Compiled edited by 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
Air Date: December 9, 2024
Background Information
In this podcast, MicroStrategy founder Michael Saylor and Dave Portnoy discuss the investment value of Bitcoin. Saylor uses a sports metaphor to emphasize that Bitcoin is a fair game that gives everyone the opportunity to participate and profit. He believes that Bitcoin is not only a tool for wealth protection, but also an important asset for achieving economic empowerment.
Saylor also proposed the concept of Cyber New York, comparing Bitcoin to the historical opportunity to buy Manhattan real estate, emphasizing its importance in the digital economy. He suggested that investors rationally allocate assets, including investing part of their funds in Bitcoin, and reiterated the necessity of long-term holding.
Finally, Saylor responded to Elon Musk’s idea of mining gold in outer space, arguing that there are more valuable resources waiting to be discovered in outer space. The discussion provided the audience with great insights into the future role of Bitcoin.
Bitcoin games and investments
Dave: We have a special guest today, Michael Saylor, you just bought 400,000 bitcoins with your company, so Im wondering what I misunderstood about bitcoin?
Michael: I think we can talk about this using a sports metaphor. First of all, there are some games you cant play, 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 other games you can play. You go to a casino and play a game, but you know that the game is stacked against you. There are some games where the casino wins and you lose. Satoshi Nakamoto created a game that favors individuals. Is he a real person? Satoshi Nakamoto is a real person who is no longer with us. Do you know who that person is? We are all Satoshi Nakamoto, now, Dave.
The most important thing is that, like Prometheus gave us fire, Satoshi gave us a game that we can all win. Bitcoin is that game. You know, there are things you dont want to do on a network that can censor what you say and freeze your account. Bitcoin is a currency network that doesnt censor the money you send and doesnt freeze your account. Its designed in such a way that, at the margin, you win the game over time. I think if you had a basketball team with LeBron James, Michael Jordan, and their digital versions, they could play forever and you could go out there and play with them. When they score 100 points and you score 2, you all get rich together and you all win together. Thats what Bitcoin is like. Everyone can participate. Everywhere I go, theres a fan base. In the process, you not only win the game, you get rich in the process of winning.
Motivations for investing in Bitcoin
Dave: Thats an interesting description, and we talked about it a little bit outside. I always hear Bitcoin supporters say that they buy Bitcoin because they think its good for humanity, its not just about making money, its for the benefit of society. Im very clear, Im on the side of making money. By the way, Im sure that ultimately Ill see your point. I think Bitcoin has become too big to fail. Too many people are involved in it, and thats why its so interesting to me. So when youre so heavily invested, I think you said you own almost the most Bitcoin in the world after Blackstone. Can you give a percentage, as a good investment, does that make sense financially compared to saving humanity? How do you divide it? Do you feel that this is the best investment I think, or is it a moral decision?
Michael: I think its both. I think we have to play the game of life, and half of life is economics. So you have to play the economic game whether you like it or not. You can put your money in a bank in Lebanon, using the Lebanese currency. The government inflates, the bank freezes your assets, and you lose. In the game of life, you can put your money in any asset in Africa, or you can put your money in Bitcoin. So the real appeal of Bitcoin is that everybody in the world doesnt want to put their money in a bank in an African currency that youve never heard of. But Bitcoin gives you control over your own money. Is that egalitarian? Is that humanitarian? Of course it is. Is it economically smart? The two are connected. If you want to achieve anything in life, you have to have economic empowerment. To have economic empowerment, you have to be on a network that wont freeze you or censor you, and you have to have an asset that no one else can devalue, no company can screw up, no country can screw up, and thats what Bitcoin represents.
The Cyber Newyork 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 Newyork, which is buying real estate on the Internet. If you could buy real estate in New York in the 1600s and then sell it, how valuable would it be? I find it interesting that not everyone can easily buy Cyber New York, but this is actually what we are talking about when we talk about Bitcoin. If you would like, can you explain this analogy a little more?
(Note from Shenchao: Cyber Newyork is a metaphor used to describe the concept of owning scarce assets in the digital world (especially the Internet). This analogy mainly compares digital assets such as Bitcoin with investment opportunities in New York real estate in history, and is used to emphasize 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 importance of digital assets such as Bitcoin.)
