Michael Saylor SPEAKS on Bitcoin, Ethereum, Cardano, & Altcoin Market!
if you were to say well do i want to invest in a technology solana and cardano and ether competing with each other in a technology realm but in essence they're private equities with teams and it's like private venture capital i think that the industry would benefit if the sec and the cftc put out clear guidance as to how you qualify as a digital commodity most of them are non-compliant right now but uber and airbnb were non-compliant too right like airbnb is like illegal in half the places they operate and i think what's important is to give people a strategy to save their money when i was growing up my family wasn't wealthy what we had was a savings account and the savings account yielded six percent interest and now savings account don't yield any interest and so if you're taking your paycheck and your savings every single month and you're saving them in currency you're probably going to see your life savings dwindle away so i'm an advocate of bitcoin uh primarily because people need a technology to save their life's work back everybody to altcoin daily you are going to love our current interview guest the ceo and founder of microstrategy the new bitcoin jesus this man is a blue chip in the space michael saylor how are you doing today i'm awesome thank you thanks for having me thank you so much for coming on let's let's jump right into it half of these questions are sourced from our audience uh these are things people want to know uh but first question let's just start off big picture michael i want to be sold on bitcoin give us your best pitch as to why someone with no bitcoin should buy some bitcoin today i think we're living in a very uncertain world right now and there's a lot of political uncertainty with regard to politics trade policy labor policy manufacturing policy so if you're if you're considering uh investing in a company the question you have to struggle with is will the company be impacted by tariffs or trade policy or tax policy or labor policy or manufacturing policy or a war or a famine and so that's that's the first uncertainty the second uncertainty we have today is monetary uncertainty we see a lot of a lot of countries with their currencies collapsing in argentina they just implemented some capital controls limiting the amount of u.s dollars that companies are allowed to hold in zimbabwe their dollar rising their currency is literally collapsed to nothing and so if you're if you're holding a currency or you're holding a company or a bond that generates cash flows and anything other than the dollar you have a massive amount of uncertainty and risk if we look at the last uh 12 months the euro has weakened against the dollar the pound is weakened against the dollar the yen has weakened against the dollar the turkish lure is weakened against the dollar in fact just about every currency in the world is collapsing against the dollar anywhere from 10 to 20 to 30 percent and in turkey it's about 90 percent in 12 months so there's a lot of monetary uncertainty to go along with that political and a commercial uncertainty we call the two things together stagflation you've got a stagnating economy you've got an inflating money supply which means that your currencies are buying less so if you're any individual and you're looking out over the course of a decade and you have any capital that you wish to preserve or you're generating cash flow from your job the question is what do you do to insulate yourself from stagflation and if you rifle through the list of options you can invest in companies but which company if you invest there's no company in zimbabwe that'll save you so i guess if you x out all the international companies and you invest in uh domestic companies in the country where you live the question then is uh do you actually know enough to handicap their performance 98 of the companies are actually not monopolies which means that they're getting eaten by google apple amazon facebook so if you're buying a non-monopoly company it's risky for all sorts of reasons if the company has employees it's risky because of employment taxes and labor policy and unionization if the company manufactures things and moves them across borders it's risky because you end up with tariff barriers it may be if you manufacture great stuff in china you can't bring it to the u.s maybe it gets banned so so if you're trying to save your capital by investing in companies you take on all sorts of uh corporate risk if you're trying to preserve your capital by buying bonds bonds are currency derivatives the value based on cash flows so if the dollar supply increases by 15 percent a year you have to discount the bond cash flows by 15 a year that means that every five years or so they're worth half as much if you're holding the cash itself that's obviously a currency derivative it's collapsing in value i think uh last i checked real estate in florida has escalated and priced 500 x over 90 years 500 in a hundred years it'll escalate a thousand x which means that you your currency will lose 99.9 of its value against property scarce desirable property over 100 years uh that's assuming about a seven percent monetary inflation rate it looks like uh the us is running 15 to 20 percent monetary inflation rate you can keep track of the strength of every other currency so if the great british pound lost 13 percent against the dollar then you're up to 33 percent uh inflation rate and of course with turkish leary or you're much much harder much higher inflation rate so a a person's got to figure out how they're going to store their life savings and if i'm not going to hold it in a in a currency and i even if i hold it to currency not only do i have the inflation risk i have the counter party risk the banks will actually freeze your funds if you live outside the u.s banks are freezing people's funds everywhere in the world right now in the us perhaps your funds won't be frozen you'll just have the currency collapse so there's a risk with currencies there's the obvious risk with bonds there's a risk with stocks um and that takes you to property and collectible so maybe you collect rolexes a lot of people are doing that a lot of people you can see what people are doing in this macroeconomic environment they're buying watches they're buying uh luxury cars they're buying real estate if you look over the past two years the money supply expanded by 40 percent uh single family homes in the us increase in price by 40 percent so it looks in the near term over two years like single-family homes uh are a pretty good inflation hedge uh bitcoins perform better than single-family homes in that time frame but now we're we're stuck with this issue of well our single-family homes and inflation hedge over a decade and the challenge there is that is the price of of homes go up then there's an incentive for home builders to build more homes so commodities um