Michael Saylor on Institutional Era of Bitcoin, Altcoin ETFs, Tokenization, and Government Deficits

[Music]

welcome back to the show we are at micro

strategy World 2024 in Las Vegas joining

me here is executive chairman Michael

sailor always a pleasure to talk to you

I talked to you recently so I'll I'll

keep this one easy on you but we're here

for Bitcoin for corporations and micro

strategy obviously being such a Pioneer

it's been four years since you

implemented the strategy so tell me a

little bit about that Journey what

you've learned and why it's so important

to talk about Bitcoin 4 corporations at

an event like this you know there's a

lot of great Bitcoin conferences and

sometimes the conferences are aimed at

individuals and some of them are aimed

at policy makers and some are aimed at

developers uh but we had a unique

experience as a company that adopted

Bitcoin and so we wanted to have a

conference to address the questions that

corporations air whenever we speak with

Executives that are considering

embarking on a Bitcoin strategy and

that's why we decided that we'd sponsor

this kind of conference once a year and

this is our third Bitcoin for

corporations conference so I know that

you talked to a lot of Business Leaders

what are their questions about Bitcoin

why haven't more of them gone the way of

micro strategy I mean they have to see

your share price right so when are we

going to see them well you know you've

got individuals and and they have to

they have to talk with one or two people

that are in a close Circle and and go a

lot of research to make a decision and

then you have private companies and they

sometimes have uh one investor and one

or two Executives and then they make a

decision or maybe one uh they might have

one or two um attorneys or Finance

people but when you get into public

companies for them to make a decision

like this they have to take into account

the the questions that will come from

the finance department from the legal

department from the techn ology

Department from the senior executive and

then they'll have questions from the

board of directors and then they have

questions from their outside auditor

from their outside legal counsil and

after they've aligned the interest of

all of those and and those uh people

will be thinking well what about our

regulator and if they're in the UK is a

different regulator than France and

that's different than Japan that's

different than the US so so the Nexus of

the company makes a difference and let's

say they get through all of that and

they and they build consensus amongst

the officers and the directors and the

key the key professional partners of the

firm then they've got a shareholder

relations challenge which is they might

have uh public Equity holders they might

have public debt holders and so if you

have creditors the bank might own some

of your debt the bond holders might own

some debt the equity holders might own

some uh own the equity and the issue is

how do I communicate and build consensus

with now so corporations they they tend

to have many many more challenges

they've got many more constituencies to

align and they don't just consider the

consequences of making the decision but

they consider the Ripple effects two or

three or four levels deep like for

example if we do this what will our

biggest shareholders limited partners

think of their decision to invest in up

it might be two or three uh steps

removed from us and they also consider

not just the Rippling of this

organization is backed by that

organization is backed by the state of

California right they also consider well

what about 10 years down the line if we

have to enter into a new business and

you know will this affect that and so

corporate corporations by their nature

they move slower they need more

consensus

and you could get a little bit

dejected but um there's that that

Japanese maybe it's a Chinese phrase is

you know is if you if you want to go

fast go alone but if you want to go far

go together and once the company is

aligned they can invest hundreds of

millions or billions or bring 10 10

billion dollars of capital to bear and

they can bring that benefit to millions

or tens of millions or hundreds of

millions of people so so it's not really

an either or it's just a bigger

investment in order to get a better R

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given the challenges you just stated why

