Michael Saylor's Strategy World 2026 Keynote: Digital Credit

Thanks for joining me today. Uh this

talk is uh about everybody's favorite

subject. I'm going to speak with you

about how to make money. Literally how

to make money. How to make money for

your family, for yourself, for your

company, for your public company, for

your country, for everything you love.

And specifically, I'm going to talk

about how to make money digitally. And

the the title of the talk is digital

credit. But really this is this is about

a revolution in the way we think about

money. So let's just start with uh the

subject of digital credit. You know what

is digital credit? Well, digital credit

is built on digital capital. Well,

digital capital is Bitcoin. How do we

create Bitcoin? Well, we we put together

a bunch of technologies that were

available. proof of work, public key

cryptography, peer-to-p peer networking,

distributed timestamping, some

semiconductor technology.

And of course, the fundamental question

is what is Bitcoin? And people debate

this at infinitum, but it just seems

quite obvious. It is digital capital.

What is digital capital? Well, it's it's

economic wealth stored digitally. What

is economic wealth stored digitally?

It's the ability to move something of

value somewhere else on Earth over a

digital rail. Right? People oftentimes

ask, well, what's the use case? What's

the value? Well, the value is if I can

send a billion dollars from here to

Tokyo, that's valuable. Try taking a

billion dollars of land out of Tokyo,

try to take a billion dollars of gold

out of Tokyo, try to remove a billion

dollars worth of companies from Tokyo or

a billion dollars of mineral or oil and

gas rights from Tokyo. You just can't do

it. On the other hand, you can move a

billion dollars of Bitcoin into and out

of Tokyo. And if you can do it, a

computer can do it and AI can do it. And

so it it seems very straightforward in

the world of of digital that if

everything we've got that's digital is

better, whether it's digital photos or

digital music or digital video or

digital communications or digital

intelligence, then when we finally have

digital wealth, digital capital, it will

be the basis of something that is

extraordinary and beautiful. And Satoshi

gave us this. Uh the truth is there's

nothing deeply complicated about it.

It's just putting together it's an

engineering breakthrough. Putting

together a bunch of techniques that were

readily available and well known in the

day. It was the way that it was used

that was an extraordinary breakthrough.

Digital credit is very similar. There's

nothing deeply complicated about this.

Uh what we're doing is we're taking a

common thing, a publicly listed company,

a public security, a capital asset,

digital capital asset in this case, a

preferred security, the idea of a

monthly dividend that's variable and a

tax treatment return of capital that's

been around since 1910 and then a ATM

actively managed. and you put together

all of these components. No one of them

is all that difficult. You pretty much

could understand them if you're a sixth

grader. You put all of them together and

you create something which is much more

than the sum of its parts. You you've

created an extraordinary breakthrough in

the entire world of credit. We call it

stretch STRC.

What is our company doing? What is

strategy do? Our company is converting

capital into credit. We're converting

economic wealth into a stream of cash

flows.

That is the big breakthrough. You need

an operating company in order to take uh

a block of economic energy and turn it

into a currency, peg it to a currency,

strip away the risk, damp the

volatility, extract the cash flows in

the form of yield and compress the

duration to now. I don't want to wait 30

years to get rich. I just want you to

give me money every month or every day

forever consistently without risk.

The former, right, is a capital

investment. I buy a big chunk of

Manhattan and I wait 30 years and maybe

I get rich. The latter is a is a a bond

or is it a money market account? So,

this is all about conversion of capital

into credit. And uh you might wonder,

well, how did we discover stretch?

Sometimes people ask us this and and

this is the most poorly understood

concept. Most people don't really think

deeply about capital at the first order

but but STRSC is at the end of a long

journey. I often times say we got a PhD

in leverage at strategy. Well, let's

just start with a basic question.

How do I raise the capital to invest? If

I want to invest in real estate for 40

years, where's the capital come from? If

I want to buy gold and hold it for 40

years, where do I get the capital? If I

want to buy Bitcoin and hold it for 40

years, where do I get the capital?

Well, I'm going to tell you the easiest

place to get the capital. And it's the

worst place. It's an exchange. You go

onto an exchange and you use exchange

leverage. So, I post $100 and I do a 50x

levered Bitcoin buy. And when you lever

up 10 to1 on an exchange, they loan you

$1,000 of capital against your $100.