they have a they have an appeal but if you can produce more of a commodity then if i increase the price by a factor of 10 i increase the incentive to build that thing by a factor of 10. so silver gold lumber oil homes real estate in general they're all um they're all subject to um supply demand elasticity and when the demand increases the supply is going to increase that's why a lot of people probably they actually prefer branded items controlled by monopolies i i think they probably almost believe that ferrari and rolex are more reliable they'll keep the supply capped like it's not likely that a random uh suburban ranch house and so you know in middle america will have a cap supply because there's no there's no single monopoly or brand organized or brand controller to keep that supply from getting out of control so the the general strategy when you're staring at inflation is i want to acquire scarce desirable property that i can hold for a long period of time if i'm going to hold it for a long period of time that means i've got to be able to afford to maintain it if you buy if you buy a really nice beach house in palm beach you find that you have a two percent of your property tax so in a decade you have to come up with 20 percent of the purchase price to maintain it then you probably got to come up with another one or two percent per year to pay for wear and tear hurricane insurance electricity repainting whatever there might be so if you take four percent a year of the purchase price that means that you have to come up with 40 percent of the purchase price over a decade to maintain it bitcoin is not going to cost you 40 of its purchase price to hold it for a decade so the maintenance cost on digital property is lower than the maintenance cost on physical property the scarcity on a digital commodity well well that's a function of the protocol and the integrity of the protocol so if i create a product like dogecoin and i know i'm going to print more dogecoin every year right it's not quite five percent inflation a year but it's it's an inflating supply well then you don't have an a hard cap you've got an increasing supply it'll continue to increase in supply forever that's an uncertainty if a small group of people can change the protocol that's another uncertainty the reason that we don't trust stocks as money over 100 years is because the board of directors and the ceo can change the supply of the stock so apple might be a good company but if the ceo of apple changes the new ceo might double the supply of the stock and so it doesn't necessarily make a good currency or a good money over the long term so i think in short commodities are increasing in price right now oil wheat soybeans natural gas all of those have surged in the past 12 months you'd like to hold a commodity that you can hold forever that's that it has a supply that is inelastic to the demand it's kind of hard to dollar cost average into a skyscraper right you can i mean the average person can't buy 387 a month worth of a skyscraper so it doesn't quite work you can't buy 200 a month worth worth of um the new england patriots either so certain things that look like long-term trophy assets don't work for the for the average person you can't stockpile oil for a decade either i i know i thought about it you know when oil got to zero dollars a barrel there was a point when it was free so why wouldn't you just go and get a billion dollars worth of free oil right a billion barrels of it because you would have made a fortune if you could have but the average person can't stockpile oil you couldn't take delivery up so at the end of the day the the the issue is most things you can buy are currency derivatives and currency derivatives are correlated to the strength of the currency all currencies are collapsing international currencies much faster than the united states dollar but the united states dollar is also collapsing so i have to find property which is not correlated to currency i need it to be scarce i need to be desirable i need to be able to afford to hold it for a decade maybe hold it for 20 30 40 years and i want something that's globally desirable ideal and the ideal property is something that a person more affluent than me more more intelligent than me will want from me in a decade so the case for bitcoin is it's scarce desirable property it's not a currency derivative it's not a security it's beyond the reach of a company a nation state an agency you can hold it and you can give it to your children or your children's children you can take custody of it and you don't have to trust a counterparty and i think we can see especially this month the risk of counter parties is great if you hold gold in a vault and you're russia your goal can be seized if you have cash in a bank account in argentina this week your cash is locked up if you had bitcoin with a counterparty like voyager or celsius they they might very well block you from withdrawing it so uh bitcoin is desirable because it's portable it's global it's scarce and you can you can duck a counterparty you don't trust you can transfer it to a different counterparty or you can take personal custody and that's why it's a it's a useful asset right now and it ought to be part of people's portfolios and i can't think of anything better right i mean there are other things you can own other assets you can own apple stock you can own google you can own a building in los angeles and you can own the new england patriots well you can't right i can't right but the things that you could own they're challenging to own they're expensive to maintain they're not necessarily portable and universally desirable around the world and you in many cases you may not be able to take personal custody of it you know we got a phrase not your keys not your coin and the bitcoin world but you know if you own a building in moscow maybe you don't own the building you know if the mayor of moscow turns against you and if you have a yacht in the south of france and you're russian maybe you don't own the yacht and uh you know if you have granaries in the ukraine and a war breaks out maybe you don't own a farm and so most things they live in a political domain or in a physical domain where your ownership rights are questionable and you have to at least discount them with some risk depending upon your citizenship and your own location and then the type of entity you are i think bitcoin uh it appeals because it is it is the purest form of property or ownership that the human race has yet to divine and that's why i think it's valuable in a portfolio very well said um and one of the things i love about interviews you've given in the past is your conviction for the long-term viability of bitcoin uh so speaking of beach houses and single-family homes would you say now that bitcoin is back at twenty thousand dollars that um it's still a good idea for you personally you know to mortgage a home to be able to buy one full bitcoin for the long-term viability of your future i think that uh the mortgage issue is a function of the mortgage rates you can get so if you roll the clock back a year the 30-year mortgage rates were 275 basis points and so i i would say a year ago if you actually had unmortgaged real estate of any sort and you had equity in the home then it makes sense to draw down that mortgage because that's that's in essence capital that's good for 30 years there's less than three percent interest and we know that the uh inflation rate the cpi inflation is running eight percent while those mortgages are 2.75 so so if the actual monetary
