Michael Saylor’s Master Plan: "Fix the Money, Fix the World"

Michael Saylor, a prominent figure in the Bitcoin space, shared his long-term bullish outlook on Bitcoin, projecting a 21-year average annual return of approximately 29%, with an expectation that it will eventually reach $20-21 million per coin, leading to a market cap of around $400 trillion and its emergence as the dominant global digital capital. He believes this price appreciation hinges on several key developments: global recognition of Bitcoin as a legitimate capital asset, its adoption by the banking system (overcoming current penalties in Basel rules), the securitization of Bitcoin through ETFs, and the formation of robust bank credit networks. Saylor elaborated on the concept of bank credit networks, explaining that for every $10 billion of credit created by banks using Bitcoin as collateral, the entire annual supply of newly mined Bitcoin is essentially absorbed. He highlighted that the current rehypothecation of Bitcoin in the shadow banking system, where people borrow against it to get yield or loans, acts as a price constraint. The cessation of this rehypothecation and the migration towards asset-backed cold storage would significantly drive up Bitcoin's price, creating a short squeeze. He then discussed MicroStrategy's evolving financial strategy, moving from equity and convertible bonds to credit instruments like STRC (Stretch). Saylor explained that Stretch was developed to cater to investors seeking pure yield without duration or delta risk, essentially offering a Bitcoin-backed money market instrument. The innovation lies in its variable rate preferred stock structure, allowing the issuer to adjust the dividend monthly to maintain principal stability. This contrasts with traditional preferred stocks that have fixed dividends or fixed credit spreads. He emphasized that Stretch has become the least volatile security in the S&P 500 universe, transferring volatility to MicroStrategy's common equity. Saylor detailed the mechanics of asset-backed credit, using gold as an analogy. He explained how a capital asset with no cash flows can be converted into a credit asset by issuing preferred stock that offers a dividend derived from the expected capital appreciation of the underlying asset. For Bitcoin, with an anticipated 30% annual return, a 10-11% dividend is feasible. He outlined how MicroStrategy leverages its equity, which often trades at a premium to its Bitcoin holdings, to generate cash flow for these dividends by selling equity or, if necessary, selling Bitcoin with a tax gain. The company also utilizes derivatives and maintains a cash reserve as a buffer. He argued that the "pure play" strategy of focusing solely on Bitcoin is crucial for transparency and investor understanding, allowing different investor profiles (equity, credit, derivatives) to participate. Diversification would obscure risk. He stressed that the current model is designed for long-term capital appreciation, with equity investors seeking amplification of Bitcoin's returns and credit investors desiring stable, tax-deferred yield. Addressing concerns about quantum computing threats, Saylor adopted an optimistic stance, categorizing himself as an optimist rather than a pessimist or alarmist. He believes the Bitcoin community, with its smart developers, will find solutions and adapt, just as Satoshi Nakamoto suggested with the possibility of upgrades. He cautioned against panicking and making hasty decisions based on hypothetical risks, likening it to iatrogenic solutions where the cure is worse than the disease. He pointed out that many perceived threats have not materialized and that alarmism is often used to gain attention and influence. Regarding Ethereum and other staking networks, Saylor acknowledged their evolution into a separate segment focused on tokenizing securities, currencies, and commodities, requiring smart contract functionality. While recognizing Ethereum as a leader, he anticipates competition from other proof-of-stake networks. He sees regulatory clarity as a key factor for this sector and believes the market will ultimately decide winners based on technical, economic, and ethical soundness, with regulators and legislators also playing a significant role. Finally, Saylor reiterated his core belief in "fixing the money" by providing a digital bank account that pays more than the inflation rate. He sees MicroStrategy's mission as creating digital credit and digital money to serve this need for a billion people, offering a stable, high-yield product that simplifies financial life. He views this as a revolutionary product with immense value, akin to the advent of cars or robots, and dedicates his life to this endeavor with a monomaniacal focus.