Markets with Madison | The Bitcoin Revolution & Risks, with Michael Saylor (Part Two)

Madison Reidy: You are the biggest Bitcoin bull in the world — easily — right now, but you are a bull among a lot of bears out there still. It even took you 7–8 years to convince yourself that Bitcoin was something that you should convert your own balance sheet to, and obviously now you’re doing it. But how do you convince others — the Big Tech players out there — the giants: Meta, Google, Microsoft? How do you get them to flip like Larry [Fink]?

Michael Saylor: I think you have to make it easy and you have to give people gateway products that they can use. You have to give them Bitcoin with guard rails. You have to give them domestic Bitcoin — not wild Bitcoin.

Madison Reidy: What’s domestic Bitcoin versus wild Bitcoin? Is that like IBIT versus on the market in cold storage?

Michael Saylor: Raw Bitcoin is: You buy Bitcoin and you self-custody it, and the next is you buy Bitcoin with a custodian. But a simple, domesticated Bitcoin is IBIT, an FBTC. “I buy it through BlackRock,” and that’s a lot easier to handle. Again, we’re back to $900 trillion dollars of capital. Real estate investors — they want to buy something that looks like real estate. Bond investors want to buy something that looks like a bond. Preferred stock wants to buy something that looks like preferred stock. Some people want half the upside as a capital gain but they don’t want the downside, so they’ve got to buy something like a convert. Options traders — they want to trade options. When Bitcoin first came out, there were none of these things. And then for a while there’s an entire crypto economy that was created offshore, to much colorful drama and anxiety — the FTX’s of the world, etc. Those are unregulated crypto exchanges, and conventional, traditional, regulated investors can’t trade in that. It’s probably good they didn’t, because most of them failed. What we’re watching right now — since 2020 — is the creation of the institutional vehicles in order to invest in Bitcoin. I’ve got this saying — I say: Everybody’s against Bitcoin before they’re for it. We’re all against it until we’re for it — I was. Why are you against it? It’s like, Well why are you against electricity in 1880? I’m sure the first guy with fire, he scared a bunch of other tribesmen. What happens if you get too close to fire? It burns you. No one wants to get burned. The idiom is, “No one wants to get burned,” and yet without fire we’re not better than the apes. What happens when we play with electricity? We get shocked. Who wants to get shocked? It’s another idiom in the English language: “Shock is bad,” and yet without electricity 90% of humanity is dead.

Madison Reidy: I love that the siren just went off in the background as you were talking about the shock.

Michael Saylor: It happens. New technologies are scary. People thought that if you gotten an automobile and it went more than 10 miles an hour it would suck the oxygen out of the cabin and you would suffocate.

Madison Reidy: It can’t be better than a horse, right?

Michael Saylor: Yeah. If you look at the great revolutions in energy — fire was extracting energy from matter. Water was extracting energy from gravity. That’s the big idea: There’s energy in this field — if I put water there in a water clock and it comes down here, I can turn a wheel with it. Big idea. Wind — extracting energy from the atmosphere. The steam engine is: Let’s refine the entire idea and create an engine that takes that energy and spins something so that kids don’t have to do it. The steam engine eliminates slavery — it’s a pretty good idea. After that: Gsoline and internal combustion engines. What follows next? Nuclear reactors and electricity. Each of these energy revolutions, it was a shocking, scary paradigm shift. And for 30 years people rejected it and they had good reason because their city burned down and their house burned down and they got electrocuted and my airplane fell out of the sky. If you study James Watt, he spent his entire life trying to make the steam engine work — it’s not easy. Bitcoin is digital energy. Satoshi figured out a way to both store and channel energy through cyberspace without an intermediary — that’s a profound breakthrough, because that means I can put a billion dollars in cyberspace, I can move it 60 times a second, I can hold it for a million years, and I’m not facing counterparty risk to a bank, a country, a currency, a corporation, a culture, a commodity manufacturer. That’s a profound idea. We’re 15 years into the innovation. We’re only 4 years into the crazy years. And January 2024 was really the beginning of this era — maybe this is year zero of institutional adoption. When we have regulatory acceptance, bank acceptance, and accounting acceptance of Bitcoin — those three planks — that’s year one of adoption. And when do you have that? Well, you kind of got 75% regulatory acceptance since we got these ETFs — not all, most. When we have IBIT trading on the options market? That’s a big step forward. When you can do in-kind create and redemptions of the ETFs, you’ve got full regulatory acceptance of the asset. Then January 2025, fair value accounting becomes the norm, and now you’ve got accounting acceptance, and now you can mark up and mark down the asset just like Apple stock, or just like other assets. And then when you have too big to fail banks — when you have the BNY Mellons of the world or the JP Morgans of the world, the State Streets of the world — [when] they custody the Bitcoin or they buy and they sell and they hold the Bitcoin, you’ll have banking acceptance. And what are banks? Banks are just institutions that are engineered to be custodians of financial assets, so of course the greatest custodians of assets in the world need to custody this asset. So we’re right in the middle of that, and I think maybe 2025 you can call year one of the institutional era of digital capital — that thing which is Bitcoin.