inflation rate is in excess of the mortgage rate and if you can afford to hold that duration if you don't need the money for three four five six years then you should take the mortgage now once you take the mortgage i would say would make sense to buy a lot of things with it right buy a car with it if you need a car if you have a portfolio of of assets that you want to hold and you can borrow money at 2.75 interest i think any uh portfolio of scarce desirable assets makes sense to whole with a 2.75 percent mortgage now if you would ask me the question today well now mortgages are 575 basis points so i suppose the negative is the 30-year mortgage rate has doubled the positive is bitcoin is less expensive so i think the bitcoin looks less risky when it's trading around the four-year simple moving average so that's a plus i think the mortgage looks more risky because the cost capital is doubled um and so you know i i think there's a point uh would i borrow money at five or six percent well if it's 30 years and it's a mark to market money and i thought that and i had passion for spending it on something i would i would definitely borrow the money to maintain a lifestyle if that's what you wanted to do at that rate i i think it's no-brainer that you would rather be holding a 30-year mortgage than holding any other kind of debt for example you probably you probably would be better off to borrow money at 500 basis points in order to pay off your credit card debt and you'd definitely be better off to pay off any margin loan because those things are much more expensive either in interest rates or they're much riskier excellent all right thinking about the future obviously you're bullish on bitcoin i don't know if you know i think your price prediction is pretty up there the long the more time goes by but uh you know thinking about the average person how much bitcoin do you think the average person needs to accumulate to be considered wealthy in the future um i haven't really thought about that i'm not sure what the definition of wealthy would be i just i think the bitcoin is a good thing to buy and accumulate so as a general rule um i think that it ought to be part of someone's long-term portfolio um i i'm not going to define wealthy it's like that's that's a another topic and i don't really think it's it's necessary uh i think what's important is to give people a strategy to save their money when i was growing up my family wasn't wealthy my father was a commission a non-commissioned officer a sergeant in the air force what we had was a savings account and the savings account yielded six percent interest and now savings account don't yield any interest and so if you're taking your paycheck and your savings every single month and you're saving them in currency you're probably going to see your life savings dwindle away so i i'm i'm an advocate of bitcoin uh primarily because people need a technology to save uh their life's work or to save their assets at any level any scale it seems to me and correct me if i'm wrong or if you have a different opinion but it seems to me that crypto and not just bitcoin is you know seeping into the mainstream in a big way do you feel pressured to stay bitcoin only when we're talking about things that aren't for the use case of bitcoin so we're not talking about the use case of money or store value but when crypto is seeping into other places in the mainstream what are your thoughts well i think that bitcoin is is uh the first and the greatest and perhaps the only digital commodity and a digital commodity means not a security it means not without an issuer so in a world where we're going through a digital transformation you want a digital commodity to serve as the base layer because if i can put billions of dollars into a digital commodity on a layer 1 then i can move it on a layer 2 or layer 3 or layer 4 at the speed of light friction free and i can store the money for 100 years so there clearly is a benefit to having a layer one digital commodity now as for the rest of the world the world's full of securities and the world world's full of companies for example is there a place for apple computer like like it's it people in the crypto world seem to think that the only place there's technology that's relevant is crypto right they think that all the software engineers went into crypto they didn't right there's software engineers working for ibm and their software engineers working for general electric and their software engineers at apple computer and google and facebook and amazon and the like so i of course i think there's a place for software engineering and technology in apple and google and amazon and jp morgan banks governments there's hundred thousand of them and uh and the crypto world in general has been focused upon crypto exchanges defy tokens crypto securities cryptocurrency stable coins that's one part of the technology world and uh it's a it's an embryonic part uh the difference between the technology and the non-crypto market like the technology that apple's using and the technology in the crypto market is that apple's technology is is sitting generally in a regulatory zone where there's less murkiness there's not a massive debate about whether apple can add a certain feature to the iphone 90 98 percent of what apple does is not that controversial 2 is on the other hand in the crypto world about 75 of what they do is controversial so there's a lot of controversy and there's a lot of uncertainty and a lot of murkiness in crypto which makes it uh very very high risk and more like it's appropriate for venture capitalists generally and it's a speculation and uh and it'll continue to be that way until we lay down uh clear lines about about uh rules for crypto exchanges what's compliant uh rules for cryptocurrencies what's a stable coin rules for crypto securities you know what's the disclosure required on a crypto security that's got an issuer right we don't really have those rules uh there's and there's a lot of controversy and uncertainty about what they will be so if you want to invest in technology right uh invest right and by the way when i say uh when i talk about bitcoin i'm talking about saving i'm actually converting money a currency into a commodity i don't see uh if you said to me what are the other commodities that i