And when you lever up 50 to1, they loan

you $5,000 of capital, right? Uh and of

course, that's that's DeFi. That's

crypto. People think this is a wonderful

thing. If you look at my chart, you can

see exchange leverage is one hour

capital. If you think about if you think

about the credit terms, the risk

factors, the covenants on the credit and

the optionality that you have for the

credit when you enter into the

relationship and you and you ask the

question, how long do I have the use of

this capital on a probabilistic basis?

Well, the engineer would say that's the

stochcastic duration of the capital.

What is the stochcastic? The likely time

frame I have the use of the money for.

Well, on an exchange, you might have

that money for an hour. If you lever up

50 to1 and Bitcoin trades down 2%,

you're going to get margin called. They

force liquidate you and you get all your

capital ripped away in an hour. So on

one extreme is very short duration

capital. What's the next big idea? Well,

I do a margin loan. I borrow the money

under reggg t and I or I do asset back

financing. I borrow against my bitcoin

or borrow against a stock or an asset.

How long do you have the capital for?

Well, when you get the margin call,

you've got no more than a day. You might

have four hours, but that's about one

day capital. That's like repo financing.

When you read the history of long-term

capitals bankruptcy or Lehman Brothers

bankruptcy, the reason they're

bankrupted is they were financing a

hundred billion or hundreds of billions

of dollars of long-term investments with

one day money,

right? Okay, you invest the money for 10

years and you have the use of the

capital for one day and you and you

think what could go wrong. Okay, that's

a duration mismatch. Well, we had some

of that. We had a silvergate loan where

we actually borrowed from Silvergate and

when Bitcoin crash, you have to post

more collateral. That creates extreme

anxiety for your equity investors. It's

reflexive. It'll unwind your company.

That's why it's not a great idea to do

asset back financing. The the next idea

is senior debt. You go and you borrow

money from a bank or you borrow money

via a bond that has covenants.

Well, I've actually marked it

stochastically as about one year money.

And you're like, well, if it's a

fiveyear loan, why do you think of it as

one year of money? Well, the term is

five years. The covenants are checked

every quarter. You might get to the end

of the quarter where you break the EBA

do covenant or break a lean of some

sort, at which point either the loan

comes due, it accelerates, or the

covenant prevents you from accessing the

capital markets anymore. So, you have

lost the ability to raise additional

capital because you tripped over a

covenant. That means in order to grow

the company, you have to pay off the

loan. So, you thought you had a five,

you have a seven-year loan, but you have

to pay it off in order to raise any more

money if your EBIT DAW ever falls by 2%.

So, it's kind of a banker trick where I

pretend I'm giving you a seven-year

loan, but it's really a seven-week loan

because I know you're going to have to

continuously refinance it. So senior

debt is actually stochcastically much

shorter duration than you would think.

Junior debt is like a junk bond with no

covenants. You've just got a big

interest bill. And so you you've got it

a bit longer, but it's still very

expensive. Convertible debt uh is a bit

longer because you've got a very low

coupon. Maybe you've got a zero coupon

or 1% coupon convertible debt. You can

carry it for five or six years, but

eventually you have to pay it back. So

convertible debt is is a little bit

longer duration on a probabilistic

basis. But as you can see as we march

through these debt capital, we find

something better. If if you ever credit

default, if you default on your interest

bill, if you can't refinance or if you

bust a covenant, you lose the capital.

In the extreme case, the equity goes to

zero. The company's bankrupt, right?

That's very uh dangerous, if not toxic

capital. When you get to equity, right,

if you look at a senior preferred like

STRF,

well, you have the money for a while,

but you've got covenants and you got

penalties if you don't pay the dividend.

So, it's a little bit longer. Um, but

it's it's better than uh debt, but it's

not as good as junior PRs. The junior

prep doesn't have the covenant, so you

can you've got more optionality, fewer

covenants, longer capital. The

convertible preps have a lower cost,

fewer covenants, longer capital, and

then when you get to a variable

preferred, what's going on is the

optionality is exploding. You're getting

more optionality. You don't have the

option to vary the coupon of a bond, but

you do have the option to vary uh a

monthly dividend. So, as the optionality

explodes, the duration uh lengthens. And

so, what and of course the the last form

of capital is equity.

I sell $10 million of equity, I have the

money forever. Well, from a net present

value point of view, that means I've got

economic benefit for about the next

hundred years before the benefit becomes

uh third order. So, if you look at the

table, you can see if you want to invest

for a long period of time, you'd really

like to use equity, but if you can't get

the equity, what's the next best thing?