should major corporations adopt a

Bitcoin strategy the way you did well

there there are two primary reasons

there's a p&l reason uh Bitcoin

represents the world's first greatest

digital settlement Network digital

monitor Network digital trust Network

and um we're going to have um one

session I'll have with David Marcus

he'll be speaking about wiring dozens of

companies into the lightning Network for

for Speedy extremely cheap settlements

so if you're a company and you want to

be able to move money the speed of light

or if you want to implement the next

generation of Internet applications by

by using the internet of money then

you're going to be interested in this

it's like we're in the first year of

corporate adoption of the internet of

money and uh just like in 1994 that was

the first year of of adoption of the

internet you would want to do it if you

want to stay on the Leading Edge of

digital

transformation the second reason the

company want to do it is because the

entire world is attempting to beat cost

of capital and the cost of capital is

about

12% and the capital asset that most of

them use is is um bonds and bonds very

rarely yield more than 3% so all of

their treasury portfolios are invested

in something which is generating a minus

9% a negative real yield and Bitcoin

generates a positive real yield in the

last four years it's been 40 to 50% so

it's four times the cost of capital but

two times the cost of capital would be

magical and even equal to the cost of

capital if you could simply invest your

Capital at 12% and meet 12% then your

Capital wouldn't be deluded to your

shareholders so Bitcoin represents an

opportunity on the p&l for technology

leadership and it represents uh an

opportunity on the balance sheet to

attract capital

preserve capital and create shareholder

value well we've seen some Milestones

over the last few years as far as the

move towards more institutions adopting

Bitcoin we have the ETFs recently

approved the fby rules are changing do

you think there's going to be another

Catalyst that we should be watching out

for that will usher in maybe these big

companies finally saying they're going

to put Bitcoin on the treasuries yeah I

I think that uh January of 2024 was the

beginning of the period of corate

adoption of Bitcoin and you know that

first big Catalyst was the sec's

approval of spot ETFs for

Bitcoin the second big catalyst is going

to be the sec's denial of every other

crypto application for spot

ETF and and the entire world was

thinking will The Regulators

ban

Bitcoin and we answered the question

no it won't be banned and then the next

objection is but will it be

copied and when we actually see The

Regulators deny the applications of the

copies of other crypto assets then we

will have checked the box it won't be

banned it won't be copied and generally

when people are if you're if you're

deciding whether to build a 100 story

Skys scraper and invest hundreds of

millions of dollars on it and someone

says well you either need to use steel

or you need to use

bronze and you say well which one is the

right one and and the answer is unclear

well it might be that the bronze is the

right one and steel collapses or it

might be Steel's the right one in bronze

collapses that paralyzes a big corporate

project but when you get past that and

and you realize there's just steel and

there is no second best metal for

structural uh civil engineering once you

get to that point the project moves

forward because it's pretty obvious to

the corporation they want the 100 story

building they just don't want to be

paralyzed by the indecision and the fear

of making the wrong choice so I I think

that the critical Catalyst will be not

just the institutional ex or or the

regulatory acceptance of Bitcoin as an

Institutional asset but it'll also be

the regulatory rejection of the

Alternatives well you talk a lot about

how much regulatory Clarity and

certainty there is around Bitcoin but I

have to ask you because it seems like

there is still some uncertainty around

different aspects of Bitcoin activity a

