing and exchanging labor, and Bitcoin is currently the optimal choice for storing value.
2. Under pressure from debt and deficits, the value of Bitcoin as a scarce asset becomes increasingly prominent.
3. The dollar export model is collapsing, and Bitcoin's position in the global value storage system is becoming more pronounced.
4. Volatility is a prerequisite for obtaining returns.
5. Risk does not equal volatility; true risk is systemic failure.
6. 21 Capital introduces "Bitcoin per Share (BPS)" and "Bitcoin Return Rate (BRR)" metrics to reconstruct the evaluation system of capital markets.
7. Unlike ETFs, 21 Capital enhances investors' Bitcoin exposure through operations rather than static holding.
8. Bitcoin rules are determined by global node consensus and cannot be altered by governments or institutions.
9. Bitcoin is not a political bet but a financial system built on mathematics and freedom.
10. The real risk is not volatility but systemic failure due to centralization and reliance on trusted counterparties.

The Value Logic of Bitcoin and the Global Currency Landscape

Bonnie: Do you think the continuous decline in the purchasing power of the dollar and the passive weakening of the U.S. currency will naturally drive the world towards Bitcoin, or will it require significant events like financial crises or wars to prompt a shift?

Jack: Currency, like other goods, competes in the free market with advantages and disadvantages. However, unlike consumer goods, the role of currency is to store and exchange people's time and labor. Even without a crisis, people will naturally choose the optimal store of value. Bitcoin has a significant advantage in this regard.

Bonnie: You mentioned that Bitcoin has a growth potential of 400 to 500 times; what is the basis for this estimate?

Jack: I am not predicting prices but analyzing the market size Bitcoin is facing. The total value of global assets is about $900 trillion, with roughly half used for value storage. In other words, humanity is looking for tools to store $400 to $500 trillion in value. Bitcoin is currently the most promising store of value, being both a product of technological advancement and an innovation in value storage methods. In comparison, the global stock market is only about $150 trillion, which severely underestimates Bitcoin's potential and positioning when compared to stocks or Ethereum.

David: Bitcoin's price did not rise after Trump took office, which disappointed some investors. Were you surprised by this?

Jack: I was not surprised because the market expectations were incorrect. They thought Trump's presidency would bring liquidity expansion, but the reality was tightening. Understanding the current situation requires looking back to the post-World War II era when the U.S. became the issuer of the global reserve currency based on its gold reserves, establishing a system of "paper money for real goods" through dollar exports and imports of goods, gradually shifting from manufacturing to finance. This structure is now difficult to sustain. Trump's emphasis on manufacturing and fiscal balance is a response to debt and structural deficit issues. In this context, the value of Bitcoin as a scarce asset becomes even more prominent.

David: Some believe Bitcoin is highly correlated with the stock market, while others think its movements are more influenced by global M2 money supply. What is your view?

Jack: I lean towards the view that Bitcoin is closely related to global M2. In the context of dollar depreciation, most asset prices rise, and the apparent correlation is actually driven by monetary policy. Bitcoin is a sensitive indicator of fiat currency liquidity; it combines technical attributes with the ability to counteract currency overproduction. For example, China's trade surplus funds flow into U.S. stocks and real estate, driving up asset prices and exacerbating bubbles and wealth inequality. Once this capital stops flowing into U.S. stocks, Bitcoin will decouple from stock market trends and demonstrate its independent value. It does not rely on profits or valuations but returns to real demand and scarcity.

**Bonnie: If Bitcoin becomes a mainstream store of value, how will it affect the valuation of human capital, stocks, and real estate?

**Jack: Bitcoin's proof-of-work mechanism makes it an "energy currency," which must be created through time and energy, possessing scarcity and anti-inflation capabilities. When people can save and plan for the future, society becomes more stable. The harder it is to produce currency, the more society can withstand uncertainty.

**Bonnie: You hardly hold any dollars; how do you achieve that?

**Jack: I do not hold long-term depreciating assets; I only keep the best performers. I receive my salary in Bitcoin through Strike, take out loans, and pay bills, thus preserving my assets while meeting liquidity needs. Such services are making Bitcoin more practical.

**David: Peter Schiff believes Bitcoin has no intrinsic value and that high volatility equates to high risk. How do you respond to this viewpoint?

**Jack: Volatility is a prerequisite for obtaining returns. The Sharpe ratio measures the returns generated by volatility; if high volatility is accompanied by high returns, it is worth it. Risk does not equal volatility; true risk is systemic failure. Bitcoin operates based on mathematics and does not rely on counterparties, which in essence makes it lower risk.

**Bonnie: For ordinary people, managing Bitcoin is more challenging than managing a bank account. How do you address concerns about losing private keys or being hacked?

**Jack: The uniqueness of Bitcoin lies in the freedom of use. You can store your private keys yourself or choose to use custodial services. While I encourage users to enhance their sense of sovereignty, the key is that it provides a choice. This complete control over assets is not available in other financial systems.

**David: Over the past decade, Bitcoin's Sharpe ratio has outperformed most assets. Why is institutional allocation still low?

**Jack: The process of institutional allocation to Bitcoin is slow, but the trend is upward. People often overestimate short-term changes and underestimate long-term impacts. Despite the complexity of institutional structures, I have seen a continuous increase in demand for Bitcoin in capital markets, and the allocation ratio will keep rising.

