The co-founder of Strategy (formerly MicroStrategy) gave an extensive interview to Bitcoin Magazine. In it, he talked about the firm’s business model, its endgame, bitcoin’s role in the transformation of the global financial system and the “information noise” around the first cryptocurrency.

Who is Saylor and What Does Strategy Do?

Strategy is the world’s largest corporate holder of bitcoin. Michael Saylor is its co-founder, previously he also held the position of CEO. He takes a bitcoin-maximalist stance, supporting the widespread adoption of the first cryptocurrency.

His company, in turn, set the trend for treasury firms (DATs) managing reserves in crypto assets. The essence of Strategy’s business model is to raise capital by issuing stocks and bonds and buying bitcoins, which ultimately increases the yield on its securities.

Bitcoin as Economic Hope

According to Saylor, the first cryptocurrency is something that can qualitatively change the life of mankind. He compared it to fire, which carried the first humans the hope of warmth and protection.

“Humanity’s hopes have always centered around technology. Be it cars, airplanes, electricity, oil or fire. Bitcoin is a hope because it represents digital energy. […] It is digital property, digital capital, digital gold,” he noted.

Note, Saylor is not the first time to declare the thesis that bitcoin is energy. Earlier, his position was criticized by the well-known cryptocurrency skeptic Peter Schiff, noting that the mere fact of spending electricity to mine bitcoin does not make it a carrier of energy.

“When I say bitcoin is hopeful, that’s exactly what I mean. If you want to send capital across half the planet to solve some problem, you need that digital energy. It [bitcoin] represents the next global paradigm shift,” Saylor believes.

Signs of “Hyperbitcoinization”

The Strategy co-founder believes that the adoption of the first cryptocurrency is at a level where it has permeated all areas. Signs of this, he believes, include the following factors:

• a trend among publicly traded companies to accumulate cryptoassets. Saylor noted that the number of DATs that hold bitcoins has now passed 180. That said, he believes that one day every firm will, in one way or another, interact with the first cryptocurrency;
• integrating bitcoin-enabled infrastructure into off-the-shelf software. He cited Cash App as an example. However, Saylor also believes that in the foreseeable future, companies such as Apple and Google will add bitcoin support directly into their operating systems, particularly iOS and Android.

Saylor also noted that he feels a significant responsibility to drive this trend forward and strives to be a good example. Strategy tries to be as open as possible, he noted, publicizing its reports and operations through publishing documentation and presentations.

“In the bitcoin ecosystem, everyone can be a winner, as we all share the same value system and a single underlying asset whose supply is limited,” the entrepreneur said.

Criticism and “Information Noise” are Part and Parcel of the Paradigm Shift Process

“Bitcoin is evolving faster than society can accept it. There has always been misunderstanding around it, even when we entered this business in 2020. When the value of our portfolio reached $1 billion-$2 billion, we were told we just lost that money. When it grew to $100 billion, the critics went somewhere, after which they were replaced by new ones,” Saylor noted.

According to the entrepreneur, this misunderstanding and criticism will remain even when the bitcoin exchange rate passes the $1 million mark or more.

“How many years did it take for humanity to embrace electricity? How long was Rockefeller [John Rockefeller, the first dollar billionaire in history] considered a failure until he became the richest man in the world? And even then there were skeptics until automobiles came along and his fortune grew even more,” the businessman believes.

Saylor cited nuclear power as another example. According to him, 50 years ago it was considered a “terrible invention”, but now it is clear to everyone that it is absolutely necessary for the further development of AI.

As for the bitcoin community itself, the businessman believes that there has always been a certain skepticism in it. At the same time, Saylor considers the very idea of complete distrust that reigns in it to be counterproductive.

Why is Bitcoin Superior to Gold?

According to the entrepreneur, one of the reasons why gold “lost” in the race with the first cryptocurrency is the difficulty of storing it. It is a slow, expensive asset that is difficult to move and hold, Saylor emphasized.

“Bitcoin is just more practical, whether it’s an individual or a company. […] Bitcoin gives a sense of economic integrity. And so I don’t think we should oppose its adoption by banks and states. If 150 countries around the world hold bitcoins, it will be a much more decentralized system than gold ever was,” he stressed.