Michael: I think in some places, land values are going to go through the roof. If we stand on land in Miami right now, it used to be $10,000 an acre, and now its $10 to $20 million an acre. Thats gone up 1,000 times in less than 100 years. Same thing in the Hamptons, same thing in Manhattan. I grew up in Fairborn, Ohio. Land in Fairborn is not going up 1,000 times. Land in the Everglades or land in the Rockies is not going up.
So if I gave you the opportunity to buy all the land in Palm Beach, the Hamptons, or Manhattan over the last 100 years, that would be a good deal. In fact, in 1650, you could have bought land in Manhattan every ten years and always paid more than the person selling it to you paid, and it would still have been a good investment. The only thing that would have slowed you down a little bit would have been the property taxes. But assume there were no property taxes and you would have bought and held forever.
Now, if you are African, South American, Russian, or Chinese, you cant easily buy land in the U.S. You dont want to own land in Africa, just like you dont want to own land in the middle of the Rockies, it wont appreciate in value.
Bitcoin is like the Manhattan of the Internet, with a total of 21 million. All the rich people in the world will want to invest some of their wealth in it. So how much will they invest? If you live in Lebanon, Iraq or Syria now, your wealth held in Bitcoin is safe, while your deposits in local banks may be at risk. This happens all the time if you need to leave a country or escape a crisis. In this case, you can keep your wealth held in Bitcoin, but you may lose land, buildings, local currency or bank deposits. Therefore, Bitcoin actually represents the most powerful and greatest city in cyberspace, and will become the center of the digital economy in the future.
The interesting thing is that when you bought a block or a few blocks of Manhattan in the 19th century, you probably had no idea what people were going to do with the land, but you could imagine that smart people would flock to New York, eager to own this land to build on, and that you could get rich just by owning it.
The decision-making and psychological process of Bitcoin investment
Dave: You are actually Michael Jordan, you are the Jordan in this analogy. If you buy Bitcoin, MicroStrategy, you are constantly buying, you never stop buying.
Michael: I would buy it for $1 million, and I would probably buy it at a rate of $1 billion a day, $1 million a day, because that’s what I do. Like you know, Manhattan real estate in 1930 was really expensive, it was much more expensive in 1930 than it was in 1830. I said, “Well, you know, 100 years from now, we’re still buying it, and we’re going to pay more. The only question is, can you hold it for that period of time?”
Dave: Since you’ve really been involved in Bitcoin, especially during the Covid pandemic in 2020, have you ever had doubts, like “I made the wrong choice”? Or have you always 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 wondered: Should I move to Miami? Should I enter the stock market? Should I buy Bitcoin? What should I do? I spent about six months trying to figure these questions out, and finally discovered Bitcoin. Although investing in Bitcoin is not without risk, other options are more risky by comparison, and may lead to a quick death or a slow death. So, over the next four years, I decided to take some new actions to gradually reduce risk. The government recognized Bitcoin as a commodity, which eliminated one risk factor. Then, the introduction of ETFs eliminated a second risk factor. Later, the support of the Trump administration brought a third risk factor reduction. Then MicroStrategy bought $250 million of Bitcoin at $11,800, but then its price fell 20%. In the next week and a half, we lost $40 million.
Dave: What were you doing when this happened? How did you do it?
Michael: I was thinking about how to buy the next 250 million. Because I was already involved. Once you commit, you cant back out. I decided I was going to win, and I knew if I didnt get in on the game, I was going to lose. So, that was a really difficult time. But then Bitcoin rebounded and broke through its all-time high again. From August 2020 to about a month ago, we raised $10 billion because everyone supported us, we had a strategy, and we were committed to it. Then in the red tide in November, we raised $15 billion in four and a half weeks to buy more Bitcoin.
So now we have $25 billion invested in this network. But you know, decide what youre going to do, focus, commit, but youre going to get hit in the face, youre going to have some setbacks along the way.
Thoughts on Bitcoin investment advice and other investment opportunities
Dave: Let’s say you are my financial advisor. If my net worth is $100 million, what percentage should I put in Bitcoin? I own 14 Bitcoins, which is only a small part of my assets and I won’t need this money in ten years.