**Bonnie: You are developing Bitcoin-related products, right?

**Jack: Yes. Currently, there is a lack of Bitcoin representatives with institutional strength in the market, and we hope to enter with blue-chip qualifications and scale. We not only hold billions of dollars in Bitcoin but also have strong capital and Wall Street resources. More importantly, we focus on building products rather than merely hoarding coins. As participants in the Bitcoin protocol, we understand the technology and growth opportunities, aiming to build a bridge between technology and capital markets to promote the growth of "Bitcoin per Share."

21 Capital: Building the Growth Model of "Bitcoin per Share"

**Bonnie: What are the upcoming timelines or plans you can share?

**Jack: We are advancing our SPAC merger with Cantor Equity Partners, which is still under review. The XXI stock is our first product, and my focus is on advancing the listing process and communicating our business philosophy and the value of Bitcoin to the public.

**David: Will large institutions holding significant amounts of Bitcoin threaten its decentralized spirit? What do you think?

**Jack: The design of Bitcoin ensures that how much one holds does not affect control, which is different from proof-of-stake mechanisms. It is a permissionless system where anyone can participate freely, and specific holders cannot be excluded. Everyone is equal before the rules, which is the essence of Bitcoin.

**David: Are you planning to go public and list on an exchange?

**Jack: Yes, we have applied to merge with Cantor Equity Partners for a public listing, with the stock code XXI, and it is still under review.

**David: As a Bitcoin-centric company, will you consider hedging against price volatility?

**Jack: We will not hedge Bitcoin assets. The company introduces "Bitcoin per Share (BPS)" and "Bitcoin Return Rate (BRR)" as new metrics, focusing on increasing the number of Bitcoins represented by each share. We hold long-term and do not sell coins, aiming to create a growth-oriented capital market tool centered on Bitcoin.

Note:

• Bitcoin per Share (BPS): Refers to the number of Bitcoins represented by each share of a company, used to measure shareholders' actual Bitcoin exposure, similar to earnings per share (EPS) in traditional finance but measured in Bitcoin.
• Bitcoin Return Rate (BRR): Refers to the growth rate measured in Bitcoin, used to assess a company's ability to enhance its Bitcoin assets through operations without selling Bitcoin.

**David: You mentioned the BRR concept; how does 21 differ from Bitcoin ETFs?

**Jack: Investing in 21 is investing in an actively managed company with the goal of increasing Bitcoin per share. In contrast, ETFs like IBIT are static exposures where the number of Bitcoins bought and held does not change. 21 continuously expands Bitcoin exposure through financing and business growth. We combine blue-chip qualifications with startup potential, aiming to allow shareholders to grow alongside Bitcoin.

**David: You are also the CEO of Strike; will there be any overlap between the two companies in the future?

**Jack: There will be no overlap; Strike and 21 are completely independent. Strike serves consumers, providing services such as loans, trading, and custody; 21 focuses on capital markets and Bitcoin investment tools, with different positioning and goals.

Strike's Product Strategy and Global Implementation

**Bonnie: How does Strike operate in countries with unstable currencies or weak banks?

**Jack: We customize products by region. In places like the U.S. and Europe, we support local fiat currencies and Bitcoin; in Latin America and Africa, due to unstable fiat currencies, users prefer a USDT + Bitcoin combination. We are user-demand-driven, doing whatever they ask for, which is key to our success.

**David: Will you adjust your strategy in response to a more favorable crypto regulatory environment?

**Jack: A friendly regulatory environment is beneficial for entrepreneurship, and I am glad to develop in the U.S. However, Bitcoin does not rely on any political figures; it is a decentralized technology that transcends parties and political situations. What is truly valuable does not depend on who endorses it.

**David: After regulatory relaxation, if banks offer crypto services, would you worry about being replaced?

**Jack: I am not worried. Traditional banks lack understanding of Bitcoin and product capabilities, while we have them. The key is to focus on ourselves and do our best. I was also questioned five years ago, but we persevered. Even if one day Jamie Dimon (Chairman and CEO of JPMorgan Chase) becomes a Bitcoin banker, I would be happy to discuss again.

Immutable Protocol: How Bitcoin Protects Itself

**Bonnie: If governments or institutions hold large amounts of Bitcoin, could they potentially unite to modify the 21 million cap?

**Jack: It is impossible. Bitcoin rules are determined by global running nodes, and no one can unilaterally change them. Historically, those who attempted to modify them ended up forking, resulting in a significant loss of value. The neutrality and immutability of Bitcoin are its core. Once the rules are changed, it loses value. The incentive mechanisms also encourage participants to maintain the system rather than destroy it, making it nearly impossible to modify the total cap.

**Bonnie: What changes have occurred in your understanding of Bitcoin?

**Jack: Initially, I viewed Bitcoin as a competitor to PayPal, but later realized it is a core technology for storing time and energy. It has reshaped my understanding of the meaning of currency and the value of hard currency for social cooperation and long-term development, profoundly influencing my financial views and decision-making.

**David: Do you still use Bitcoin to buy pizza?

**Jack: No. I use a credit card for purchases and then repay it by collateralizing Bitcoin through Strike, thus preserving Bitcoin while meeting daily expenses. Bitcoin is a savings tool; dollars are for spending.

**David: If I offered to buy you pizza with Bitcoin, would you accept?

**Jack: No, I would not exchange quality currency for depreciating assets. Data shows that holding Bitcoin long-term can lower living costs. In 2011, buying a house required 1.8 million Bitcoins, but now it only requires 4.7. The longer you hold Bitcoin, the more valuable it becomes, while dollars lose value over time, so I save Bitcoin and spend dollars.