might choose in lieu of bitcoin gold lumber land real estate right oil natural gas fields right those are commodities in lieu of bitcoin that that's what it competes with if you were to say well do i want to invest in a technology well what solana and cardano and ether competing with each other in a technology realm but they're but in essence their private equities with teams and it's like private venture capital whereas google apple and facebook are competing with each other in their public equities also with teams and that's public tech investment so if i was a if i had a billion dollars of um capital and my job was to invest in tech equities i would be shifting between apple and google and facebook and if i had a billion dollars of venture capital and i was a crypto vc fund and my limited partners wanted me to invest in private entities high growth entities the like that was my mission then i would be sifting through the other cryptos because i'm a vc and if i'm a public company and i want to adopt a treasury reserve asset strategy in lieu of what are my choices sovereign debt i can hold 30-year treasuries or two-year treasuries i can either do that or i can adopt a treasury reserve strategy where i buy gold and i just buy 500 million worth of gold or i can uh adopt bitcoin right in order to adopt something as a treasury reserve it needs to be a commodity not a security and there's a couple of reasons for that one of them is a technical legal reason a public company can't hold more than 40 percent of its net assets in securities so like if i had a hundred million dollars i couldn't buy more than 40 million worth of a security including like an etf apple stock the nasdaq index the s p index i couldn't spend more than 40 percent of it if i went beyond that i would trip i think the sec 40 act and i become an sec 40 financial company and now i've got to go through i've got to transform the business and when that happens you lose the ability to operate the rest of the business so it's pretty catastrophic right so so there's there's a pretty good reason why you want to be a commodity the second reason is you don't want an issuer if there's an issuer then that means there's a management team and then it's a security and it's a security it's subject to sec rules and then you have have all sorts of securities liabilities about what you can say what you can do how you can handle it now as a general rule most uh most bonds are our securities and most equities of securities and private companies are securities it turns out that uh sovereign debt of the united states is a carve out because the united states issued it and that and that gets an exemption and is treated as a commodity not as a security right don't ask me why i wasn't around when they made the decision but um you can see for that reason uh it really depends on what entity you are right are you a venture capitalist are you a public company tech investor are you a macroeconomic investor or are you a saver right and then you would choose the assets accordingly let's uh well let me ask you about that how it relates to ethereum because uh senator loomis credits you as being pivotal in the loomis-gilbran responsible financial innovations act and based on the language in that bill ethereum is seemingly a commodity what do you think you know i didn't have any input into that she's too kind to me but but that's not me right unless unless some unless they referred to some publicly available uh comments i made uh i didn't offer any private comments with regard to that act um with regard to ethereum i think ethereum's a security i think it's pretty obvious it's a security it was issued via an ico there's a management team uh there's a pre mine there uh there's a hard fork there's multi you know there there's continual hard forks there's a difficulty bomb that keeps getting pushed back the difficulty bomb is going to wipe out the entire east mining industry it's going to obliterate it murder it okay the fact that somebody is able to murder an entire industry and then they keep changing their mind every six months about whether to do it or not do it is in disha that it's a security and not a commodity for it to be a commodity there can't be an issuer and the truth is you can't really make decisions i mean one of one of the fundamental insights in the crypto industry is is the fact that you can change it is what makes it a security so if you look at most of these cryptos where they have hard fork after hard fork after hard fork the problem with a hard fork is it changing the protocol means that some development team is making a decision and and if you can change the protocol in a material way you can change the monetary protocol right a hard fork can change the issuance pattern or can change the value of something and so that makes an investment contract under under securities law and that means it passes the howie test so what you want is is a completely decentralized protocol where nobody can change it even if they wanted to change it so fundamentally the problem with ethereum is they keep changing it right from a securities law point of view right and there's a team of people that make recommendations and and if you if you um want to establish yourself as a digital commodity then you're trying to create something like gold in cyberspace so for example no gold miners in the world could change the the physical characteristics of gold right if a government passed a law i mean they wouldn't send an email saying oh gold is now steel or steel is now aluminum right you can't if you can change the characteristics of it right then it's not a commodity it's a security and securities have a place in the world but they need to be sold to the general public pursuant to a disclosure full and fair disclosure you want to take the company public you have to disclose who owns the the company what are the risk factors and that way people can make a decision the problems i see right now it's like you know you've still got the ether locked up and will the merge take place will it not take place and then after it takes place then the question is how long is your eth locked up and then what's this is there a staking reward and what is that and if it if there is a staking reward it's probably a security the head of the sec is said on six different occasions that if you generate staking uh off of a crypto asset network it it makes it a security you can't generate yield and not be a security so i mean in theory you can create another digital commodity but uh you can't leave on you can't leave questions uh unanswered oftentimes people in the crypto industry they think well we'll just resolve this by taking a vote taking a vote doesn't make something decentralized if 51 percent of the people vote to double the supply or like if you look at this solana thing salend last two weeks ago the fact that you can vote on something is is proof that it's a security for example my