Bitcoin: There Is No Second Best | Michael Saylor at Bitcoin for Corporations

Bitcoin: There Is No Second Best | Michael Saylor at Bitcoin for Corporations

this of course is my favorite subject there’s uh there’s no better way no no way I’d prefer to start the day than talking about Bitcoin and uh why there is no second best um and uh I had uh had an occasion uh to consider this phrase as I prepared this presentation and uh I just thought it resonated across so many different dimensions and so I started considering you know what is the best idea right what is the best and uh I think that in the modern era in the in the 21st century I think we can agree that uh the best idea has been digital transformation and the companies that have reshaped the world over the past 30 years are Microsoft and and Apple and Google and Facebook and Nvidia and and they stand for digital books and Digital entertainment and digital intelligence and digital Communications and digital memories and and uh of course as they dematerialize those products as as our recorders drop away or dematerialize and our CDs and our libraries dematerialize and as our services dematerialize there’s just a massive amount of economic energy that’s been given out there’s an extraordinary amount of efficiency now you can give a book to a billion people or you can give Beethoven’s Ninth Symphony to a billion people and you can do it for the cost of some incremental electricity and and uh the big winners were the investors in these companies and the companies themselves became you know as powerful as nation states um now how good and I ideas digital transformation uh well it’s good enough that in many years 100% of the return for the SNP are attributable to just seven companies 1% of the companies have all the result in other words if you’re not doing this then you’re just working very hard and working harder just doesn’t doesn’t get ahead this is a snapshot in uh the year 2023 fre and it just shows you a how good that idea is and B just how much trouble you’re in if you’re not actually surfing a digital wave here seven companies have all the returns in the S&P index 493 companies return nothing okay this is not a value judgment the truth is probably the people that work for the 493 companies worked harder they worked harder they’re probably smarter they got paid less and and they’re taking an extraordinary beat beating and a burden on their back trying to fight against a digital wave but uh life isn’t fair and uh and certainly the global economy isn’t fair uh if you are the winner you’re the winner and and if you get on the wrong side of a trend then you just get gradually crushed so this is a sobering observation but it’s a reminder that if you’re going to invest and if you’re going to align yourself with an idea it better be the best idea because the second best idea as you can see is worth nothing you’ll be lucky if you just stay in business so what’s the best digital transformation idea digital capital is the best digital transformation right I mean yeah I for 30 years we’ve been transforming books and records and email or or letters and packages and pictures and and VHS cassettes and the like but that’s all digital information uh digital information is it’s interesting uh it does it does create enormous value but the truth is the first 30 years of digital transformation will be an order of magnitude less important than the next 30 years of digital transformation and the real the real blll here uh the extraordinary opportunity is the digital transformation of capital the digital transformation of property the digital transformation of money and if you want to be a physicist and and be deep about this it’s the digital trans formation of matter and energy not the digital transformation of information but the digital transformation of matter and energy and uh where are we well I mean first of all you’re talking about $900 trillion dollar of assets that are in the analog world so I don’t know what Apple’s Worth or what Microsoft is worth but you know books weren’t worth 900 trillion when they transformed them and nor were CD records worth 90000 trilli as of today .1% of the capital on the world is digital 99.9% is this right we’re very early in the digital transformation cycle of capital right the world is living in analog assets we have analog money we have analog bonds we have analog real estate we have analog Equity we have analog art a lot of analog stuff $900 trillion dollar of it but the 900 trillion doesn’t just reflect the value of the physical stuff it reflects a monetary premium over and above the utility value of the stuff people buy buy real estate not just to live in they buy real estate as a store of value and they buy equities not just because they want to capture the cash flows of the company they buy equities uh because they want to store a value and they feel like it’s preferable to hold in cash and uh and for 500 years people have been buying art as a store of value it was scarce desirable portable property if you had to leave the city you could take it with you and gold is the same thing people have been buying gold as a store of value so something like half of all this capital is really a monetary premium and um and the other half may be a utility we are just 1 trillion out of the 900 trillion right now very early crypto proof of work is the best way to create digital Capital the world wants digital capital what’s the best way to do it crypto proof of work that is to say when you’re running a proof of work mining operation that converts energy into information that can be secured and transferred via cryptography um not all crypto is based on proof of work and therefore not all crypto is digital capital A lot of it just looks like a digital security but what’s special about this particular approach which is of course the Bitcoin architecture is it creates a decentralized asset it creates a physical asset there’s a there is a physical linkage to the real world via the electricity and the Silicon that makes it thermodynamically sound and integrates it into the universe and not just the metaverse it’s Sovereign you can take custody of this it’s a galarian the protocol is open anybody anywhere on Earth can engage in this network it’s permissionless it’s Global right this is the best idea the best way to create digit capital what’s the best crypto proof of work asset Bitcoin is the best how how good is it it’s 97% of all of the market cap of crypto proof of work after Bitcoin you have to go all the way down to Dogecoin literally a joke literally a joke created over the weekend by an by an engineer as