Madison Reidy: I want to come to the banks because I’m very keen to talk to you about how you see banks as being key to unlocking that next phase, but just on this corporatization and even perhaps government adoption — what do you think is the fear other than just volatility? Is it fear of completely disrupting economic theory and monetary policy as we know it? Is that the fear that these corporates and governments hold?

Michael Saylor: I think the issue is not really with the asset class. I think any conservative or traditional investor, if you’re a high net worth individual, a family office, if you’re a successful corporation, if you’re an agency, a government, or any political entity, and I introduce new technology — say I come to the government and I say, I’ve got this electricity thing and you don’t have any electricity in your building! Well what they would do is go to their contractor — they’ve got some contractor that built the building — and they would say, Can you backfit or rewire our building for electricity? And the contractor said, No man, because my competitor just did it and they got shut down and bankrupted and another person did it and the building burned down so we’re not going to do it for a while — we’re afraid. In that case they wouldn’t just just embrace electricity immediately. The equivalent of the building contractor for Bitcoin would be the bank. So when your rich uncle gets asked about Bitcoin, he’s like, I called my broker, I called my bank JP Morgan or I called Standard Chartered or whatever and they won’t buy it for me yet — they say it’s too risky — I’m just going to hold off a bit. If you want to see the people with all the money and the power in the world embrace the asset, they will do it when their vendors support the asset. And that’s a rippling thing, because until you have the fair accounting, people can’t see how intelligent the idea is. The difference between fair accounting and indefinite intangible accounting for a big company is: Under fair accounting, you would know within 5 seconds whether you had a good quarter. Like, Oh we made $10 a share. Under indefinite intangible accounting, you would have to read 250 pages of documents and create your own proprietary models and spend somewhere between 1–10 hours to figure out how you feel about the quarter.

Madison Reidy: And even then it wouldn’t be that succinct — it wouldn’t necessarily give you a figure.

Michael Saylor: The 70-year old billionaire isn’t going to take 10 hours — they can’t even read the document. You could get all intellectual about this and say, Oh they’ve thought about it and they don’t like this and this and this — that’s not the case! It’s: If I call my broker and say, Buy $10 million dollars of this, and they say, Sure boss — click — and it’s done, then you start to see adoption. And when the company that adopted it announces they just made twice as much in their earnings for the quarter as they used to because of it — it’s like, Well then buy more of that stock! And when the mayor of Miami or the mayor of New York City or the governor of Texas says to his treasurer, I think we ought to have some Bitcoin. The treasurer says, Okay no problem I’ll let Citigroup or Bank of America or Morgan Stanley know and they’ll do it — click — and it’s done, then you’re adopting! But when the governor says the treasurer, Buy $10 billion, and the treasurer says, There’s not a single bank in the US that will sell that to us, he’s like, Well I guess we’re too early? It’s the same thing with you putting an elevator into your house, or electricity. Or how about running water? Why didn’t people put running water in their house in 1880? It’s because you had to be rich, and it was expensive, and 1 in 100 people had it, and the guy that’s building your house didn’t know how to do it — he’d never done it before. So these things get embraced as everybody in the society gets comfortable with the new technology, and generally it’s a 30-year generational shift. In year one, no one’s doing it — you see those pictures of New York City in 1905: no cars. 1915: everybody’s got a car. Well what did it take? It took this exponential set of processes and support for this to happen, and the same is going on with Bitcoin right now.

Madison Reidy: You mentioned yield. And Michael, every single time I do an episode on Bitcoin, there’s always somebody in the audience who says, Yeah but if I buy it then I earn no yield on it — it’s not a stock, I don’t get paid a dividend quarterly, it’s not a second property that I can rent out, it’s not money in the bank that I can earn a savings yield on. But I think from what you’re saying there: When Banks — whether at JP Morgan, City — start adopting it and allowing us to put our Bitcoin in the bank, what happens there? And how are banks key to unlocking that next phase?

Michael Saylor: Let’s say I give you 10 acres in Manhattan: there’s the land. You buy the land — you can buy the land in 1700, 1800, 1900, the year 2000 — is it worth something? Would you sell it to me for a penny if you owned it? No — it’s worth something. But there’s no yield! It’s raw land. There’s no yield. Well give it to me for a penny? Like, it’s Central Park but there’s no yield. So what’s the solution to the problem? You take the land and you have a company — a real estate developer — and the company builds a building on the land, or a parking lot, and then they rent it out and they generate the yield. Okay so do I like that or not? Well there’s counterparty risk: I’m buying a security, I’m buying a REIT, there’s a company, the company might build a building that falls down, they might get a deadbeat — the point is there’s risk. So you want a reliable company that you trust — too big to fail — to take that risk and give you the yield.