Well, it's uh it's variable preferred

credit. We discovered uh digital credit

and stretch because we kept moving out

this curve of risk and we found what we

thought was the longest duration capital

other than equity. Now what is digital

credit? It's solving the investor

dilemma. The dilemma of the investor is

I either get double-digit returns and I

get deferred tax treatment on equity and

I take large volatility, large draw

downs and I might lose my capital or I

buy credit where I have uh principal

protection, low volatility but I lose a

double digit returns and I have to pay

ordinary income tax or I have to pay

capital gains tax every time I receive

anything in that year. So what if you

wanted the benefits of equity and the

benefits of credit and you wanted to get

rid of all the liabilities of both? What

we did with STRC was created this

instrument which gives doubledigit

returns uh deferred capital gains tax

treatment, low volatility, principal

protection

all at the same time, right? And and

that's the big unlock there, right? You

don't have to make a compromise.

And um who's it designed for? Well, it's

definitely designed for retail

investors. It's also designed for

corporations, but you can also offer it

to institutional investor, a hybrid

investor, or a cryptonative investor.

So, there's lots of different uh classes

of investors that might want this. Um,

in the in the process of building the

longest duration credit, we

inadvertently discovered that all of the

dividends for that credit are return of

capital dividends. There are three types

of ways to tax credit. You either tax it

as ordinary income and you got to pay

income tax upfront or it's taxed as

capital gains or it's taxed as uh as a

deferred uh return of capital. You don't

have a tax on it.

Well, in order to create return of

capital, you have to have a treasury

company that doesn't have positive

earnings and profit that would then that

would create a tax liability that you'd

have to pass on to your credit

investors. So, what we discovered was we

could create credit where the tax

benefits go directly to the credit

investors instead of acrewing to the

issuer. And because as an issuer, we

don't actually generate taxable cash

flows, we don't need the tax benefit.

Most credit created by companies was

always to the benefit of the issuer to

the detriment of the investor. And we

stumbled upon a new idea. What if we

created credit which was the benefit of

the investor? The best credit. The

credit becomes the product, not the

means to the product, right? Um

well, so you create this and now the

issue is how do I assess the digital

credit? What's the mathematical

framework for assessing credit risk?

And really we created three metrics. BTC

rating is the amount of collateral

coverage. Like if you're BTC rated five,

it means you got $5 of equity for every

dollar of credit outstanding. Uh BTC

risk is the probability that you get

underateralized at the end of the term.

If you have $5 today, will you have only

$1 of collateral uh at the end of the

term of the credit? You know, to pay it

back if you had to pay it back. And then

if you calculate that BTC risk, you can

back into a credit spread. What is the

fair credit spread above the risk-free

rate that you have to pay the investor

to offset the risk? Right? So there are

simple formulas here for people that

like formulas, but maybe the bigger

point is the credit spread of investment

grade bonds today is 78 basis points.

That means you're getting paid 34 of 1%

more than the risk-free rate in order to

take the credit risk of a company like

Apple or Microsoft. The credit spread of

junk bonds or high yield, I guess, is

288 basis points. So those are the two

benchmarks worth looking at. And now we

move to the theory of asset back credit.

What is it? Well, the idea is I buy a

capital asset that's going to return 30%

and I strip off the first 11% and I pay

it to the credit investors. Maybe I buy

the S&P index, I expect to pay 12%, I

strip off the first six and I pay it to

the credit investors. If gold is going

to appreciate 10% a year, I could create

a preferred instrument that pays 5% a

year and pay that to the credit

investors. So, and you know, logic says

you're not going to pay a dividend

greater than the return of the capital

asset over a 100 years. that you're

going to eventually run out of

collateral, but you can certainly pay uh

a dividend rate lower than the ARR of

the capital asset. And that takes us to

the question of what's really going on

here? The signal processing. Okay,

digital capital is highly volatile,

growing in a in a a rate. If you look at

that chart, that that uh orange line

kind of looks like the Bitcoin price

chart if you've looked at it over the

past 10 years. It's doing this.

The credit line is what is what most

people want. People don't want to get

rich

suddenly in the distant future,

unexpectedly after a roller coaster

ride. What they want is to get risk

steadily

with with very very low volatility, no

anxiety. They don't want the fighter

jet. They want the uh the jumbo jet

airliner. and they want to recline in

first class while they go to their

destination.

So digital credit is just stripping out

that smooth 11% out of that very

volatile 30%.

Now where does the excess volatility go?