a joke to find the second best obviously there is no second best proof of work asset but you know what there’s no second best crypto bitcoin’s the best crypto asset now why is it the best crypto asset because it’s increasingly clear that no other crypto token is going to achieve institutional acceptance this decade Bitcoin is the only crypto that’s going to cross the chasm you could see the writing on the wall when the spot ETF of Bitcoin was approved in January by the end of May you’ll know that ethereum is not going to be approved and when ethereum is not going to be approved sometime this summer it’ll be very clear to everyone that ethereum is deemed the crypto asset security not a commodity after that you’re going to see that ethereum BNB salana Ripple cardono everything down the stack is just a crypto asset security unregistered none of them will ever be wrapped by a spot ETF none of them will be accepted by Wall Street none of them will be accepted by mainstream institutional investors as crypto assets this is the one universal consensus accepted institutional grade crypto asset in the world there won’t be another one this decade I can’t speak to 20 30 40 50 years out anything can happen that far out but between the year 2024 and the year 2030 the die is cast the writing is on the wall this is the winner there is no second best and Bitcoin is the best crypto Network it’s not just the best crypto asset this is secured this asset is secured by the most powerful computer network in the world it’s rapidly growing stronger hash rates growing by 70% a year it’s growing that fast in good in Bull markets and bare markets it’s an Unstoppable thing how much is 624 x a hash it’s enough that all of the computer power of Microsoft or Amazon is not going to outdo this right this this is a silicon machine because the The Genius of of an open crypto proof of work network is that very intelligent Engineers can harness the power of Asic chips to create orders of magnitude more efficiency in Shaw 256 hashing so the Silicon ratchet is 2000 to1 3,000 to one more powerful than a general purpose CPU uh a GPU is not appropriate and is is not capable of doing this it’s not the right technique so you’re not threatened by all the GPU capacity and what you have here is enough hash power to create a wall of encrypted energy that’s nation state resist resistant that’s corporate resistant that’s Dr Evil resistant that’s hacker resistant there is no trick there is no gimmick there is no social attack this is just raw digital power standing in the way of anybody that would try to undermine the Integrity of the network and it’s also it’s also driven by electricity 20 gwatt of electricity 20 full-on nuclear reactors worth of electricity but it’s a lot better than 20 full-on nuclear reactors because this electricity is is spread everywhere to the ends of the Earth the network is feeding on electricity and that creates a decentralizing dynamic that drives all of uh all of the network to the end of the Grid in the quest of stranded energy so this is going this network and the dynamic is going to continually decentralize continually dissipate it’s going to continually move away from population centers where the electricity is expensive it’s going to move to places where the electricity is is stranded where it’s where it needs to be recycled and that 30 gaw is going to create a thermodynamic connection between the virtual Network and the physical world this is what makes the network stable this is what makes the network ethical this is what makes the network politically sound the fact that that electricity is going to be coming off of a a dam in Bhutan or or a a volcano in South America or Africa means that this is going to be a global neutral asset there’s no way anybody’s going to centralize the Bitcoin Network on top of a a single uh data center that’s what makes Bitcoin uh the best crypto Network now beyond that Bitcoin is the best crypto brand why is it the best crypto brand well 220 million Bitcoin holders people that have an economic interest in Bitcoin 420 million crypto users around the world the crypto industry has been aggressively marketing and aggressively expanding on the on the backs of lots of different use cases not just Bitcoin a store of value or property but also cryptocurrencies stable coins nfts everything under the sun and this continues to grow it’s a it’s a incredibly aggressive fast growing creative Market the marketing is extraordinary but there’s an important point to be made here as the other crypto assets fail because of competition right as as the you know salana competes with ethereum competes with whatever as they fail due to regulation as they get shut down or they get T they get labeled unregistered Securities by Regulators as they fail due to entropy just the complexity of what they’re attempting to accomplish and they crash or they get hacked or they unwind or as people move away from their projects as as those failures take place all the US in the crypto ecosystem and all the capital in the crypto ecosystem is going to flow into the best network it’s going to flow into Bitcoin because Bitcoin has 100% crypto acceptance if you talk to everybody in the world uh and you say well do you like crypto yeah I do well is Bitcoin legitimate which what’s the most secure what’s the most credible crypto Network well it’s Bitcoin bitcoin’s the O positive right it’s the universal donor right everybody can’t agree on anything else if you talk to people in the crypto ecosystem and you ask them whether or not they like salana better than this or tether better than that or nfts better than this they can’t agree on that that’s competitive that’s controversial uh that’s confusing everybody agrees on this one thing Bitcoin Bitcoin will be around for the long term the industry was built on it it’ll be around long after most of the other industry participants are gone well bitcoin’s not just the best crypto brand it’s the best investment brand there is no second best investment brand that people know about the dollar but dollar is not an investment unless you’re in a country with the currency collapsing and if the currency is not collapsing then you need a different investment okay bitcoin’s the most widely held investment asset in the world right people are coming to grips with that I travel all over the world I get on I I get on the runway in the middle of Switzerland and the guy with the with the yellow vest knows me he’s buying Bitcoin for his daughter he just got married I walk to the beach in Italy and somebody you someone swimming off the beach yells at me and they know me I walk