Madison Reidy: A bank?

Michael Saylor: Well no MicroStrategy is doing it right now! We just discussed BTC yield: MicroStrategy takes the Bitcoin and then we do something — we actually find a way to take out a loan, reinvest it, and generate a BTC yield. And the price you pay is you take a risk with a security called $MSTR. Banks do it a different way: a bank will take your asset — you have a billion dollars of something, a billion dollars of Apple stock — and they may loan it out to someone else and they may get paid a fee by the one person that wants to borrow it, and they might pass it on to you and they might not. Sometimes they do — they’ll definitely do it with your treasuries or with your cash, sometimes they don’t — depends on who you are. I think that banking is just the next logical step. But in terms of: How am I going to get a yield on Bitcoin? I’m going to get a yield when a thousand companies in in the Russell 2000 buy Bitcoin, operate their existing business, sweep their cash flows into Bitcoin, and do stuff with it — they develop business on top of it — that’s a way to get a yield. And I’ll get a yield if too big to fail banks that are well capitalized, they start to accept Bitcoin as collateral. And you don’t get a huge yield. If you think about the metaphor, it’s like: When you own Apple stock, oftentimes you don’t get a yield by loaning your Apple stock. But big corporations do — the big investors actually get paid a small interest rate when they loan their stock to people that want to short sell the stock. There is a market there for that, but more likely the next stage is: A big bank accepts your Bitcoin collateral alongside your Apple and your Microsoft stock and your treasury bills as collateral and they give you some advance ratio against it and then you can borrow it at SOFR plus some spread against it because it’s no worse collateral than Apple stock as a Block is. You’ll start to see the formation of credit markets around Bitcoin.

Madison Reidy: Well let’s consider that within Bitcoin’s characteristics. And you’ve already spoken about Satoshi. If there is more Bitcoins held with these third party custodians, what risk does that pose, having greater supply held by fewer, large institutions? Does that increase the risk of seizure and confiscation, like we’ve seen with gold? And is that not exactly what Bitcoiners don’t want to happen?

Michael Saylor: No I think it’s the opposite. I think that when the Bitcoin is held by a bunch of crypto-anarchists who aren’t regulated entities, who don’t acknowledge government, or don’t acknowledge taxes, or don’t acknowledge reporting requirements, that increases the risk of seizure. If a country in desperation — if China knew that there were underground crypto traders with billions of dollars of Bitcoin in their midst that didn’t pay taxes, the Chinese would probably try to shut that down. And that’s what they do. Normally the risk is greater when they’re unregulated private entities that are perceived to be holding the asset. When you have regulated public entities like BlackRock and Fidelity and JP Morgan and State Street Bank holding the asset, all the lawmakers and all the law enforcement arms — they’re invested in those entities. There’s no way that all the Senators and all the congressmen are going to seize the assets from Fidelity and BlackRock or Vanguard, because that’s where all their retirement money is invested. So the asset moving from private to public hands, and moving into regulated entities, it does a bunch of things: It decreases the volatility, it decreases the risk of loss. Who do you trust more as a custodian: FTX, or Fidelity or Vanguard or State Street? If you walked down the street and you said, Would you put all your family’s money in an offshore entity without a headquarters run by five dudes without an auditor, or would you put it with a bank that’s too big to fail in the US? At the end of the day, you have an OG crypto community that’s very hardcore about it, but if you look at where all the money is, 99.9% of the money is actually in the traditional economy. And in the war for the future of money, the war is going to be won with money. At the end of the day, Bitcoin is capital. Who’s going to actually decide who’s the winner or the loser? The people with the capital. Where is the capital? It’s at Vanguard, Fidelity, State Street, JP Morgan, Morgan Stanley — they’re all regulated entities of sorts. So when Bitcoin is held by those entities, it becomes regular and normal, and people would no more think about seizing that than they think about seizing a building in the middle of Manhattan, or seizing the S&P SPDR assets. Why would you do that? That’s just the capital that you built the country on.

Madison Reidy: Well if you ask, Why would you do that? If you consider the Great Depression, I mean people thought that their gold was safe in banks until the executive order of 1933, so we’re not entirely safe. I know that’s kind of a wild thing to suggest may happen again, but history does repeat itself, so people’s Bitcoin wouldn’t be entirely safe — it’s not fully safe there.