There's a conservation of energy

conservation of volatility. So if you

want to if you want to take a 30% roller

coaster ride and strip it down to 11%

jumbo jet luxury ride then you have to

put the volatility somewhere else. So

what you can see is the excess

volatility goes to common equity and

what I've just shown you is basically

digital equity digital capital digital

credit is clearly digital stack. It's

changing every 15 seconds. In our case

the equity is MSTR.

It's up 52% ARR. The capital is Bitcoin.

We expect to be up 30%. The credit is

the STRC.

Now, what's the highest yield you can

pay on digital credit? Well, if you

expected 30% then and then you have to

plug in the collateral coverage. What's

the BTC rating? What's the duration?

What's the volatility? Once you plug in

your assumptions, what pops out is,

well, in this case, I can pay 15% and

still stay investment grade on that

assumption set. You go up to 23% and

you're still in high yield. But there is

an envelope of dividends you can pay out

or a dividend ratio you can pay out.

That's just a function of the volatility

and the performance of the underlying

capital asset.

So, what's this chart show? So this

chart shows if you're a skeptic and you

think Bitcoin's going up zero, there's a

very small amount of credit you can

create and uh most of it is is low

dividend yielding and you know a little

bit of it is 5 to 10% and a very small

amount is more than 10%. If you think

Bitcoin's going up 10% a year like the

S&P, you see you can issue a lot more

credit and you can have a bit more

flexibility on the dividends. As your

view of the capital asset, whether it's

gold or Bitcoin or real estate or the

S&P or whatever, as your view of that

improves, as it as you think it's going

to improve over time, your ability to

issue credit and higher yielding credit

is enhanced. And you can see what's

going on here. When if you're a bull and

you think Bitcoin's going up 30% a year,

you can see you can issue quite a lot of

high yielding credit that is investment

grade. That's the big the big idea here.

If you're staring at this and of course

if you think about high yield, right,

you're willing to accept a a slightly

higher risk instrument, then you can

create a lot more credit. You can create

exceptional amounts of credit if you

think it Bitcoin is going to appreciate

faster than the S&P. And of course, if

you're a Bitcoin bull, you can see you

can issue monstrous amounts of credit,

even 1x collateralized

at this level, right? And so the amount

of credit you can create is really a

function of those variables. Now, so how

risky is STRC? What is stretch?

Well, I put it on the chart. If you're a

Bitcoin skeptic and you think Bitcoin's

going up zero, it looks like distress

debt. If you think Bitcoin's, you know,

a 10% grower, it's almost high yield.

It's like it's kind of suboptimal high

yield. But then as you start to have a a

better view of Bitcoin, it starts to

float into the high yield. And then of

course, if you're a Bitcoin bull, it's

investment grade.

And so the what I've laid out here, we

call the theory of digital credit, but

really it's just a theory of asset back

credit. You could do the same exercise

with the S&P index, MAG7 stocks, you

know, uh, Nvidia stock, gold, real

estate.

Now, why haven't people? Well, because

the Investment Company Act of 1940

prevents you from, uh, levering or

capitalizing a publicly traded company

on equity, portfolio, or securities. So,

no one does this in the public market on

securities. you'd have to go to gold or

real estate. And the performance in gold

and real estate has just been not

compelling enough to be worth the

trouble. Bitcoin is the first time when

you have a nonsecurity asset which is

outperforming the S&P where it's worth

the trouble. And that takes us to the

question of, well, what's the

performance of this stuff anyway?

Well, since the all-time high four and a

half months ago, Bitcoin's fallen 45%.

That's the capital investment. If you're

a capital investor, you got no dividends

and you lost 45% of your wealth. Just

wait for 10 years. You'll be fine.

I'm okay with it, but your

three-year-old's not okay with it. On

the other hand, look at STRC, right?

STRC is for everybody else. It's it's

actually lost 0% of its value. It's paid

4.5% in dividends through a a a very bad

big capital market draw down since the

beginning of the year. Same story. STRC

holds its value and pays a dividend.

Bitcoin's down 25%.

Do people want this stuff? Well, it's

trading 130x more uh liquid than the

average preferred stock and 1,000 times

more liquid than the over-the-counter

preferred. This is in fact the most

successful, most liquid preferred stock

probably in the entire century.

Okay? And this is six months old, right?

And I would love to tell you we knew

what we were doing, but what I what I

just showed you was we were running from

risk, from credit risk until we got to

press. And then we were chasing after

the ideal product until we got to

stretch. And so at the end of our

journey after trying 10 different

things, we found the 11th thing. And

then the market told us they like this.