into a room full of billionaires they know me I walk to a bar and the guys at the bar turn around and they know me this happens in uay it happens in Mex Mexico it happens in Brazil it happens in Italy it happens in Greece happens in Switzerland it happens in London happens in New York City happens in Asia right why right bitcoin’s a sports team with hundreds of millions arguably 400 million fans you know and they’re all rooting for the same thing and when bitcoin’s doing well they’re all in a good mood it’s like their blood sugar’s up when Bitcoin is doing poorly it’s all they’re in a surly mood their blood sugar is down but you know give me another example of a team that’s got 400 million passionate fans and they’re all winning or losing together right what what’s making news on Sunday afternoon Bitcoin when there’s a when there’s a scare of a war what’s crashing what can you sell Bitcoin when you decide the war is not coming what can you buy Bitcoin what is there to tweet about talk about Bitcoin what do you cover on YouTube on a Saturday or Sunday or midnight on on the East Coast Bitcoin right everybody’s got something to say about it what is it well and why is it well first of all it’s the most widely held asset in the world because it’s a it’s a standardized economic unit right I mean maybe we own watches but we own different watches maybe we own buildings we own different buildings right maybe your building is worth more in Paris but how does that help my building in losw Angeles we’re not on the same team we’re not on team building right we’re not on team watch you know we’re you know and and and good luck you know trying to invest in like Apple’s stock in Nigeria right and so what is bitcoin well Bitcoin is the economic solution to everybody it’s a global economic solution to billions of people right right and what has it become it’s become cool bitcoin’s cool it’s useful it’s Global it’s standard who’s the last person to standardize something well I mean people have been standardizing things for thousands of years but you might know the name of one company one Standard Oil John D Rockefeller launched Standard Oil and it became such a household World in fact just about every oil company in America came from John de rockefeller’s company half the oil companies in Europe came from John de rockefeller’s company we all zoned out and we thought oil we forgot about the standard part the standard part was this is the oil that’s not going to blow up in your face and set your house on fire this is the oil that’s actually got clean chemical properties standardizing energy was the most powerful idea in the 20th century made the richest man in the 20th century and created every single Energy company but what is this this is standard Capital this is standard wealth for 8 billion people it’s you know so tell me the next standard right give me another asset that goes up in value not down in value that’s standardized open to and Global to everybody right and the answer is there is no second best right there’s there’s a standard investment brand it’s called Bitcoin it’s always interesting it’s egalitarian you can buy a billion dollars worth of it and it’s a pretty good idea to buy a billion but you can buy $23 worth of it and if you look at the wealthy in the world they buy buildings but you know how’s a cab driver in Nigeria supposed to buy a fraction of a building right how’s it how’s it impact the other 7.9 billion people that can’t afford a building right this is a galarian capital a galarian property and it’s prestigious right so this is the ultimate luxury brand you know people used to buy the nice watch so they figure they could sell it if they ever needed uh to eat or pawn it right but you’d much rather have Bitcoin in your watch bitcoin’s the best digital commodity there’s no second best digital commodity what is a digital commodity it’s the only crypto in the world recognized as an asset without an issuer by all major Regulators by all major Regulators okay the Chinese recognize it the Russians recognize it right the enemies of the US recognize it that you know in Singapore in the UAE in the US in Brazil everywhere this is the one thing everybody recognizes so the question is why why it’s not the first it’s not the only there’s two and a half million copies why it’s because of the Immaculate Conception what is the Immaculate Conception by it’s such a simple idea and yet everybody that’s copied Bitcoin hasn’t got this simple idea in their head Satoshi created a way he gave it away and he went away walked away that’s the idea there’s not a single major company in the world where someone created the company gave it to the world and walked off and in fact if you look at every other crypto asset there is no Satoshi right in fact the way you know that they’re they’re not Commodities is they’re all arguing that they’re Commodities Satoshi is not arguing anything Satoshi went away gave it to you right and and this is the essence of it if something’s going to be commodity there there can’t be a beneficiary Satoshi gave up control of the protocol Satoshi gave up the Satoshi coins Satoshi stopped trying to influence the network it was a gift to the world that’s what makes it an ass asset without an issuer if you go and make a list of the next 100 cryptos and you go down the list you’re going to be hard pressed to find that but that’s a simple assd test by the way it’s a lot easier than the hoe test you know if you wanted to figure out whether you’re a security if you created something did you give it all away to someone else did you never sell it and are you gone and not arguing over it and then maybe it is so I I have simple advice for someone that wants to create a digital commodity right give it away and walk away Bitcoin is not just the best digital commodity it’s the best commodity right bitcoin’s the only commodity in the world a that’s digital everything else is a physical commodity and because it’s digital it’s fixed in Supply everything else is physical therefore not fixed in Supply that makes Bitcoin Superior to gold and gold is the king of Commodities you know when I started my career at Dupont commodity was a dirty word every single business decision made by the DuPont Corporation was to escape a commodity business and create a specialty business nobody wanted to to manufacture or sell Commodities and the reason why is they knew they were all eventually driven to zero profitability or your or every commodity provider eventually has to produce the commodity at a loss in order just to run their capital and so Commodities are awful Investments and uh gold is simply you know