Michael Saylor: Yeah, people say that but mostly it’s paranoid crypto-anarchists that say that, okay? It’s a myth and a trope that goes on over and over again. First of all: He didn’t really seize the gold! People voluntarily turned in the gold. They didn’t go and kick in everybody’s door, arrest them, shoot them, and take their gold — that never happened. Second of all: He didn’t seize all the property. He didn’t go seize all the buildings owned by wealthy people in New York. He didn’t seize all the stock portfolios of wealthy people in New York. Gold was the monetary asset backing the dollar. The dollar was literally $20 to the ounce of gold. The problem was the country was on the gold standard, and Franklin Delano Roosevelt wanted to devalue the dollar. He wanted to devalue the currency — he wanted to print more dollars. They had to actually do something so they could devalue the dollar, and the way they did it was put that executive order in place, and then they revalued the dollar to $34 per ounce — a devaluation — and now you have to ask yourself the question: Is the United States on the Bitcoin standard?

Madison Reidy: Maybe we will be soon?

Michael Saylor: But the point really is: We’re not. It’s totally not a reasonable comparison. Franklin Delano Roosevelt didn’t seize every car and every watch and every piece of real estate and every piece of equity in the United States, because we weren’t on the equity standard or the property standard or the chicken in every pot standard or the grassy lawn standard or the lawnmower standard — we were on the gold standard, and he wanted to devalue on the gold standard. Today we’re not on the gold standard, we’re not on the Bitcoin standard, the US government has no problem printing money — they can print as much as they want. In fact, every government on Earth — all of them — they’re either on their own standard, or they’re on the dollar standard. So in this particular case, I don’t think we have to worry about Bitcoin held in custody being seized by the government any more than you have to worry about your Apple stock being seized by the government, because the government doesn’t need to devalue the dollar against Apple stock to print more dollars either. It’s not really an issue. Often times, people have these inflammatory tropes or inflammatory memes that they use and it’s like, “I say that because I want you to give me your money.” Like, If you don’t trust the bank then you’ll buy my hardware wallet. If you don’t trust this government you’ll move to my country and you’ll buy a passport from me. If you don’t trust that company you’ll sell that stock and buy the other stock. So there’s a lot of this kind of of messaging and ideas that are very inflammatory and they’re meant to actually stampede people into some behavior which is financially beneficial [for them]. Like, You can’t make your own investment decisions! Investing is very hard — you should give me your money. I’ll make the decisions for you. I’m going to charge you a 2% fee and 20% of the upside. It’s like, What should I do about hyperinflation? Well you need to invest in a diversified portfolio of global alternative assets across 152 different asset classes and revalue every quarter. Oh I can’t do that! That’s okay — give me your money girly, I’ll do it for you. That’s the kind of fear-mongering to get you to give me your money. And I use it to sell you a gun, to sell you a hardware wallet, to sell you an account, to sell you a financial advisor, to sell you an insurance policy, to sell you a fill in the blank — whatever it might be — and ultimately I think that there’s just a lot of fear that’s unnecessary. The bigger idea is: Bitcoin is digital capital — it’s a million times smarter, a million times faster, a million times stronger, a million times more elegant than analog capital, physical capital, and financial capital, and it’s simply a technology transformation. It’s like, Don’t take 10,000 records and haul them around with you, and 10,000 books whenever you trave — take the iPad with 10,000 books on it and take the iPhone with 10 million songs on it when you travel. It’s like, Blah blah blah but the phone will eat me and it’s listening to me and it will steal my identity and kill me — it’s just a computer with some digital files on it. That’s the digital transformation of capital, and that’s what Bitcoin represents.

Madison Reidy: So on digital money then, tell me if this is a legitimate fear or not: quantum computing. It apparently is going to have the ability to solve multiple more complex mathematical equations all at once. Does that pose a legitimate risk to the Bitcoin network? Or are you confident that developers will come up with some kind of quantum resistance?

Michael Saylor: No, it’s just another fear-mongering, end of the world scam narrative that people use to sell stuff. And in this case — quantum computing — the fear is used to sell the next altcoin: “I have a quantum-resistant token and quantum computing is going to destroy your token so give me your billion dollars and give it to me and make me rich because maybe an asteroid will hit the Earth. I have an asteroid bunker — give me your billion dollars and I will give you my asteroid bunker. You’re gonna die of pneumonia — give me your money and I’m going to give you a vaccine. It’s just fear-mongering. Quantum computing — if you take the general theme — it’s like, Oh computers are going to get better over time, and as they get better maybe they’ll get really good and they’ll be able to hack systems. And what’s your response? Well I guess I just shouldn’t invest in Apple or Google or Facebook or I shouldn’t have money in a bank and I shouldn’t use a computer because computers might get hacked — huh? Give up everything in your life that has a computer in it, including the podcast that you’re running right now — give it all up because one day quantum computers run by Dr. Evil will hack the thing. Well I mean the answer is: It’s silly. Of course computers will get better, and as the computers get better, we will adopt the better computers to defend the network. The Bitcoin network used to generate hashes a 1,000 joules per terahash — it took a 1,000 joules to generate a terahash, and then it was 500, and then it was 100, and then it was 50, and then it was 30, then there’s 15, and the next will be 5, and then it’ll be 1. It doesn’t take a rocket scientist to figure out that computers get better, semiconductors get better, the network gets more secure. “But what if someone invents something that’s better than the better thing?” Well we spend $10 billion a year to keep upgrading our thing, and you think that Dr. Evil — Mini-Me in the basement with no money — is going to come up with a quantum computer that’s going to be better than the $10 billion dollars we spend every year for the last decade? So yeah if a teenage kid with 50 bucks and a rubber band comes up with something better than a $100 billion dollars of semiconductor investment, then in theory they could hack our network. But why wouldn’t you just hack X and declare nuclear war on someone and short the market and make $10 billion dollars by hacking the president’s account?