lot of people are wondering what defines

a money transmitter business um how much

should wallet companies provide in terms

of information on their customers there

seems to be some controversies coming up

in the community wondering will the

peer-to-peer aspect be protected will

privacy be protected and I've always

seen um you know you as someone who has

this very measured conservative approach

to bitcoin being able to fit into the

greater traditional Financial structures

that it's not a zero sum game it's very

symbiotic and and all all of us can win

right so can you talk a little bit about

your thoughts on that because there

seems to be some concerns right now

given recent headlines and law

enforcement

actions yeah um well I think that if we

go back to light Sparks activities again

they've got dozens and dozens of

corporate

customers that are regulated compliant

entities that want to integrate

lightning in order to provide instant

chap final settlement um each of those

companies is operating in a different

jurisdiction perhaps with a different

set of regulators and they may have a a

different mission right the mission of

of a crypto exchange or a large scale

bank would be different than a simple

money transmitter and that might be

different than an eCommerce company so

the reason we need corporations to be

involved is corporations can afford to

hire the array of lawyers the array of

Finance years they can put in place very

expensive accounting

systems and those systems you know will

then uh have normally built into them

all the various compliance rules perhaps

state by state perhaps Nation by Nation

the rules for doing Banking and Money

Transfer in the UK will be different

than France will be different than

California so I think what you're going

to see over the coming four years is uh

Progressive adoption of Bitcoin by a

bunch of banks a bunch of various

regulated entities operating in every

major jurisdiction the rules uh

regarding transfer are going to evolve

in some cases they're clear in some

cases they're hazy in some cases they're

being contested in some cases they're

very unclear and uncertain uh I don't

think that in four years every question

will be answered but I do think four

years from now you'll have a lot more

clarity than you have right now and that

Clarity to a certain degree will come

because of the entrance of the large

entities in space for example the uh the

success of the Fidelity in the Black

Rock ETFs will accelerate Clarity with

regard to can uh can NASDAQ and you know

or other stock exchanges trade Options

under what you know when can they trade

options there's already uh interesting

uh interesting movement of foot for the

New York Stock Exchange to start trading

247

and that's uh that's been created by the

crypto enthusiasm so I think you're

going to see an evolution of traditional

Finance organizations I think you're

going to see uh a lot of lobbying for

more precise uh legal Clarity and

Regulatory Clarity and you're going to

see a lot of building both by uh new

digital assets companies as well as

you're going to see all the traditional

accounting and traditional Finance

operators they're going to upgrade their

systems in order to support this new

Bitcoin back economy and it's going to

take a lot of money and a lot of

accountants a lot of lawyers and and a

lot of thinking and some time but over

because of that action I think we'll get

to a much better place I'm hearing a lot

lately about tokenization do you see the

real world assets being tokenized on

bitcoin I think that uh the question of

what happens with tokenization is going

to be a political one we're going to

need to see a digital assets framework

that's adopted and you know what the EU

does and what the US does and what uh

jurisdictions like Brazil or Singapore

do will determine how fast that industry

grows and what direction it grows and I

think it's too soon to give an answer on

that it's time for a quick break to hear

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way today all right back to the show I