company votes on things shareholders vote on things when you take a shareholder vote it doesn't make you gold right there's no way that the gold owners or the gold miners could take a vote and convert gold into aluminum you see and if i owned a bunch of lumber i couldn't take a vote and turn the lumber into steel right so ultimately the challenge with these things is the ability to do anything if it's truly decentralized then you have to release at least the protocol into the world and not change it not even not even contemplate changing it in fact you know that one of the big problems with all these proof-of-stake networks is in order to get them to work they have to keep doing hard fork after hard fork and the reason they're doing it is because they're they're putting the security into the software instead of into the hardware or into the physics if you're relying on the physics of of the network with proof of work then you don't have to keep upgrading the software if you keep upgrading the software then then someone's got to write the software and when you write the software you end up with this exploding complexity and then you have to you know you have to keep changing it and so there's this pursuit of functionality and performance via continual upgrade that's that makes you a software company and there's nothing wrong with software companies i have a software company i have more experience writing software than anybody in the crypto space i've been in the software business since 1989 so i've actually seen what happens when you upgrade software every year 25 years in a row right and you know it makes your company you and and if you're a company and you want to go public and you want to sell your shares to the general public you have to do it with a registration statement so that i mean that's the challenge in the crypto space that um that really they're just all securities and and the problem with it is they're all securities trading on exchanges that don't have a license to trade securities and they're being traded by management teams that haven't issued a registration statement which means they're non-compliant securities so what will happen nobody knows what will happen i don't know what'll happen but what i know is there's a lot of uncertainty so you're either a speculator or you're a venture capitalist and you're waiting and to see what'll happen and and uh bitcoin is different because it's proof of work based and ultimately you know there was no ico there was no pre mine nobody could change it nobody wants to change it it doesn't need to be changed right and so you would you would generally think you got to think more like genetically you know like something that got released into the wall 300 million years ago and the dna is the same that's that's what you're trying to do with a crypto asset network you're trying to release a protocol and not change it and uh and so i think that that um it's one more point i'll make here which is from a from an institutional investor's point of view the point at which you consider trusting a crypto network is somewhere in the range of five to ten years after people stopped changing it i mean i would say it's after after a hard if there's a hard fork to fix a fatal bug maybe that's okay if you're fixing a fatal bug or or if you're if you're improving the network against a fatal security threat right then then maybe you can get past that but if you're hard forking to change the functionality or change the performance you know change the block size anything like that where you're changing it it resets the lindy clock and you have to wait for five to ten years after five years it's risky after 10 years you think well maybe all that combination of protocols is going to work right and if you look at bitcoin well they had the 21 million coins and the and the monetary protocol it was set january 3rd 2009 and on pizza day around may 2010 it's the still the same protocol the things traded for nothing and then it starts to monetize and if someone you know if someone changed materially that monetary protocol you know it it calls into question is the thing robust is it lindy right and uh so if you keep changing the thing every six months i mean you can do it but but the problem is a someone changed it and somebody voted on it or did it and that makes it a security and they've got if they've got a vested interest in it right you've got a management team and an issuer and that means you can't be a commodity and then b you have to wait five years to figure out whether or not it's robust right and so you keep restarting the clock every time you push that back i have a different question i want to ask you it's about the wider cryptocurrency market but just a very short one in 60 seconds or less agree or disagree ethereum in the cryptocurrency market would be out of all the altcoins the most decentralized compared to the others the most censorship resistant compared to the others i mean i can't say that it looks pretty centralized to me like there's probably something there's i'm not going to give you an opinion on all of them except they all are securities right i mean i'll give you that opinion there might be something on it there's 20 400 cryptos or 20 000 20 000 cryptos there might be a half dozen that we can debate whether they're commodity but none of the proof of stake networks and and none of the smart contract networks would be in it you'd be having a debate over proof of work networks right that that have not changed in the past five years right that don't have an issue or don't have a management team don't have a foundation did never if you didn't have a pre mine if there's no ico there's no foundation if no one's controlling it if it's not changing right then you can have a debate but uh i don't think that that ethereum qualifies for that debate i think that's pretty black and white cool i love the conviction i might and just a piggyback off what you said prior i know you're not the sec i know you you just said there's risk with the other cryptocurrencies software is fine it's just incredibly risky so you're not interested but spacing you put out a tweet out the other day the whole crypto market besides bitcoin right now is unregistered securities what should happen should you know some get fined or should they all be go to zero and start new what's the solution there i don't know what the solution is i i think that the industry would benefit if um if the sec and the cftc put out clear guidance as to how you qualify as a digital commodity for example if you could submit if you want to go public you actually submit a registration statement to the sec and you negotiate it with them and over the course of three months or six months when they grant you when they approve the registration statement you can go active and then you're a publicly traded company so there is a process by which you can take a company public as a public equity if you don't get