We didn't know we like that they'd like

this. Stretches seasoning. The health

keeps improving. Here, what you can see

is that each month that goes by, it

spends more and more time in its target

range. The volatility strips off. It

holds its principal value much higher.

And so, what are we competing against

here? You're competing against a

multi-trillion dollar universe of credit

instruments. Most of them yield three,

four%.

Most of them have long duration. The

world of credit hasn't changed much in

50 years. You're trapped in the 20th

century. Most credit instruments are

created by issuers whose objective is to

pay you the least amount they can with

the worst tax treatment. Right? When a

conventional credit issuer issues

credit, they're keeping the tax benefit

to themsel, they're minimizing what they

pay you. And the irony is when it's over

the counter, it's illegal for you to buy

it. Huh? Say that again. Most credit

it's manufactured to be awful,

very tax inefficient, and it's illegal

for you to buy it. Well, why does that

even happen? That's just the way the

world was 30, 40, 50 years ago. What

we've done is flipped it on its head and

our view is, well, we actually want to

pay you the highest possible dividend,

make it tax deferred, and make it easy

for you to buy it. Right? That is the

credit revolution.

So why do you have to wait 10 years to

find out if you get paid back? I strip

the duration down to a much shorter

amount. Uh increase the dividend and

then make it easy for the individual. So

what what's the tax equivalent yield on

this? If you're a a company,

well, let's just start with the the

number. It's 11.3%. And if you're a

company, that's the same as uh getting

paid 14.3% because you don't have to pay

corporate income tax on this. If you're

an individual in Miami and you are able

to defer the 37% federal income tax

rate, it's like a tax equivalent yield

of almost 18%.

How's it compared to everything else?

Well, you can see it's it's anywhere

from 50% to four times better than all

the other credit in the world, right?

The the next best thing is like private

credit which is sort of illquid and it's

half as good for a taxpayer and it's uh

60% as good for a non- taxpayer just on

the basis of yield.

What if you're lucky enough to be an

individual living in New York City?

Okay, digital credit is like a bank that

pays you 23.3%.

If you live in San Francisco, it's like

a bank account that pays you 22.6%.

Okay. So, as you can see, this is uh you

know, four, five times better.

Okay. What else did we discover? Well,

when you create an instrument like this,

it's return of capital. It means that

you collect a dividend, you uh you defer

the tax on the dividend, you reduce your

basis in the instrument, and after 10

years, you've reduced your basis from

$100 down to zero.

If then you die and pass this on to your

heir, they get a step up in the basis

and it steps up to $100 and they can

start the same depreciation again. So

you actually get the benefit of

shielding your 10 years of dividends and

then your heir gets to shield another 10

years of dividends.

Now, now I'm not suggesting that you run

this on 10-year cycles,

but what I am suggesting more to the

point is the difference between

investing $100 in a T bill and holding

it 20 years versus investing $100 in

stretch and giving it to your heir and

them holding it 20 years is at the end

of the 20 years, your heir has $922 of

stretch and their income each year is

100 bucks.

versus $3.75.

You literally have 25 times as much

income after 20 years. If you're

interested in generational wealth

transfer, this is an incredibly powerful

vehicle, right? It's like it's so

powerful it kind of makes you sick to

think you might pursue the alternative.

And if you're a company, you can see

that you know your choices collect 3.6%

6% from a money market or the equivalent

of a digital bank that pays you 17% in

New York City. So, you know, who are who

are the real disadvantaged players in

the credit market? It's the individuals

that pay their taxes and operating

companies because your nonprofits, your

endowments, your insurance companies,

they just don't pay tax. The government

doesn't pay tax. So, if you actually

work for a living or your company works

for a living and does stuff, you're the

one that benefits from this kind of

instrument

and and uh you know, we've we've gone

around the world talking to companies

about buying Bitcoin. Well, what I've

concluded is that Bitcoin for

corporations is stretch. Like if you go

to most companies with hundreds of

millions of dollars of capital and

working capital, it's probably easier

for them and better for them to buy

stretch than it is to buy Bitcoin. It's

very difficult for them to convince the

board of directors that they should buy

a 40 asset that with no cash flows that

they have to mark to market every

quarter because it might screw with

their P&L. But on the other hand,

convincing the board of directors that

they should actually collect two or four

times more cash flow and not have

volatility, that's easier. It's like

instead of you taking a hundred million

and buying Bitcoin and getting on the

roller coaster, just give me the hundred

million. I will accept all the risk. I

will accept the roller coaster. I'll

overcolateralize it. I will give you the

10 or 11% uh yield back. I'll solve the

tax problem. and I promise not to sell

the Bitcoin and and so we're in the

business of not selling Bitcoin. We got

very good at it. We have a PhD in

hodling, you know, and so I figure why

don't we just hodddle for the thousands

of companies instead of try to convince

everybody else to do what we're doing

and convince their shareholders and

their board of directors.