think a lot of people look at Bitcoin as

an insurance policy and when we zoom out

and look at what's happening on the

macro side and what you mentioned the

cost of capital Staying High they have

to keep interest rates high but

inflation's elevated do corporations

think about that I mean we we just had

an announcement this week uh hearing

that Yellen is very concerned about the

deficit are corporations concerned about

the deficit and should they be looking

at Bitcoin as an insurance

policy I think most corporations have

have their hands full uh competing on on

the on the product side so so most

companies have either a very competitive

product Market or very competitive

service market so their first mission is

how do I have the world's greatest

product or service their second Mission

often times is how do I do it

efficiently and so in the background

they're always swapping out Technologies

and and when the web comes along or when

the internet of money comes along

they'll look and they'll say well right

now it's 2% fee and can I get that to be

a 0.1% fee so they will discover new

technologies as a way to save money or

they'll if we take say cash app for

example it supports Bitcoin and that's a

new technology that generated 10 billion

dollar a year of Topline Sal so they use

it to differentiate their their product

so if they find a way to differentiate

or to save money they'll be very

enthusiastic then uh then you have on

the balance sheet side you have a set of

financial uh actions that they take in

reaction to interest rates if interest

rates are gting to zero they're changing

their balance sheets when interest rates

are going to the Moon

they're moving the other direction and

they're of course reacting to

shareholder pressure and if the

shareholders are saying give us the

money back with a buyback or a dividend

and they're reacting to that but

throughout all of that right there is

this spreading orange wave and the

orange wave is of course Bitcoin and and

it is spreading into the capital markets

through a dozen publicly traded Bitcoin

miners it's entered through companies

like micro Strat and Tesla and block and

coinbase that are that all a Bitcoin

interest uh it's spreading through a you

know nearly a dozen us-based ETFs but

now we have Hong Kong based ETFs and we

have soon Australian ETFs and we have

some European ETFs well as each of those

things spread they slurp up Capital as

their performance outstrips gold or the

S&P or bonds they get headlines and that

causes them to creep onto the front page

of CNBC and Bloomberg and Fox Business

and that starts to plant some questions

in the minds of financial advisors and

institutional investors and they in turn

start to talk to other CFOs and so I I

think that the orange tide is spreading

I think that corporations especially

publicly traded corporations will tend

to be on the conservative side you'll

probably see institutional

investors uh move before the

corporations you'll see Sovereign wealth

funds move before The Sovereign you'll

see the private companies move before

the public companies but you

know you know no there's no way to stop

an idea whose time has come and the

success of the idea will tend to uh

slurp up the capital in the marketplace

because we call them Capital markets for

a reason the cap capital is going to go

to where it can find the highest return

and where it gets treaded the best and

and as that Capital reallocates then

industry Watchers take note and then the

Overton Windows shifts yeah and the

societies Converge on the hardest money

uh you recently said in a keynote

talking about how important it is for

companies to adopt Bitcoin you said

companies are people you know we

sometimes see the the brand names or the

logos but they're people and they're

people who need Bitcoin and I just I

loved that message that resonated with

really everyone and that was the talk

that you gave Bitcoin is for everyone so

any final thoughts just in terms of

where we are right now this sort of

inflection point before the institutions

really come in we're maybe at that

gradually part before the suddenly and

just anything else you want to share

about that I think you look back at the

last 15 years and you can say well from

2009 to

20120 that that was the the the crypto

Cowboy years

offshore wild crazy times and and it was

primarily pre- institutions pre

Corporation I think from 2020 to

2024 those are the crazy years that you

know with covid and lockdowns and zero

uh interest rates and that's when you

started to seeing Fidelity became much

more visible with Fidelity digital

assets and coinbase came public and all

the Bitcoin miners came public and micro

strategy adopted a Bitcoin strategy and

and uh you know Square became block and

cash app uh grew by Leaps and Bounds and

Tesla bought Bitcoin so so that was the

that crazy middle period where where the

the entirey wasn't sure where it was

going to go

2024 kicked off the era of corate

adoption and institutional adoption of

Bitcoin where now now that tension

between our Corporation is this for

corporations is this for institutional

investors or is this just a retail

offshore phenomena that got resolved in

January and and by the end of 2024 it'll

be pretty clear the next four years this

is the early period of corporate

adoption institutional adoption this is

the period where where Black Rock can go

from nothing to having hundred billion

or hundreds of billions of dollars of

Bitcoin right so there's a struggle of

who will securitize the ETF and then

this is the period when we'll see you

know some major Banks you know banks in

South America a bank of to or banks in

Europe or banks in the US that will

become Bitcoin custodians which one and

who will be the leader in that space

well we'll know by 2028 we're still

waiting to see and um this is the year

when you'll start to see large

corporations adopting Bitcoin as a

treasury asset we've we'll have fair

value accounting and it'll become much

more normal and you'll start to see a

Universe of 20 30 40 50 100 companies

that have some Bitcoin exposure I think

once you get to 2028 from 2028 on to

maybe 2040 that last 12 years that

that'll be just break n growth I mean we

we'll we'll see everything kind of

working we'll see 90% 95% clarity as to

as to how it's going to work that'll be

the growth years and I think when you

get to 2040 Bitcoin will be 30 years old

and we move the first 15 years were kind

of adolescent childhood the the 15 years

after that the teenage young adult years

and then

then it'll be like the first 30 years of

the internet right and uh from there

it'll be a growth industry but it'll be

kind of a mature well understood growth

industry and everybody will every

corporation will expect to work with it

everybody will understanded it won't be

this crazy exotic complicated thing

anymore it's going to be crazy to look

back at the time and you're right there

are so many people who are going to be

building killer applications that are

needed um wait to interact and interface

with the different companies 333 million

you said corporations around the world

or something like that so a lot of

bitcoiners to be made thank you so much

Michael sailor thank you so much for

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