the least worst of an awful investment why is Bitcoin the best it’s Global it’s digital it’s programmable it’s inelastic it’s durable it’s divisible it’s portable these are all the things that every other commodity is not okay well the numbers don’t lie you know I can give you words and rhetoric but look at the last four years in a in an inflationary environment gold is up 133% Bitcoin is up 394 % any good investor will tell you all physical Commodities make poor Investments Gold’s just the least worst now uh for those of you who are Bitcoin Advocates and you go and you talk to people right what you’ll find is the very controversial Narrative of Bitcoin is this digital currency that gets everybody racked around the axle because they think well it’s competing with the Yen and the dollar and the Euro and the ruble and the CNY and and the like and it’s a medium exchange and it’s needs to be legal tender and it’s ta it shouldn’t be tax it becomes a very controversial thing if you put that aside for a second that’s the ugly narrative and you go to the bad narrative Bitcoin is digital gold it’s sort of true but it’s not a very good narrative why because if you talk to a thousand billionaires and you say well how many of you how many of you made a billion dollars investing in gold the answer is zero and if you go to a a thousand wealthy families and say now that you’re wealthy you are you going to go buy a billion dollars of gold the answer is no and you say well we’ve got digital gold it’s great it moves at the speed of light it’s programmable you can teleport it it’s great and and they go well that’s that’s nice but I don’t own any gold okay I can’t find anybody that owns gold the people that are Advocates of gold don’t own gold Peter Schiff on the record has spent 15 years advocating gold and when you ask him Peter do you own any gold he’s like oh no I don’t own gold it’s a very small part of my portfolio Okay so find me someone that actually owns gold that you could even debate on the topic and the answer is it just seems to be 1 to 3% odity you know in any portfolio so yeah Bitcoin is the best commodity but the truth is all Commodities are dogs and Bitcoin actually fix the commodity but that but that word commodity is a dirty word every intelligent business person every intelligent investor knows that you should run as fast run don’t walk away from Commodities so what is bitcoin really Bitcoin is the only scarcity it’s not a commodity a commodity is something you can create infinite amounts of and anybody’s allowed to create infinite amounts of and dump it on the market and uh if you want to hold you know a billion dollars of soybeans for a hundred years that’s probably not going to be generational wealth for your granddaughter right pretty obvious why um but a billion dollars a goal won’t be generational wealth for your granddaughter either um bitcoin’s the first absolutely scarce commodity in human history so you have to say it represents an entirely new asset class it’s not an equity it’s not a property it’s not a commodity it’s something different it’s new given the fact that it’s new there’s nothing to compare it to so you got to ask the question if there is no scarce commodity in the world what is scarce find me find me anything that’s scarce and and I got The Hourglass up here to make a point no amount of money will buy you more time or more Bitcoin so if you consider the nature of the universe as a physicist the one thing that’s that’s scarce is time right no politician can make more of it no capitalist can manufacture more of it no AI bot can create more of it time is the is the true ultimate scarce yard stick right that’s how the universe works that’s that’s how God makes the universe work Einstein had a lot to say about it physicists have a lot to say about it what have we done with Bitcoin we have bottled time in a Bitcoin right that the process of proof of work mining is in essence digitally transforming time into an asset our goal was to create a digital money but now it gives new meaning to the phrase time is money how do I actually create digital time digital scarcity and then how do I put it you know on a hardware wallet how do I move it how do I compute with it right so scarcity is it’s it’s very underwhelming to say oh Bitcoin is like it’s digital currency or it’s digital property or it’s digital gold or it’s digital something because what it really is is this digital time this constant right right if I if I give you a 100 trillion cadrillion dollars you won’t get more than 21 million Bitcoin if I give you all the money in the world and you crank the minor up we know how fast Bitcoin is coming out every 10 minutes right we have created the perfect monetary asset because we have figured out how to duplicate the benefits and the characteristics of time and ultimately when you measure your life and everything in your life you have to measure it against time because time’s the one thing you’re not getting back no matter how rich you are now people oftentimes they try to buy land right land is the scarce asset they AR not making any more beachfront property right I want to buy land I you know and the truth is in the 20th century if you’re a rich family and you didn’t make money on technology then you made money on property and the property you bought was the middle of London or Paris or New York or you bought some beach front in the Hamptons or Palm Beach or something but probably you bought very desirable commercial real estate in the middle of the city but you know it’s it’s kind of a bromide people you know people will say things oh yeah well I guess Commodities can be manufactured but land they’re not making that anymore not making any more land right when that Mark Twain said that okay look at the picture here the truth is they are making more land this is is Boston over the course of 300 years half of Boston was made I live in Miami Beach three4 of Miami Beach was manufactured in the last 100 years it’s all made right they dredged it Dubai made they make land Amsterdam roddam they made the land the truth is given enough money you can make land and if you want it you’d be surprised how much of it you make right most people don’t think about this but but at the end of the day storing all of your economic energy and land is is not truly uh going to be effective because it’s going to it’s going to inflate and it’s going to be it’s going to be impaired by a whole set of other challenges so bitcoin’s the best property what’s the best property bitcoin’s the best property what’s the second best property there is no second best property right this is the