So then you see this this chart, right?

And what is this saying?

Look, if your time horizon is less than

four years, you need the money in 12

months, you need the money in 24 months,

you need the money in six months, you

need the money to make payroll, that's

working capital, you put that into a

credit instrument like Stretch. If you

don't need the money for four years, if

you if you don't if you're a cap

investor and you've got a 10 year or 20

year time horizon and you just want to

get wealthy, well then you either buy

digital capital, which is Bitcoin,

because there's no counterparty risk and

that has the most optionality, or you

buy digital equity, amplified Bitcoin

like MSTR, because there you're getting

more Bitcoin.

But you have to have a long time

horizon. Four years is the minimum in my

opinion. 10 years is a healthy or seven

to 10 years is the right time horizon

for that. And of course what you see

which is not disputable is there's not a

person in the world or company on earth

that doesn't have capital they need in

the next four years. There's a huge

amount of capital that's tied up in

making payroll or paying the annual

bonus to the sales people at the end of

December. It's like I've got it sitting

on the balance sheet. I'm I'm generating

2% after tax,

but maybe I'd like to get 10% untaxed,

right? Maybe I'd like five times as

much.

And so what's the impact of actually

allocating a corporate treasury to

stretch? Well, you can see here if you

put 35% of your treasury into STRC, you

double your cash flow. It doubles the

cash flow of a company to put 35% in. If

you're a public company, you probably

don't want to go above 40%. But if

you're a closely held private company,

you could go to 60 70 80%. The

difference between holding T bills and

holding stretch is 2.9 million versus

11.3 million a year. Right? It's like

it's not quite it's almost four times as

much cash flow.

And what about the rest? Well, look,

I was saying to a company, a company is

in the Bitcoin space. I said, you know,

you're in the Bitcoin space. If Bitcoin

goes to zero, you don't have much of a

business. So, that being the case,

you've already absorbed the existential

risk of Bitcoin going to zero. So rather

than collect 2.9 million a year, why

don't you collect 11 million a year,

right? You might as well make four times

your money. You've already accepted the

Bitcoin existential risk. So for people

that believe in digital capital and

digital assets, it's a no-brainer. Just

quadruple your treasury or or double

your treasury yield.

That takes me to the issue of digital

money and digital yield. So I I told you

I'd show you how to make money. Okay?

I'm not saying just buy stretch as an

individual or your company should buy

stretch. Those are the two obvious ways

to make money. But what we've observed

is you can take digital credit and you

can use it as the building block for

digital yield and digital money. You can

step it up or step it down. It's like

sucralose. It's a universal sweetener,

right? It is the active element of money

making. So we're we've got a product

which is 11% with like a 10 to 20. You

can cut it in half and you can create uh

an instrument that pays 7 and a half%

with much lower or you can double it or

triple it, amp it up in order to create

something that pays 18% or 24%.

Okay, so I can dial it up and down. But

let's take this idea a bit further.

Stretches digital credit. Digital money

I would define as zero volatility daily

liquidity instruments. If you give

someone zero vol and liquidity every

day, you've created high-powered money.

Digital yield

is non zero volatility or illquid.

There's nothing that says you can't lock

up the money for three months, lever it

two to one,

right? And and maybe strip the ball or

leave the volatility, right? You can do

that as well, but I wouldn't call it

money. Now we call it yield.

Now the big idea is digital credit is

programmable. And most people think

programmable means like oh yeah I want

to like do something computery with it.

No, I've got a much bigger idea for you.

Programmable means I take the credit and

I create it. I turn it into a token, a

private fund, a public fund, an ETF, an

ETP. I make it a bank account. I make it

a crypto account. So I turn into a type

of u of uh credit. Then I put it on a

platform the NASDAQ, the the London

Stock Exchange, Salana, Ethereum,

Binance, Coinbase base. I can I can I

put it on Aladdin. I put it on a

Fidelity mutual fund system. I offer it

through Morgan Stanley or JP Morgan's

private wealth, you know, system or the

Maril Lynch system. There are a lot of

different platforms I can put that on.