Madison Reidy: I mean that would be illegal, but —

Michael Saylor: It’s all illegal, but my point is: It’s a billion times easier to just hack the bank or hack the communication network and make money than it is to hack Bitcoin. Bitcoin is the most cyber-resistant, the most powerful digital network on Earth — it’s the hardest thing to hack. So when someone pitches quantum computing, it’s normally a degenerate 20-something crypto trader that wants you to buy his yo-yo quantum coin and make him rich because he’s got a yo-yo quantum algorithm, and I just shake my head because I think, Who could be so stupid to fall for this kind of alarmism? It’s ridiculous and a waste of time. But having said it all, the generic, statesman-like answer is: Technology will advance. Bitcoin is the best, most profitable use of computer power — in order to protect money. If technology advances, you’ve got to believe that the people most incentivized to use the technology will be the one with the trillions of dollars of money to protect. It will go there first: All those advances will be first implemented into the Bitcoin Network to defend the network. They won’t be used by teenage boys to attack the network. By the way, teenage boys would rather hack Twitter — it’d be cooler. It’s been done. It’s been done again. It’s very simple to do: it’s a billion times easier to do, to hack these communication networks. That’s where your threat will come.

Madison Reidy: To sum this all up — and I would love you to give a non-statesman-like answer to this one, Michael — can you give us your Bitcoin superiority complex about the asset? And can you even [touch on] some of what you spoke about earlier about governments printing money? And if you consider the economic cycle that we’ve been through over the past four years while you’ve been accumulating Bitcoin like crazy, how has that — in your mind — increased its superiority?

Michael Saylor: A short summary: Why is Bitcoin better? First of all, if I had a hundred rich families and they lived all over the world and they didn’t trust a government and they didn’t trust a bank and they didn’t trust a corporation and they had a lot of money and they wanted to keep their money for a thousand years — if God came down from heaven above and said, Hey I’ll run the God bank, issue 21 million God coins, and I will make sure that no one can steal your God coins, you can buy in however you want and you can trade telepathically with each other and I’ll do this for free — they’d probably accept that. The history of the human race is people looking to heaven to solve their problems — in every religion. In the absence of God coin and God coming down to do this, the next best thing would be an intelligent engineer that creates a crypto network that combines semiconductor technology, public-private key encryption, and the Internet — TCP/IP. That’s a crypto coin. So now we create a crypto coin, and the question is: Who’s going to run the software? Because nobody trusts anybody, and maybe I trust you and you trust me, but I don’t trust your idiot great-grandson — you haven’t even had him yet. I mean, how could we trust your great-great-grandchild? Okay, so we’re all going to run the software, and we’re going to run it on thousands and hundreds of thousands of nodes, and anybody whose software cheats gets kicked off the network. Okay, that’s the idea of Bitcoin: It’s basically a crypto-asset network. I figured that out — now what kind of monetary policy do I want? I want 21 million, hard cap forever, never can make anymore, I want a scarcity, nobody can make anymore. Okay, that’s good. Now the question is: Which network is going to win? We launched Bitcoin as the 40th try, and the first one with the right monetary policy, the right cryptography, and an equitable launch — Satoshi launches it, walks away forever, disclaims beneficial ownership. It’s an Immaculate Conception. What if somebody else launched another crypto-network with an Immaculate Conception? There’s been 5 million cryptos launched — most of them are not immaculately conceived. Some of them still have the founding teams that are getting rich off of them. When there’s a founding team getting rich off of them with a jet and with an office or with a mansion, it doesn’t look immaculate. There’s no Satoshi in a swimming pool flying his jet around as a billionaire.

Madison Reidy: Maybe he is and we don’t know? We don’t know who he, she, they are?

Michael Saylor: The point is: We absolutely know there isn’t, because the coins have not moved in 15 years and we can see them. So you’ve got all these smart families and they’re staring at the crypto bank, and the question is: Which network is the best one? We sort through it and we try Bitcoin and it works for a while and then we trust it, more money gets onto it, and for a while we’re not sure, and then in 2020 some crazy entrepreneur buys $250 million dollars of it for a public company. And that’s the first time in 10 years anybody ever bought a quarter-billion dollars on that network and people are like, Oh my God! And then that same person buys another $9.7 billion dollars of it.