greatest City in dig city in the world there’s 220 million inhabitants there right now what’s the second best digital city in the world right there isn’t a second best city in the world why is this so powerful it’s Global anybody can go there it’s digital you can zap there on a mobile phone and there’s billions of mobile devices it’s open this is a city that’s got no mayor to tell you what you can’t do and on the otherand everybody can zap there with their Capital when they want it’s permissionless and you don’t have to buy a building and you don’t I mean how many people can afford an apartment in New York most people can’t afford an apartment in New York you can buy a fraction of a piece of property in this city it’s totally divisible and this is The Immortal City maybe New York is there a couple hundred years this this city could be there 10,000 years it’s a virtual City and you know we talk about sustainability but sustainable here means there’s no painting there’s no tornado going to hit the city there’s not a there’s there’s not a flood insurance obligation on this city you don’t have to worry about you know neighbors getting together and creating a zoning ordinance this city will last and this property in the city will last bitcoin’s the best property right why do you why would you buy it you would buy it because it’s a heck of a lot better idea than buying an apartment to Airbnb for the rest of your life what are you going to do when you die you’re going to leave instructions for your grandchildren on how to operate that Airbnb and you know and where where are the instructions for how to actually convin the convince the mayor to not tax away or rent control your Airbnb you know one one of the problems with property is it’s inherently corrupting in the physical world because if you’re not a political actor in your own property then the politicians take it away from you and that convinces you that you have to then influence the political process and take control of the government whether it’s the city the county the state right entire states were created right why is Las Vegas here why are you in the city you know why you’re here it’s because they drove all the way down to the cross the straight this the state line and when they were out of California they said okay this is a good State and we’ll put the city here in this part of the desert if the city had been a few miles on the other side of the highway there’d be no Las Vegas everything that’s going on here would have been shut down regulated away made illegal or taxed away sometime in the last 50 years so the problem with physical property is you have to become the political actor or another political actor will just take it away from you and there’s no there’s no middle ground and at the point that you’re no longer politically capable of Defending Your property when you’re children or grandchildren aren’t as well-wired and not aren’t as politically sophisticated ated or charming or charismatic as you are then uh then the county the city the state the the whatever they just crank your property taxes expropriate your property turn it into an airport or a school or whatever utility line and someone writes a little obituary saying oops third generation they lost the Family Farm I guess they weren’t as smart as their grandparents were they probably deserved it right and that’s the best thing about this property here’s a city you can move to a cyber Manhattan there’s never going to be more than 276 to the3 blocks 276 Cub that’s the number I want to plant in your head if Bitcoin was a city in cyberspace it would be 276 blocks wide 276 blocks high 276 blocks deep when you buy a Bitcoin you’re buying one of those blocks blocks that’s all there is 276 is the cube root of 21 million to the nearest integer there’s no second best property but again as I say properties really uh it’s an it’s underselling what Bitcoin is Bitcoin is much better than digital property Bitcoin is the best Capital asset Capital what is capital pure economic energy bitcoin’s digital Capital it is the first occurrence of pure economic energy in the history of humanity if we look at every other asset there’s no other asset there’s no second best Capital asset there’s no asset that represented pure economic energy the closest thing we have to it is the myth of gold and the idea that you know if I’m successful one business I’ll I’ll basically convert that success into gold when I’m a powerful King when my kingdom is successful it’ll be the kingdom of gold when my city is successful it would be the city of gold right the gold standard right we talk about gold but gold was never pure economic energy just as the Spanish when they had all their gold wash up in Queen Elizabeth’s Harbor during the Great Wars and she took it all and and then they lost the war in the Netherlands because she took their gold because their gold had to be shipped on Wooden Ships it wasn’t wasn’t quite energy at all it was a little bit too clumsy and uh and gold of course as we talked about it’s a commodity it’s inflationary the Spanish had hyperinflation you know in the in the 16th century after they brought all the gold back from the new world uh 500% inflation they collapsed their entire civilization they destroyed their empire because they found too much gold must not have been pure economic energy the way it worked out the problem with every other asset and and the primary Capital assets are Equity Credit the bonds that is currency and property they’re all impaired by physical constraints the physical constraints lead to political constraints lead to lead to entropic effects k chaos disorder fragility risk bitcoin’s better than that bitcoin’s Immortal immutable indestructible the whole idea of Bitcoin is I create an asset which doesn’t live in the physical world that lives in the virtual world and because it’s Immortal I mean Immortal is a pretty big word I mean what’s the difference between inflating the gold Supply 2% a year and inflating the Bitcoin Supply 0% a year over 10,000 years well the useful life of gold the half life of money in gold is or half life of capital on gold is 30 years it’s a difference between dying in 30 years or living forever that’s what when people tell you 2% inflation doesn’t matter well 0% inflation is live forever or Immortal and 2% inflation is die or half die in 30 years die fully in 60 to 70 years it really does matter so the idea of a mortality in your in your energy is pretty critical immutable right is someone going to corrupt it indestructible is an act of God a force measure going to destroy it everything else all these other Capital assets