Michael: I would recommend you split your money into several parts and invest in scarce and popular real estate where you want to live. You will like the place. Then, I would recommend you put some of your money into a large-cap technology stock portfolio, perhaps the Great Seven (Deep Tide Note: Usually refers to the seven largest technology companies in the world by market value, including: Apple, Microsoft, Amazon, Google, Facebook, Tesla, NVIDIA) or other stocks you like. Next, you can take out a part of your money, maybe between 10%, 20%, or 30%, to buy digital assets, such as Bitcoin. About 2% can be regarded as an insurance policy, you will not get rich because of flood insurance on your home; 10% is a participants proportion, and 20% or 30% may bring considerable returns. Of course, if you are a strong supporter of Bitcoin, you can also increase the proportion to 50% or 75%. But in that case, you are really focusing on Bitcoin investment.
Dave: I get asked this question a lot, and I ask a lot of people. Do you only invest in Bitcoin? What do you think about other cryptocurrencies? We know what you think about Bitcoin, but what do you think about other coins and everything thats going on?
Michael: My view is that Bitcoin is like a protocol asset with no issuer. As for other investments, I think that building might be worth buying, that Picasso might be priced right, and it might be a good idea to buy some Nvidia shares. These are countless investment opportunities, and you have to be an expert. If you have the expertise to participate in these investments, then you should participate. I dont have any negative views on these investments.
But I want to emphasize that if you just want to hold a portion of your money for a long time and dont want to worry about the future, then what you need is a global dominant economic agreement or capital agreement, which is Bitcoin. Therefore, I think Bitcoin is like a way of saving. I just want to save my money without external interference, and all other investments are games that you play as an investor, and you need to make your own decisions.
MicroStrategy Roles
Dave: MicroStrategy is a Bitcoin company. Do you guys look at Bitcoin charts every day? What is a day like at MicroStrategy?
Michael: There are a lot of investors in the world who cant buy Bitcoin. For example, in the UK, they are not allowed to invest in Bitcoin in retirement accounts. So they need to buy shares in the company. Sometimes people buy our shares because they have to invest in a certain company and cant buy Bitcoin directly. So some people choose to buy our shares for this reason.
Then there are investors who are bond investors who want the upside potential but dont want the downside risk. So how do you get the upside potential of Bitcoin but also have downside protection? I need a bond issued by a company that is perfectly correlated to Bitcoin. If Bitcoin crashes 90% tomorrow, the bond will still pay interest. But if you buy $100 million of Bitcoin, you will lose $90 million when it crashes. So, some people want to enjoy the upside potential while getting downside protection.
What MicroStrategy does is offer bonds and stocks. In addition, our stocks are twice as volatile as Bitcoin and generally outperform Bitcoin. There are also a lot of hot money speculators and options traders who want 10x leverage. They may not want to buy Bitcoin directly or want to sell a call option with a 30-day interest payment of 200%. So a lot of traders have their own strategies, and there is no publicly traded company on a regulated exchange in the United States that can implement these strategies.
So MicroStrategy becomes the bridge between the traditional capital markets and the global offshore crypto economy. We provide people with this high volatility asset, whether its 2x, 0.5x or 10x leverage, which is an interesting business.
What do you think of Elon Musk?
Dave: Last question, will Elon Musk reach outer space and mine gold from outer space and then have it come down on Earth in abundance, or is this just bullshit?
Michael: He will reach outer space. But when he gets there, he wont mine gold because gold wont be that valuable, and there will be a lot more valuable things to find in outer space.
Tips for investing your time
Dave: When you mention 100 years, is 10 years long enough 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. The current 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 a four-month, four-week, or four-day gain, you may feel anxious. If you have four years, you will be fine. If you can hold on for 10 years, you will look like a genius. So my advice is, join the ranks of Bitcoin.
Moderator Summary
Dave: Michael has 400,000 Bitcoins, and I think that was a little bit shocking to me. Ive never met anyone like that. He mentioned that he really likes the analogy of Cyber Real Estate, where you can buy real estate and it always goes up in value, and not everyone can buy real estate in these premium areas, but everyone can buy Bitcoin. I like that idea, it resonates with me, it really makes sense. Supporting a sports team, thats exactly how I think about Bitcoin. I believe in Bitcoin, not because I believe in all the different moral visions or egalitarianism, I dont believe in that. I believe that people are going to get rich. Thats what hes talking about: support your team. Youre going to have people like Michael who are constantly buying Bitcoin. Also, there are other stocks, he mentioned like the SP 500 is also true to some extent. If you buy stocks, they always go up, thats the first rule of traders.