Madison Reidy: He must be crazy — my God!

Michael Saylor: In that time where there’s one company — MicroStrategy — buying $10 billion dollars of that asset, not a single person ever publicly spent 250 million on any other crypto-asset, ever. Of the 5 million [crypto coins], nobody even put in the first $250 million. Nobody put in $100 million. Go find it — you won’t find it. So now you have an interesting issue, which is: Why is Bitcoin the winner? It’s because all the smart money in the world decided that’s the winner. Did it have to be? It’s like, Why do we speak English? Because all the rich, powerful people decided on English. Could it have been a different language? It could have been French — Napoleon wanted it to be French. But it wasn’t French — it was English. Why do we use base 10 math? Because all of the rich, powerful engineering companies use it. Is it the only form of math? No, there’s base 2, base 8, base 16.

Madison Reidy: Same with measurement standards.

Michael Saylor: Yeah, we have the big joke about the metric system: We’re still trying to work through that protocol. So Bitcoin is the protocol that the rich, powerful, smart people chose. You can fork it and create your own, and you will have to find stupid, poor people to buy yours. But why would I actually want to put all my money in the network with the stupid, poor people when I’ve already got the network with the smart, rich people? And the result of that is: Bitcoin is the most powerful crypto network in the world, and you can measure it via computer power: 700 exahash — that’s $40 billion dollars of special purpose semiconductors that generate more hashes than all the computer power of Microsoft, all the computer power of Amazon, all the computer power of Meta. If they all ganged up on it, they still can’t get to 700 exahash. It’s the most powerful computer network. Then it has 18 gigawatts of electric power — that’s the most electrically powerful network. 18 gigawatts is more power than the US Navy uses to run all the aircraft carriers and the destroyers and the battleships — we conquered the world with less than 18 Gigawatts of power. It’s 18 full-on nuclear reactors running full-on, spread everywhere in the world. Okay, how does that compare to the second best? The second best has like 0.1% that much power. How about the hash rate? 1%, maybe. And then $800 billion of actual capital. MicroStrategy spent $10 billion to get 1.2% — work it out in your head, look at the 4-year simple moving average of Bitcoin, multiply by the number of Bitcoin, look at the trading volume, look at real people — thousands of institutional investors with real money at risk, the Bitcoin miners, the BlackRocks, etc. $70 billion, $60 billion dollars put into just the ETFs alone — real money. $800 billion in capital back the network. So what’s the second best? The second best doesn’t even have $8 [billion]. 99% of the real money went into the Bitcoin Network. Everything else you read about in crypto, all the other crypto-assets that might be a store of value — I’m not counting the stablecoins because they’re just dollar-pegged — everything else probably doesn’t even have $8 billion. It might have a few billion dollars. So it’s 99-99.9% dominant. And then you go to the political power: there’s 420 million crypto people that love crypto, but what’s the reserve asset of crypto? It’s Bitcoin. 420 million voters, and then 200 million people that hold an instrument backed by Bitcoin. So what’s the source of the network? Political power, electrical power, digital computer power, economic power — that’s the source of power of the network. It’s like, Why should I buy that? Once you understand that it’s the dominant crypto network, now the issue is: Why should I buy Bitcoin instead of gold? The gold supply is going to double every 30 years, and you can’t teleport gold 60 times a second, and the AI is not going to want the gold, and you can’t put gold on your iPhone — gold’s not digital. If you have a $100 million dollars and you put it into gold and you wait a hundred years you’ll have $12 million worth of gold — that’s why you don’t want gold. If you have $100 million of Bitcoin and you hold it 100 years, you’ll still have $100 million worth of Bitcoin. Gold is the best of the commodities, but it’s awful because it’s got a 2% inflation rate. What’s the difference between 2% inflation rate and 0% inflation rate? It’s the difference between living 30 years and living forever. One is mortal. Here’s your choice: take the orange pill, you live forever — take the gold pill, you’re half dead in 30 years, you’re going to live to 75–80 and you’re dead. This is a mortal life, this is immortal life. That’s the difference between 0% and 2%. Gold is the greatest of the commodities — every other commodity inflates at 10% a year, 20% a year, 50% a year. They’re awful. Commodities are awful stores of value. But what are they good at? Commodities are ethically sound. That means they’re an asset without an issuer. You can promote gold or a chicken in every pot or land or silver or you can promote soybeans or you can tell people to keep kerosene behind their house — those are commodities. You cannot promote a security. A security is an asset with an issuer. If a senator says, God bless Apple, she’s promoting a security. If a senator says, God bless Bitcoin, they’re promoting a commodity. It’s like promoting bluegrass music. It’s like promoting fasting. It’s simple a cultural or a technical idea. So what do you want as your long-term store of value? You want something economically sound — that means absolutely zero inflation rate forever, and nobody can screw with that. You want something ethically sound — that means an asset without an issuer. Prometheus disappeared — you own fire. Electricity — you can use it. The English language — you can use it. Math — you can use it. Bitcoin — you can use it. There’s no company with the copyright that charges you a royalty. It needs to be ethically sound — it needs to be a commodity. And finally it needs to be technically sound — good engineering. A building is sort of economically sound — not as good as Bitcoin, because you’ve got property taxes and entropy. And a share of Magnificent Seven — it’s kind of economically sound, but it’s a security. And if the Chinese decide to seize Apple’s assets or if the US seizes a Chinese company’s assets, you’ve got all sorts of political risk. But Bitcoin is both the economically sound asset and it’s the ethically sound asset, but it’s a big tech digital network — it means that I can move a $100 billion dollars a million times a second. So the big idea is: I can give a capital asset to 8 billion people on their mobile phone, and 10 million computers can trade it a million times an hour across every jurisdiction. If you want to give music to 8 billion people, you need digital music — you can’t do it with records and 8-track tapes. If you want to give digital communications, you want to give education to 8 billion people — you need digital education. You need to give them lectures for free for the cost of electronics. And if you want to give wealth to 8 billion people — you need digital capital. You need to put your wealth on your iPhone and you need to know that it will last forever. I just ask anybody. I ask you: What do you own in your life that you think your family will still have intact that will be valuable 300 years from now? What would that be? There’s no conventional thing, there’s no company that’s going to last 300 years. They might not live in New Zealand 300 years from now. I could give you 10,000 acres in Auckland, and the issue is: Can you take it with you when the government changes and they decide to seize the assets of people with blue eyes? Because it happens, if you look at the history of the 20th century. What country didn’t seize the assets of somebody over a hundred years? You had one country — the United States — that won every war, and yet that country’s currency lost 99.9% of its value against scarce assets. That’s the winner! The winner gives you 1/10th of a percent of your wealth — the rest is all just anxiety-inducing counterparty risk.