they suffer from those risks and because Bitcoin doesn’t it’s inevitable it’s inevitable idea why look at Bitcoin man here not stupid right people aren’t stupid I mean go back 10,000 years and then find everyone that disagreed with you on every ideology and every religion and then ask the question what they all agree on and they generally all agreed that they didn’t want to lose their stuff right just about everybody whether you know whether they’re Socialist Communist capitalist every possible ideology they all agree that that generally being wealthier or having economic power is better than not having econom omic power now there’s a few people that kind of forsake all their property and and surrender their economic power they end up losing control of the government and lose control of the society and they certainly lose control of the armies because one of the lessons of history is if you can’t pay your soldiers then they’re going to Mutiny and then your Empire is going to collapse so in this particular case every self-interested human being that that’s going to compete in a darwinian world is going to agree that they want immutable mutable Immortal indestructible Capital right who doesn’t so back to the numbers what’s the best Capital asset Bitcoin what’s the second best Capital asset well actually the SNP is the modern surrogate for cost of capital so that’s been the case at least for 30 years probably 30 40 years since the Vanguard 500 and since SP was launched by State Street and so if you’re looking for the cost of capital what is the cost of capital it’s kind of like the rate at which your Capital has to return for you to not get poorer and it’s kind of interesting here 50% over four years is about 12% a year the cost of capital is about 12% if I had to guess at what rate does the US dollar money supply expand probably 12% because that’s kind of copying it I mean the probably the dollar supply expands a little bit faster that probably slightly underperforms the monetary inflation rate but but if you had to pick one metric and say what’s the metric that gives you a sense of how rapidly the world currency Supply is expanding in dollars probably the S&P 500 that’s the cost of capital and as you can see when you have inflation the money Finds Its way into the strongest asset and it does not find find its way into the weakest asset so this is another way to see inflation this is last four years and what do you see here you see that when uh the money supply expands perhaps 50 60% I wouldn’t be surprised if it didn’t expand 60% uh I don’t think we measure it by the way I think that all all of the the official measurements of M2 I think all of them are incomplete imperfect in the same way that unemployment statistics are imperfect in the same way that GDP statistics are imperfect in the same way that inflation is imperfect they’re just synthetic numbers that a certain organization decides to focus on but what do you what’s the story here the story here is that uh that bonds don’t hold value right they’re awful Capital assets silver doesn’t work gold be doesn’t keep up with the cost of capital the NASDAQ you know interesting it underperforms the S&P why well you know sometimes you get you get some big Winners with technology and sometimes you don’t but maybe the S&P is a more broad index and just uh got a little bit less of a sharp edge to it less risk in it there’s a lot of lowrisk businesses in the S&P 500 and then count and then obviously what we see is uh Bitcoin is the only asset that exceeds the cost of capital another way to say that is everything else is deluded you invest in anything other than Bitcoin you’re destroying Capital you’re destroying wealth right you invest in the S&P 500 it’s a conventional Capital asset you won’t look stupid you’re probably still losing a bit of wealth but nobody will notice because the rest of the society’s using that as The Benchmark but you know if if you’re not doing the 50% then you know you’re running a hedge fund underperforming the S&P 500 you’re destroying value most of them underperform the S&P 500 and they destroy value what’s the best Capital asset Bitcoin what’s the second best there is no second best bit that makes Bitcoin the best treasury asset treasury meaning you got a company a private company a public company you’ve got a treasury you know a treasury means you got a country you’ve got a city you know you have municipality you have an institution you have an endowment you have a treasury well most operating companies surrender their Capital to avoid shareholder dilution right because if they hold the Capital and they invest it in t- bills they’re going to get 3% after tax against a 12% cost of capital per year and so you hold a hundred billion dollar of capital you destroy $9 billion of shareholder value a year you know burshire Hathway’s got 160 billion of capital that’s a $15 billion a year cost and or in order to use that as a treasury asset cash and credit are both deluded Bitcoin is the first treasury asset that’s accretive that is you carry a hundred billion do of Bitcoin it goes up 40% a year you’re earning $40 billion of accretion a year instead of $9 billion of delution a year that means Bitcoin changes the rules of modern Corporate Finance Finance for the past 50 years in B school you know is taught like this you have to uh operate on the p&l to strip away all volatility we want you to pursue the Microsoft model we’re going to sell you three-year Enterprise agreements and they’re fixed for the next three years we’ll renew them every three years the CFO of Microsoft can predict the quarterly results 12 months in advance Plus or minus 50 basis points or 100 basis points the only moving part is the cost and the costs are controlled by the corporation so modern Finance says you’re a good CFO if you strip the volatility off the p&l and then you’re a good CFO if you return all the capital of the shareholders via buyback or a dividend no matter how tax and efficient it might be and then if you want to be a really good CFO you borrow $50 billion and you give that back to the shareholder so you actually go to negative working capital well so you know and that’s happening where it’s happening at Apple it’s happening at meta it’s happening most places why well I mean partly it’s happening because you need to get your EPS to go up by 12% a year if you’re going to beat the 12% cost of capital and make your stock a store of value and if you’re organically only growing 1 2 3% a year which is the I mean people do the math if the economy grows 2 or 3% a year and you need your Equity to grow or your cash flows to grow 