that approval then you can't go public you can't sell shares to the general public so right now the question is if you had some crypto the only crypto that's been deemed as a commodity is bitcoin that's the only one that i think is is certain i mean everything else is a question and and uh the chair of the sec said that on television a few days ago right so the question then becomes okay i think that my crypto is a commodity how do i get it certified okay there's no clear process so if there was a process by which i could submit it to the cftc or the sec and get them to certify that it is not a security that would be a step forward i think the other step forward would be um a process by which i could submit a stable coin uh to get it certified as a stable coin like uh there there's a way you can get registered as an etf right now with the sec right they they deny or they grant they've granted some etfs they've denied some etfs but there's a process um there's a process by which you can sell mutual funds and and other investment funds the general public they can grant but they can deny so i don't see the process by which i can spin up a stable coin you know and as you as you look at it right there's there's stable coins like um like uh circle and paxos and you know they're registered registered entities in the united states and they claim to be 100 backed by cash and cash equivalents so that's one type of stable coin but the sec is not certifying them the cftc is not certifying that there's no national certification there i think they're they've got money uh they've got licenses from states so there's no fdic registration there's no sec cftc i think um i think that's frustration then you've got tether right which is sitting in the middle right uh it's more opaque popular but opaque and and the problem is because it's opaque it's getting attacked people are not so much if people think they can wreck you they'll attack you right i mean it's like it's kind of sad like they like uh i'm not a big fan of hedge funds and short sellers myself but they will attack and so so they shorted ust and that worked for them and so now they're short tether they're not shorting circle and paxos because they perceive that they're not wreckable right then you have ust which some people thought was a stable coin i mean you could have called it a stable coin you people they would add up you know the market cap of stable coins they added up circle and tether and ust but when ust had 18 billion dollars worth of value the question is how much collateral was backing it right at one point ust plus luna was about a 50 billion dollar ecosystem and i you know they had a billion maybe two did they have three billion in collateral somewhere between one and three billion in collateral against fifty billion dollars of afloat and 18 billion dollars of a stable coin now instead you know issuing 18 billion dollars worth of the stable coin is like borrowing 18 billion dollars from counterparties so if you borrowed 18 billion dollars from counterparties and you had one billion in collateral you're levered up 18 to one okay on the other hand if you borrowed it at 50 loan to value then that means you have 36 billion in collateral so you see the difference between having 36 billion in collateral which is by the way 50 loan to value is risky 25 loan to value probably less risky for a volatile market so in order to issue 18 billion in stable coin and and use uh bitcoin as collateral then the right mix would be i have 72 billion dollars worth of bitcoin and i issued 18 billion dollars worth of ust okay and that's over collateralized but still risky so it's pretty clear ust was never a stable coin it was a security the point of the regulators when they say these you know these cryptos need disclosure is if you if you'd known that you were buying a token that had a billion in equity and 20 billion in debt and that a five percent move would wipe you out you wouldn't have traded it like cash or cash equivalent right you wouldn't have said oh this is like a bank account that yields 20 interest you would have said something different you said this is extremely risky this is like a 20x margin trade and a bitcoin trades down 6 i'm going to lose my life savings so there's no way there's no way right now to certify to get like a national certification for a stable coin if there was it would drive a process and people in the space would go through the certification process to get that there's no way to create a certified crypto bank right now right the reason you had uh celsius and voyager and block fi as kind of uncertified you know unregulate registered bank is because the regulators kind of they were loose with regard to cracking down but they also didn't give a path to certification uh caitlyn long you know has created a a crypto bank and she's been trying to get an fdic license for 18 months she can't get it and there's no path there's no obvious path to to get the right license but you can imagine if i was running an etf and i said i'm running a high-tech etf and i'm going to buy a mixture of facebook app on amazon and trade it and you're going to buy my etf well i would then post on a routine basis like every day or or whenever i change my portfolio i post what i own in the etf that's complete transparency and if i if we can do that with an etf the question is why can't we do it with another crypto like why why wouldn't you just say okay you know tether if you want to be certified you just have to post everything online via this form in 8k form when microstrategy uh when we buy bitcoin we file an ak it's an sec filing and the a if you go read it right there are very very talented lawyers that very carefully write those aks and then they file them with the sec and they're online in their legal documents and the the management team is legally liable for a lie right we're legally liable the cfo the ceo probably the general counsel and so you end up with adult supervision and you end up with since everybody's liable the accountants are liable they're worrying about it the outside law firm is paying attention there's an army of lawyers there's an army of accountants and because you do that well you know everybody knows where you stand and then they can make a decision that's intelligent um we're lacking that in the crypto space and there's uh there's no way so there's no way for me to issue a token that's a security there's no way for me to issue a public nft token that's that's regulated there's no way for me to to get a commodity created that's regulated also there's this issue of exchanges right like either a d5 exchange or a c5 exchange they're deemed as being unregulated the reason that this sec keeps denying the spot etf of bitcoin is they claim that all the crypto exchanges are unregulated and there's and and uh there's no surveillance agreements and there's no transparency but what they're really saying is they don't trust the exchanges