Madison Reidy: Well I’ll tell you what does live on is a legacy. And you mentioned mortality, but sadly neither you nor I are going to live forever. It’s a bit of a personal question — and a cynic may say that you do this because you have something to financially gain — but I feel like after this conversation, the effort that you put in, the generosity with your time: Why do you bother educating everyone on this and talking about Bitcoin?

Michael Saylor: I mean if you take a guy like Jack Dorsey and you ask him about Bitcoin he’ll say, I didn’t do it for the money — I did it to fix the money. The legacy is the English language, electricity, fire, fission, fusion, engineering, telecommunications, mathematics, all of these things. What’s the legacy here? It’s a monetary protocol which is true. The history of the human race — if you look at it — it’s fraught with people dying from dirty water, dirty air, dirty clothes, dirty environments, dirty everything, dirty blood. And overcoming that with electricity and clean water — the joke is: A poor person sits down at a table and they put a glass of tap water in front of them, and that’s what you drink if you have no money. If you have money you buy a Coke Zero, or if you have a lot of money you buy a $1,000 bottle of wine. But the poor person drinks the glass of water. I just finished reading again the Story of Civilization by Will Durant — the books are all over there. It’s 11 volumes, it’s 15,000 Pages.

Madison Reidy: You read all 11 volumes?

Michael Saylor: From the beginning to the end. And there a thousands stories of famous people that died of gout because they didn’t drink water — they drank wine because the water had bacteria in it and cholera and you died of infection if you drank the water. If you were the King of England you couldn’t get clean water. Then the rest of them died because they walked past the swamp, got bit by a mosquito, and they didn’t have any cure for malaria — they had no modern medicine. Or they died of tuberculosis because there’s no penicillin, or there’s no antibiotics to treat it. Today it’s like, What’s your legacy? It’s like: Clean the air, clean the water. What kills the patient? It’s dirty food, dirty water, dirty air. How did we kill George Washington? We bled him to death. We bled him to death — that’s why he died. What’s killing every corporation on Earth? It’s dirty money. Dirty capital, to be precise. The asset that every every publicly traded company — 50,000 companies — use is sovereign debt. Sovereign debt yields 3% — after tax, at best 2%. The cost of capital is 13% — it’s a negative real yield of -10%. It means that if you hold a billion dollars, you lose $100 million a year holding the money. It’s like forcible chemotherapy for your healthy 14-year-old teenager. Or it’s like strapping the 12-year-old kid down and taking two pints of their blood every day and sending them off to track practice.

Madison Reidy: It’s a very morbid metaphor, but I’m picking up what you’re putting down.