Then I decide how much volatility I

want. Turn it down to zero, turn it up

to 25. You can strip the ball by

creating a volatility buffer or a

volatile reserve or you can leave the

ball or amp the ball. That's a decision,

right? You make then liquidity, right?

You can offer people uh you can offer

people hourly liquidity. You can even

turn the yield into streaming yield.

stream the yield every hour, every day,

every week, right? So, or you can turn

it into a hey, it's a one, it's a a

private fund. It's a seven-year duration

and we'll give you the ability to act to

extract 10% of your capital every

quarter, right? You can create liquidity

or staking time. You can stake it, by

the way. You know, if you think about

the DeFi idea, you can stake this for 30

days, stake it for a year, you can lock

it up, you can unlock it, and then you

decide how much yield you want. I mean,

probably you're not going to crank it

down to less than five or 4% yield.

Although,

you know,

the guys at Hope, you know, they said,

well, you know, if we just take uh

European money markets and we and we add

10% stretch, we go from a money market

that pays 200 basis points in euros to

300 basis points in euros.

10% makes it 50% better in Europe,

right? So you could actually create

something which is a world beater right

even with a small increments like how

much sucralose do I have to put you know

sugar or whatever how much do I put in

the food or salt to actually make it

taste good um so you can crank the yield

up to 30% you can crank it down to 3%

you can convert the currency to yen and

euros

these are all opportunities to add value

and then once you've done it All right.

Then is it a fund? Is it a coin? Is it

an account?

How about your bank just pays 8% to

everybody taxfree? Right. I mean, what

was the big idea? Just wire me a hundred

billion dollars. I pay 8% instead of,

you know, JP Morgan pays 2% after tax.

Well, what well are you going to do

anything else? No.

Just that

like it's like my message to the

Emiratis is like you know the UAE has

a$250

300 billion dollar a year gross national

product why don't you just have you know

banks in the Emirates pay 8% people will

wire you 10 trillion dollars take 100

basis points of that and now you just

increase the gross national product by

50% with 12 people.

Well what are we going to do? we're just

gonna collect their money

and it's not it's like too simple,

right?

But oftentimes what you'll find is

people will go jump through hoops when

and juggle chainsaws and feel like

they're making progress, but when you

give them the simple idea, it's like too

good to be true. Like they're afraid to

do the simple thing. Yeah, we just we'll

just offer the bank account that pays

you 8%.

So with that, the digital credit

ecosystem, it is emerging, right?

Layer one, we can't take credit for.

That's Bitcoin. Layer two, we're in the

business of creating that credit

instrument, right? What are we going to

do at at our company? Well, we're just

going to build the AUM of stretch as

high as we can. Build the liquidity as

high as we can. Laser-like focus until

people have a billion dollars a day

liquidity, $2 billion a day liquidity,

$5 billion a day liquidity. Strip the

ball as low as we can. But we're never

going to be able to offer pure digital

money or digital yield in every possible

flavor or package on every platform. Nor

do we want to. So the layer three is

that digital money, digital yield layer,

and we're already seeing an exploding

ecosystem of partners, Buck, Saturn,

Apex,

uh, Hope. It's very exciting. If you've

got a Bitcoin treasury company, you got

$500 million, and you know, you're

trying to figure out what do you do

next? create an ETF,

you know, upgrade and wrap stretch with

it and then be and get the license to be

the first the first company in your

market to be able to offer this digital

monetary or digital digital yield

instrument, right? It's a license to

print money. How do you make money?

Well, you know, offer five, six% digital

money in Japan to everybody and take a

100 basis points off it. And that leaves

me with um you know the result of all

this. If you go about the process of

creating digital credit then you create

value for the digital equity. So MSTR is

digital equity. You can see for the past

five and a half years what's going on,

right? Bitcoin is outperforming the S&P

and gold. MSTR has amplified Bitcoin. If

you can sign up for the V, you can

actually get the reward. Now,

amplification creates volatility. How

much? This is the top 10 company, the

most volatile companies in the S&P 500.

I'm showing the top 10 to you, right?

We're number three, right? There are two

companies in the S&P that are more

volatile. But here's a more important

chart.

What you're seeing there is the the

absolute open interest where we don't

have the highest open interest, but

we're one in the top 15, but what we are

is the number one open interest market

cap adjusted. So, in terms of the

relationship of open interest to the

underlying market cap, we are the most

intensely interesting company in the S&P

universe.

And and if you look at the lot the

bottom chart that's showing trading

volume liquidity and what you can see is

we're the most liquid equity in the

entire S&P universe.