they think they trade against their own customers right so if you're if you're if you're buying a token like let's say let's say you were buying some random coin on an offshore exchange and you had a big order in if that exchange actually was operating a hedge fund and they got your order and then they trade they front run you and they bought that token drove up the price and then sold it to you you'd be pretty hurt right well this so so when the regulators are are concerned about that their view is there's just too many conflicts of interest right like how you you could issue a token own a bunch of the token and then you could uh list the token on your exchange the price would trade up then you could sell it and then you could not tell anybody you did it that's all totally illegal with a security you couldn't do it every it's pretty obvious to everybody that is unethical it is illegal and there would be like a hundred people that would tell you no you cannot do that in the traditional economy and the crypto economy you know it's not even clear that they know that it's unethical and illegal right it's like sometimes people like they just think that's just being creative and so in this particular case you've got a while west and uh and what needs to happen is it needs to grow up now we need adult supervision now let me just grant one more thing in favor of the cryptos which is there's a tension between the 19 the 20th century and the 21st century the 20th century is uh nasdaq you start trading at 9 30 in the morning you end at four in the afternoon you can't trade on the weekends right you can't take personal custody that's how microstrategy stock trades mstr started trading in 1998 and there has been no material improvement in the way that that stock works on the nasdaq in 24 years okay so that seems kind of antiquated and the crypto world is is why can't i take custody why aren't there 500 exchanges instead of one nasdaq why is why can't i trade 24 7 365 why can't i do things faster so the crypto world wants to go fast and it wants sexy stuff and it wants to do it in the palm of your hand and it wants to do it everywhere in the world and it wants to do it on a holiday on labor day okay so those are all admirable right that's 21st century technology the 20th century technology as well we've got the compliance down and we've worked through the ethics and the conflicts of interest and it's pretty clear to me for example that i have an obligation to tell all my shareholders any material thing that i do at my company that might impact their shares right that's pretty obvious to me so we've we've got adult supervision in the 20th century world but it's expensive and it's slow and it's not function the functionality there's low functionality it's very expensive and it's slow right in the 21st century you've got crypto which is very functional very fast but they haven't worked out the regulations and and the protections for consumers and so you know it's kind of hard to defend it if you watch 50 billion dollars get torched and go to zero in a matter of two weeks we can see why that's not so good but what the world wants the way this should end you know what you'd like to see happen is you'd like to see the regulators embrace the good that's come out of the crypto world while extending some investor protections that are common sense like thou shalt not lie cheat and steal common these are not like from 1933 sec act they're not 1940 these are like 4 000 year old rules right hammurabi's code they're in the bible right they go back to ancient ancient times the greeks the romans everybody had this idea thou shalt not lie cheat and steal so we need somehow to introduce those those common sense guidelines into a modern technology framework and right now uh for better for worse it's the united states regulators the sec the cftc the occ they have uh the control of this and the rest of the world's going to follow them right and probably going to adopt their broad brush their guidelines once they figure out what they want to do and the industry is kind of in in betwixt and in between you know we're we're out of the first decade which is a lot of innovation a lot of creativity a lot of you know mark zuckerberg used to have on the wall of facebook's headquarters before they went public it's like go fast and break things okay that was the facebook motto go fast and break things after they got public and after they became a billion user network and they had the power to change the course of democracies i think they got rid of that motto right that you know at some point you can't go fast and break things anymore so i think the crypto world is moving from its first decade which is go fast and break things to the next decade which is let's try to keep you know the the good that comes from the technology uh while we introduce uh it into the public policy framework that allows it to scale to the next order of magnitude and if you're wondering what what do the regulators think is good about crypto this is not a secret they've said it out loud uh they think bitcoin is good they think the proof of work such that you create a digital commodity using energy and no issuer is a good thing it's a it's an innovation it's a brilliancy but what satoshi did the the creation of digital commodity and cyberspace or digital energy or digital property if you will or digital money using energy and sha 256 or some hashing algorithm that's a brilliancy so there's a place for digital commodities the second thing they like is digital currency like a stable coin the world wants trillions of dollars of us dollars and probably digital euros and digital yen to move at the speed of light on mobile phones and on websites that's an innovation and they haven't we haven't quite got it right right we've got ust which is a defective one we've got tether which is successful but but opaque and then you've got you know circle you know packs that are struggling and no one there's no fdic approved bank that's issued a stable coin yet so that's a new thing we're working on and then uh i think they appreciate 24 7 365 trading right that's that's an innovation which is clearly an improvement over over the 9 30 to 4 in the afternoon five days a week the rest of the world doesn't you know doesn't necessarily take american holidays off and sunday is not a holiday in the middle east right and so and shutting down the economy of china because you want to declare a holiday in california isn't the way to run a global ecosystem so so global access that's another plus and then the final the final thing is just the idea of of crypto crypto tokens right cryptography zero proof and the ability uh to do things instantly in a hundred milliseconds right that's an innovation right now a lot of the world still approves wire transfers by talking on the phone right and and that that is about a ten thousand times more expensive than doing it with by signing with a