The Role of Institutionalizers

Saylor believes that the new White House administration’s course of becoming the “crypto capital of the world” is actually aimed at one thing – to encourage adoption of the asset by major counterparties. At the same time, he says, institutional participation will have no impact on retail traders.

“Corporates are the engine that is pushing bitcoin forward. Each DAT that buys $50 million worth of cryptoasset is slightly ‘pushing’ the screw of this engine. Without institutional participation, bitcoin would be trading at $5000. And if corporations had chosen another network like Litecoin or Ethereum, it wouldn’t be worth anything,” summarized Saylor.

The businessman believes that at the current stage there is a competitive struggle between different blockchains. And the participation of institutions, as well as the states that direct the flow of money, is an important advantage in it.

“It is corporations that are funding the lobbies, promoting bitcoin, preventing the network and its asset from being banned or heavily taxed,” the businessman believes.

According to Saylor’s vision, the first line of “defense” for the bitcoin network is the miners, who ensure the functionality and stability of its operation. DATs, in turn, form the economic defense, shielding the blockchain with their capital. Exchanges provide technical adoption of bitcoin, offering users convenient “rails” to interact with it.

Moreover, according to Saylor, the companies holding bitcoin are not in competition with each other. They are opposed to stocks and bonds, outdated financial products, according to the businessman.

“Bitcoin is like the English language. If you speak it and the most powerful man on the planet speaks it, are you going to be offended? If bank governors speak it, companies release software in English, would you then say: ‘They’ve taken my language! Why is that a bad thing?’” wonders Saylor.

What is the Bitcoin Treasury Company?

The first cryptocurrency, according to Saylor, represents digital gold. The idea behind such DATs is to issue loans backed by the first cryptocurrency, which will maintain a 1-to-1 ratio.

“At the heart of such companies is a simple concept. I buy bitcoins through different instruments and then issue loan products backed by them. When you do that you form leverage, which allows the issuer’s capital to become digital and potentially outperform the underlying asset,” Saylor explained.

DATs are using bitcoin as a “monetary framework” to redefine the credit and equity markets, he said.

“Bitcoin is growing at 55% a year. What is the average growth rate of other companies in Brazil or Japan? Who are these [DAT] companies competing with? With any other firms in those markets, as well as existing credit instruments,” the entrepreneur outlined his position.

Saylor predicted the rapid growth of this sector. He is confident that such companies can grow by 100 times and the opportunity is there for the rest of the DATs to enter these markets.

“Why go to a bank and get that 2%-3% on a deposit when you can go to a DAT and get 10%?” Saylor noted.

Against this backdrop, Saylor predicted the gradual disappearance of small banks. At the same time, the entrepreneur sees not so many risks for DAT. If they continue to raise capital with low-risk instruments, such as bonds, they will be able to hold bitcoins for as long as they want.

“The hardest hit during the cryptozyme were the miners. Why? They took out short-term loans with a 15% interest rate, which they spent not on buying bitcoins but on ASICs with an amortization of 20%-30% per year. […] If you take a medium or long-term loan to buy an asset with a 60% growth rate, you’ll be fine,” summarized Saylor.

Strategy’s Endgame

“I think the endgame for us [Strategy] would be a $1 trillion bitcoin purchase. […] We will then raise that capital by issuing loan products backed by the first cryptocurrency. A $1 trillion collateral that will grow at 20%-30% per year by issuing $100 trillion worth of credit products per year. All of these will continue to grow and generate higher returns than traditional loans,” summarized Saylor.

Saylor sees Strategy’s ultimate goal as introducing a new paradigm for the stock and credit markets. This will eventually lead to every company in the S&P 500 investing in bitcoin, the entrepreneur noted.

This will help to heal the global market, according to Saylor. He also predicted that sooner or later, major crypto exchanges, such as Gemini and Coinbase, which are now public, will start investing in bitcoin.

As for bitcoin itself, the entrepreneur believes that it will continue to grow at an average of 21% over the next two decades until the exchange rate breaks $21 million.

“I believe that bitcoin is the main partner for Strategy in terms of M&A. You can invest in the monetary foundation of the financial system of the future, which will grow at an average of 20% per year, with zero risk. Why do anything else?” asks Saylor.