Michael Saylor: The point is: It’s medieval, but at the end of the day, that’s the scourge — the burden of humanity — that they’ve been hauling for thousands of years. When you ask: What is human progress? What elevated the civilization? It’s technology. A lot of painters, they went blind because a middle class family can afford one candle. Look around you: each one of those is one middle class family of light. Clean light, clean water, heat, air conditioning, electricity, energy, clean blood, antibiotics, a language you can speak — all of these things define modernity. So what is my agenda? My agenda agenda is: Fix the money. Because the 50,000 companies have a life expectancy of 10 years. You know why you die in 10 years when you could live forever? It’s because you have toxic chemicals in your vein. I can kill a healthy person if I inject poison into their vein. I can kill a healthy person by sucking the blood out of their body. If the money is broken, all 8 billion people have toxic capital. All 300 million companies have toxic capital. Every institution, every nonprofit, every government, every city, every state — everything you wish to accomplish, you need in part economic energy. You need energy to accomplish it. What is electricity? It’s clean, silent energy. It’s clean, silent energy — take away the electricity, look at everything around you: we’re in the dark, this podcast is not happening. Clean, silent energy created cities. It created Manhattan. It created the modern world. What is Bitcoin? It’s clean, silent, programmable, immortal money. What’s it worth? It’s worth half of everything. It’s not worth the other half — it won’t fly you and it won’t cure your cancer and it won’t make you happy and it won’t solve your mental issue and it won’t make your children love you — it’s not all that. And it won’t stop a bullet. The world’s full of stuff: materials and vehicles and technologies and medicines that do things. What is it? It’s economic energy. It’s the other half. It’ll solve half the world’s problem. I give you a battery that doesn’t lose its power. I wear this watch — I don’t have to take it off. You get an Apple Watch, you’ve got to recharge it every night. What about a battery that lasts forever? That’s the promise of nuclear fusion: give me a power source I could put in my pocket that will last forever — now imagine how much better the world is. Bitcoin is digital energy. If you want your company, your family, your endowment to last forever, you have to capitalize it with an asset which doesn’t degrade at the rate of — the rate of the dollar is 7% a year for 100 years. When you lose 7% of your energy for 100 years, you lose 99.9% of whatever you are over a 100 years. And the only alternative is you’ve got to be an investor, so now you juggle razor blades. It’s like, Oh I’ve got to go build a warehouse and it’ll last for 32 years and find a tenant who’s not going to pay the rent and then I get taxed on it and then I got to go and talk to the politician who created the tax and I got to run for office — and your world becomes just one of misery because you’re attempting to not lose your economic energy. I see Bitcoin as a profound step forward for the human race, because for the first time, economics crosses from being an art to being a science. For the first time you have perfect money or a perfect capital asset — non defective. See the steel behind you? I have steel vaults. Run into it.

Madison Reidy: I saw that!

Michael Saylor: They weigh 2 tons.

Madison Reidy: I feel like I’m at a gold vault or something, or a vault in a bank.

Michael Saylor: I happen to like metal. What is it? It’s material energy. You ever seen a steel refinery? You put a lot of energy in the front — a lot of energy — and out comes steel. And what’s the significance? It’ll stop a bullet. What else will it do? You can create a skyscraper with it. If you build a 100-story building with steel, it will withstand a storm, it will withstand gravity, you can stand on the 99th floor, the floor will not crash, you will not die — we can build a civilization based on it. What did we do? We built a civilization on steel — the highest form of material energy the human race could channel. Take the steel away — I’m going to give you wood. Go to Nice, go to Europe, look at the kind of buildings they built before steel — they’re all five stories max. You take away steel and electricity — those are two big ones — take away the electricity, you have no elevator. Take away steel, the building falls over. Clean power, clean energy, almost ethereal energy — you can’t even see it — clean, invisible energy, and then almost indestructible material energy: Put the two together and you build the modern world. The problem as I see it in the economic world is: We never had economic steel. We’ve had we’ve had the equivalent of economic balsa wood. Economic clay. We built clay houses and brick houses and straw houses and we built houses on swamps. And the Bible says: Build your house on a rock, not sinking sand. Build on a solid granite foundation. What is Manhattan? It is 100-story steel buildings powered by electricity on schist — the closest to granite you can find — that’s the recipe for civilization. That’s what Bitcoin is. I’m a single guy, I have no children — when I’m gone, I’m gone. Just like Satoshi left a million Bitcoin to the universe, so I’m leaving whatever I’ve got to the civilization. But it occurs to me that 8 billion people with crypto steel or economic steel can build something much grander in the 21st century than all the 20th century economists struggling with clay and cotton candy.

Madison Reidy: Thank you so much for your time, I really enjoyed this. Michael, thank you.

Michael Saylor: My pleasure.