12% a year per share the only way to do it is to borrow money and buy back your equity and lever up but at that point you go to negative capital okay so if you hold positive Capital that’s what the the that’s what bonds do to you and if you hold negative Capital now you’re fragile you have one bad quarter you go bankrupt right so the problem here is that the treasury asset that’s conventional is toxic and it’s killing the companies the corporate life expectancy is 10 15 20 years okay and we’ve we’ve simply accepted the fact that our company’s going to die in 20 years but the reason they’re dying in 20 years is you’re injecting poison into their veins if they just stopped injecting the poison they’d live hundreds of years right that it’s a very a very basic Insight so what’s the what’s the way to flip that the way to flip it is you stop injecting toxic assets onto your balance sheet and you actually put a creative or healthy assets onto a corporate balance sheet this is what happened to micro strategy since we adopted a Bitcoin strategy in four years you’ve all lived these four years sap IBM uh Salesforce and Oracle that’s what they do Oracle looks like the winner they beat the cost of capital of 50% right the S&P oracle’s the winner the rest are losing they’re not keeping up then you got Amazon Netflix they can’t keep up with the cost of capital Apple’s barely tracking the S&P meta Microsoft Google looking a little bit better and then you see where the assets are any company that simply had a large portion of their assets and Bitcoin is getting 435 micro strategy levered up by borrowing cheap debt and buying Bitcoin and therefore we do better now if you have had asked someone is a $500 million company growing 0% a year in the in August of 20120 are they going to beat every one of these companies performance people would have said no stinking way right and the truth is it’s not us it’s Bitcoin stop bleeding the patient the patient mortality rates plunge when you stop bleeding the patient and when you sterilize the equipment you use to operate on them right it’s basic medicine eliminate the toxicity so what’s the best tech investment bitcoin’s the best tech investment best the best tech investment an investment in something everybody needs no one can stop few understand Apple in 2010 Amazon Facebook Google everybody needs it nobody can stop it people don’t understand it if people agree with you when you say I like Bitcoin that means it’s not a good investment anymore you understand at the point when it’s not controversial and everybody agrees with you everybody will own it the price will be 100x you won’t be able to afford to buy 1% of what you want right you want to know it you don’t want them to understand it let them take 10 years to figure it out because that’s how you 100x what’s the best new investment idea bitcoin’s the best new investment idea okay financial advisors they’re always they’re looking for an alternative investment that’s going to provide performance without direct correlation to risk right and they’ve been stuck in a rut for 30 years right this is JP Morgan’s family office survey what do people own they own some private Equity some public Equity some real estate some cash some bonds some Commodities infrastructure you notice Commodities are the least popular a lot of people just think it’s a no fly zone the other stuff are pretty conventional but coming back to this chart you know I think this is probably also JP Morgan L none of these assets are beating the monetary inflation rate you just feel smart because you tell yourself the the inflation rate is the consumer inflation but for the most part the screaming winner are 1% better no nobody’s got a great solution right you can either do really awful or you can just you know keep your wealth without generating any more nobody can out outperform inflation so what do they invest in well these family offices this is capital weighted they put 45% of their Capital into alternative Investments they don’t want to hold public Equity their view is public Equity is fully valued they certainly don’t want to own bonds right so so much for the 60/40 portfolio their portfolio is not 6040 they want something else now something else is more like real estate or something private or some special situation but what’s the best alternative investment bitcoin’s the best alternative investment right what’s the second best there is no second best right there’s hundreds of thousands of financial advisers and every wealthy family in the world is looking for the best alternative asset okay why is Bitcoin the best alternative asset well just a little bit of inspection will will demonstrate that it’s uncorrelated to currencies corporations or counterparties no corporate execution risk no currency debasement risk and none of the counterparty risk that comes with bonds and credit and the like what is it it’s Global it’s non Sovereign it’s a store of value it’s liquid you know buying a building in San Francisco is not liquid you can’t buy it in a minute you can’t sell it on the weekend and the truth is and this is the irony of ironies everybody thinks Bitcoin is risky because it’s volatile it’s volatile because it’s not risky it’s low it’s the lowest risk thing you can own in the world because it’s the thing that has the most risk Stripped Away the reason it’s volatile it’s that it’s the most desirable most accessible thing which means that everybody else is expressing their sentiment and their emotions every minute of the day everywhere in the world however they wish to and why is it the best alternative asset because it’s the longest duration asset right you buy a building on the beach it’ll last for 30 years do you want to buy a building in Manhattan that’s good for 50 years or whatever or do you want to buy the granite or the shist under Manhattan that’s been there for 200 million years buy 100 blocks of granite in Manhattan right don’t don’t get caught up in the building the zoning the corporation the parties the conferences and the whatever when Howard Hughes came to Las Vegas he looked around and he bought all the land he bought so much land that they’re still building on the land that Howard Hughes bought and he’s been dead 50 years Summerland it’s all Howard Ed everything he did he looked he was like well if this is going to work I’m just going to buy all the land because I don’t know which casino will work right the land’s still here the casinos are gone the restaurants are gone the politicians have come and gone every other good idea is gone they built you know it used to be the Mirage was cool Treasure Island was cool the