private key so so all of those all of those crypto capabilities those are innovation i think all of those things together plus just speed like being able to spin up a token you know whether it's a tom brady coin or whatever coin being able to spin it up is an innovation now we know what the innovations are and the question is how do you merge that uh with regulation and we'll see right we're waiting on that yes yes um so let me ask you this because i appreciate you uh you know giving up giving us your reasoning on this i think i think we understand how you you know bitcoin is different from rest of the market and i think we understand kind of your thoughts on the cryptocurrency market as a whole however as i'm sure you know not everybody in the world thinks like you i believe there's a spot etf in australia uh spot ethereum etf in australia along with bitcoin there's spot ethereum etf in canada along with bitcoin multiple ones and you know canada is from what i hear very you know tight with the global financial regulators so your best guess do you think ethereum and crypto at large will continue to grow and gain usership over the next five to ten years despite your personal thoughts i mean the only thing i'm gonna advocate is bitcoin and that's the only thing i advocate i don't look i'm not advocating google stock or apple stock or amazon stock i'm not even advocating my own stock like to be to be clear like i'm an equal opportunity uh ambiguous uh ambiguous uh analyst with regard to property i'm not going to tell you to buy property in new york city or moscow or los angeles i'm not going to advocate a trophy asset or a collectible i'm not going to advocate or opine on any other crypto i don't know how they will end uh i'm i'm open-minded to the sense that it's possible to create things but there are many many different ways to do it right i mean there's there's a lot of ways to create functionality and there's a lot of models and i think there are a lot of different countries in the world right so different countries and different different regulators will have different opinions and and uh different management teams will do different things and stuff will happen and if you uh if you want to have an opinion on silver i think you should study silver for 10 000 hours and for someone to have an opinion on ethereum they should study that for 10 000 hours and you can take their opinion if you like my my opinion is clearly the least risky thing and uh and the purest thing that's come out of the crypto ecosystem is bitcoin and uh and the reason i advocate is because it's property and not a security and i just i'm not gonna i'm not gonna advise you to invest in a private company i'm not gonna advise you to invest any public company i'm not going to advise you to invest in any of 20 000 other things i think that those are all individual decisions that people have to make and i would willingly grant like maybe the best investment for you is to own a ranch in kansas people do well or own a bunch of lumber right or own an oil well or own a natural gas facility there's a lot of businesses that make sense for people and you know if if you have uh if you have proprietary knowledge about it and you have strategic assets and interest in it and it fits with your family you know your and your uh you know your citizenship and your long-term intent right to live wherever you're going to live then i think you do that thing but uh you know cryptocurrency is global right it's not just in the u.s so even if u.s cracked
down hard from a regulatory standpoint you know presumably like rubble paul says maybe they just go offshore so if you had to just i know you're not advocating for it but best guess do you think crypto will continue to grow and gain usership in five to ten years i think that uh that what's going to happen is digital property in the form of bitcoin is going to grow i think digital currency in the form of the dollar is going to is going to grow i can't be sure which network but i think that i think that the overall digital currency network will grow i think that um other digital currencies will grow as well but much less so i think that the dollar is the king winner and i think the euro maybe number two and the cny and then all the rest will will be small and i think that ultimately the the currency the digital currency will eat into fiat currencies uh the digital property bitcoin will eat into properties it'll eat into gold it'll lead into real estate it'll demonetize other other corporate bonds and stores of value instruments over time i think that there'll be a lot of innovation in other areas but again like most of the proof-of-stake networks they're all companies right and so they're private companies and if they can if they can come public maybe they'll be you know the next google or the next something but the way i think about them is i think of them as technology ventures all on instagram or snapchat or or something like that and you manage your risk accordingly right i mean do you trust the people doing it do you understand the regulations look i i they're most of them are non-compliant right now but uber and airbnb were non-compliant too right like airbnb is like illegal and half the places they operate and uber is so it's what happens who knows what happens right people tend to get very sensitive when money is at stake as opposed to other things but people are sensitive about a lot of stuff so so if you want to invest in technology then uh you go and invest in technology but just keep your eyes open about what the risks are and i generally think the most important thing though is that is the regulatory risk is huge if you're going to move money around and the reason that bitcoin works is because the use case is property it's i'm buying a block of money i'm holding it for a decade and i'm not moving it around at the point that you want to move the money a million times an hour and you want to move it to a thousand or hundred thousand counter parties you start to cross uh into other regulatory jurisdictions right now you're dealing with the treasury and the occ and you're dealing with tax issues and and and the like so so if you're going to get into those use cases the ultimate the big question that everybody in crypto has got to ask themselves is why is it that google hasn't already done this because google has more money than god why has why has amazon not done this why has citadel not done this why you know why has apple not done this why why has a centralized company running in silicon valley not done it they all have infinite money they all have infinite programmers and if the answer is because they thought they get shut down by the regulators then you have to figure out how you're going to deal with that right and and if the answer is they could do it then the question is do you need a token or not that the challenge with fundin
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