Okay. So that so did we actually spend

money to get that? No. We didn't spend a

dime. We'd spent no money to become the

most liquid, most interesting company in

the entire S&P 500 universe. That is the

result of creating digital credit on

digital capital,

right? And and

you know what is the uh what is the use

of the capital? The use of the capital

is to create the credit. What's the

credit do? The credit creates

amplification. The amplification creates

Bitcoin per share. The Bitcoin per share

creates the equity premium. It is the

function of the company. And if you turn

up that amplification, you can double

the Bitcoin per share over seven years.

You might triple it over seven years. So

if you're the equity investor, you're

buying a company that generates Bitcoin

per share. If you're the credit

investor, you're you're buying a credit

instrument to pay US dollar yield. But

it's just a very simple swap of Bitcoin

yield for US dollar yield. You can't

have the one without the other.

But as you can see here, this is a very

powerful model. And um the way it works

out is once you crank up the

amplification,

you can expect to outperform the Bitcoin

by anywhere from 30% to 100% or more

and have a heck of a good time while

you're doing it. It's definitely very

interesting.

Uh for those of you interested in the

relationship of amplification to growth

rate, here it is. It's not very

complicated.

And um

on the subject of digital, it's all

recorded. You can download that and you

can

you can screenshot that and study it.

CJ will probably do one hour podcast on

that formula. You know, ask him. Um

the big idea of digital is every 15

seconds we're creating value. Okay.

In 15 seconds we might sell $10 million

of credit, buy $10 million of Bitcoin,

increase our capital by $10 million.

Loop, rinse and repeat. We are

synchronizing the capital and the

credit. How do you build a $10 million

building in 15 seconds? Right? We're

doing it without people. We're doing it

without labor. There's no tractors.

There's no bulldozers. There's no land.

There's no expensive long form

contracts, right? You don't have all of

the friction of the world, right? The

the reason that digital equity is so

compelling is because you're creating

digital property, digital capital, and

digital credit instantly in a

synchronized way, frictionfree

in cyerspace, in digital space, in

financial space, if you will. And that

makes it the most transparent, most

efficient, most compelling type of

credit. And so what are you going to do

if you look if I could snap my fingers

and I could build a digital building in

one second? Don't you think I would

probably sell it to you cheaper than the

guy that took a billion dollars to

create an actual building in 10 years?

If I can do this, I can I can give you a

better deal. So what are we doing? Well,

we're just making sure the credit's

twice as good or four times as good. We

can pay four times as much because we

have the most efficient credit generator

in the world.

And uh I will just end with this thought

of the reflexive flywheel. It's not not

complicated but it's the credit creates

the amplification.

The amplification from the credit

creates the volatility.

That's what creates the open interest in

the options market.

All of that creates enterprise value.

You're doing something. You're

accumulating capital. And the capital

increases the size of the enterprise.

The capital we're gathering is going

into Bitcoin, creating capital

appreciation. We're appreciating the

value of the Bitcoin network. You can't

buy $55 billion of Bitcoin without the

value of Bitcoin being higher than if

you didn't buy the 55 billion. We're

also putting capital appreciation on our

own balance sheet.

The credit creates the equity premium.

How are you not a Bitcoin holding

company? Well, we're doubling our

Bitcoin per share. Well, if you double

your Bitcoin per share, I'll give you

100% premium, right? If I'm an equity

investor, I have to have something to

believe in. You're doing something. The

credit business creates the equity

premium. The equity premium

attracts more capital.

The credit thereby attracts new investor

base. You get credit investors. You get

you get retirees, you know, and

corporate treasurers. They wouldn't have

bought Bitcoin. new investors that

diversifies all the macro correlations.

The business is going to trade verse on

the junk bond index or the investment

grade index or the forward yield curve

or the euro versus US dollar index or

the relationship of Bitcoin to gold or

or uh people's view forward view toward

Bitcoin or their view toward big tech or

macro or something or maybe they just

get excited about the future of digital

credit. You've got a lot of different

correlations.

Each of those attracts new pools of

equity.

That's all of those things strengthen

the brand. Everybody wants to talk about

you. The brand is who wants to talk

about you. So you're you're continually

building awareness

and that creates optionality, right? We

have the option to sell the credit, not

sell the credit, raise the dividend,

lower the dividend, right? uh more the

more optionality creates more

volatility, creates more equity premium

and that creates trading because people

disagree with you. It's like I think

it's a bad idea. I think it's a good

idea. I'm going to short it. It's too