bagio was cool the wind was cool the enco was cool here we are in some cool place the land’s still here bu the land that’s the alternative asset and of course that makes Bitcoin the best asset class it’s an entire ecosystem of products services companies Securities derivatives and professions it’s the global digital asset Network it’s the internet of money it’s the Securities or Bitcoin back Securities are being issued worldwide everywhere at an accelerating rate this year right you saw an explosion of spot ETFs in the US but look at all the ETFs in Hong Kong look at all the ETFs in Europe this is the beginning right you’re going to see more and more and more every one of these companies is joining the ecosystem they’re securitizing and and it’s not just this micro strategy Security Options are security there are options and derivatives on the Securities there are bonds on the Securities this is exploding it’ll continue every Bitcoin miner is a security one day there’ll be a thousand Securities or 10,000 Securities all backed by Bitcoin same with corporate treasuries Bitcoin treasuries are are growing rapidly right they keep this chart up every month it’s never declining the chart’s not ever decreasing it only goes One Way Bitcoin is a capital ratchet it’s a it’s a one-way ratchet right Archimedes said give me a lever long enough and a place to stand and I can move the world Bitcoin is the place to stand the Leverage is coming via all these Securities all these corporate treasuries right and the Leverage is getting to be extreme micro strategy showed you how how you can actually generate performance with leverage but we’re just the first we’re not the only you could do it 10,000 more times the more leverage that gets put on this network the bigger the Network’s going to get you know and a final few points bitcoin’s the best bank it’s the bank bank say it’s a savings account for billions of people no no currency no country No Agenda it’s egalitarian it’s open there is no second best bank bitcoin’s the best path to peace it’s open permissionless transparent decentralized it’s a fair and Equitable way to settle differences between Global counterparties that have conflicting interests what’s the second best way right second best way maybe is we shoot each other up right with weapons but this is the best way there’s no second best way it’s not just the path to peace it’s the path to Prosperity right this is a global monetary Network giving equal property rights to all economic classes in every nation what’s the second best way to do this there’s no second best way where are we now bitcoin’s on a path of evolution from the idealist to the instit tions the first dozen years it was the it was the era of the idealists the cipher punks you know the Libertarians the entrepreneurs the crypto Cowboys right you know the story it’s been written about people will will probably make many more movies about it what was 2020 to 2024 the crazy years right starting with covid ending with the approval of the spot ETFs it was the crazy years what’s going to happen to crypto who’s going to control crypto will it be regulated right will will Bitcoin be banned will it be hacked will it be copied we resolved that in those four years and now we come out of the crazy years now we’re in the era of institutional adoption institutions corporations and investors are going to define the future of this network from one trillion to 100 trillion and that’s appropriate right from 20 2008 to 2020 the network went from zero to 100 150 billion and between 2020 and 2024 it went from the 150 billion to 1.4 trillion so you can see how this is lining up of course institutions and corporations are going to join this network they have all the money it’s a monetary Network right at the end of the day you have a monetary Network then people with all the money that run the money that need the money are going to join the network so in summary like Bitcoin is the best idea there’s no more powerful idea than the digital transformation of capital right what are you going to do with this well you’re going to improve your life your family your product your service your company your institution your government or your world right and proove them all right it’s pretty straightforward how you do it you’ve got Pure economic energy it’s not the solution to every problem in the world it’s just the solution to half the problems in the world but every other problem in the world you’re going to need economic energy or economic power to solve it and this is how you harness and channel that power no force on Earth can stop an idea whose time has come this is an idea it’s time has come it’s unsto able and so I’m going to end with the observation that Bitcoin is the best the best what the best it’s the best on it’s the best idea once you found the best idea everything else you can invest your time which is scarce or your energy which is scarce everything you can invest your time and your energy in is dilutive everything else so what do I suggest I suggest study Bitcoin buy Bitcoin hold Bitcoin build on bitcoin Advocate Bitcoin defend Bitcoin and then you can enjoy Bitcoin so Bitcoin there is no second best thank you down

Recorded May 2, 2024 at MicroStrategy World: Bitcoin for Corporations

MicroStrategy Executive Chairman Michael Saylor delivers his ultimate Bitcoin thesis to attendees representing leading Fortune 1000 companies.

Simply put: there is no second best to Bitcoin.

Bitcoin is the best treasury asset, providing accretion instead of dilution. It is the best alternative investment, uncorrelated to currencies, corporations, and counterparties. Bitcoin is the best bank, path to peace, and path to prosperity. It is an entire ecosystem of products, services, companies, securities, derivatives, and professions. Bitcoin is on a path of evolution from idealists to institutions, with institutional adoption defining its future.

Chapters
00:00 Introduction
00:33 The Best Idea: Digital Transformation
07:11 The Best Way to Create Digital Capital
09:01 The Best Brand and Investment
14:02 The Best Digital Commodity
31:27 The Best Property and Capital Asset
37:03 The Best Treasury Asset
52:29 The Best Alternative Investment
57:06 The Best Bank and Path to Peace
59:16 The Ecosystem of the Future
01:01:40 Institutional Adoption and the Future

Read more: https://bitcoinmagazine.com/business/michael-saylor-delivers-bitcoin-masterclass-to-fortune-1000-companies

Learn more about MicroStrategy World | Bitcoin for Corporations: https://www.microstrategy.com/world-2024/bitcoin-for-corporations

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