Michael Saylor: Bitcoin has no existential threats and will dominate 21st century (Pt. 1/2)

hello i'm michelle macquarie

and this is kirco news joining me now is

a legend

in the crypto world a pioneer in

institutional investment in bitcoin

michael saylor is the chairman ceo and

co-founder of microstrategy

he is also a prolific inventor

best-selling author and one of the

biggest proponents of bitcoin advocating

for the bitcoin standard and micro

strategy was the

first public company to actually adopt

bitcoin as a safe haven asset

and is leading the way in getting large

corporations like tesla

to add bitcoin to their financial

toolboxes michael it is so great

to have you with us thanks for inviting

me michelle

all right michael before we get into

everything bitcoin

i want to start off with the world's

second

biggest crypto asset ethereum because

big news of the week is that ethereum

has been reaching new record highs

market cap or value of the ethereum

network is now bigger than that of major

companies like proctory gamble

bank of america and paypal just to name

a few

so michael what is your position on

ethereum now are you bullish are you

bearish what's your outlook

i think you can divide the entire crypto

world into crypto assets and crypto

applications

uh and so crypto asset networks are

meant to store along

a long duration safe haven asset for a

decade a century

a millennium and bitcoin is of course

the leader in that space

i think crypto application networks are

meant to do lots of different things

maybe d5 might be nft it might be

operate stable coins or provide very

flexible application rails

ethereum clearly is the leader in that

space

um i i think that there's a whole set of

investors that are interested in

investing in applications

that would be different than the class

of investors that are looking for an

asset

for example corporate treasurers or

widows and orphans

insurance funds they just want to store

their money for 100 years

and they don't want complications but

you know the world's full of

tech investors and venture capital

investors that are always looking for

the latest greatest cool thing

i i think that um yeah from my point of

view the application

space is it's going to be uh it's going

to be a bit riskier because of

more centralization more complexity and

more competition in the space

but you know that means that they'll be

higher highs lower lows

and a lot more fireworks along the way

so you you still

clearly maintain your position that

there's no comparable

asset to bitcoin that ethereum is in a

whole other category

as you just stated again it's the

unicorn categories you refer to it

before but are you at all interested

in getting in to the unicorn application

category is that something that you

would personally invest in or

use uh microstrategy cash to invest in

i don't think it's appropriate for a

corporate treasury and it's not really

appropriate for us

our our business is uh to acquire and

and to hold bitcoin i think that uh

crypto applications would be appropriate

for crypto venture funds and

and crypto specific technology investors

do you have a position though on where

you see the price of ethereum going

i really don't uh i i prefer not to

opine on things that i am not an expert

in

and uh i i have a lot of very strong

opinions about

crypto asset networks and uh

and the right architecture for a crypto

asset network for example

i think that a a proof of work

architecture

is appropriate if not if not critical

for a good crypto asset network

i don't have strong opinions about

what's the appropriate architecture

and then what's the what's the likely

outlook in the crypto application space

i think there are too many variables

it's again as i said it's

it's much much more complicated

okay well you certainly have a very

strong opinions

on bitcoin and that is clear and you've

been advocating for the so-called

bitcoin standard what do you mean by

that

i think that um there's 500 trillion

dollars of

monetary assets uh in the world

split between currencies uh bonds

real estate instruments equities

precious metals that are being held as

money etc

most of those are fiat derivatives and

so they derive their value in part

or in whole from the expectation of

future fiat cash flows

and i think right now in in the world

you have

a set of strong currencies losing one

percent or more of their value a month

that'd be the us dollar and the euro and

everything pegged to the dollar in the

euro i think you've got a set of weaker

currencies losing two percent of their

value a month

and then you've got a set of currencies

that are collapsing they're losing

three to four percent of their value a

month um all of the companies and the

bonds and the commercial real estate in

those uh those economies

are of course losing their monetary

value because

the currency that they're valued based

upon is weakening

so the bitcoin standard is all about

converting your long-term treasury

assets

that is your savings account from a fiat

derivative

asset to a non-fiat derivative a

non-sovereign store of value that

doesn't derive its value from cash flows

in the future

and you know the the 19th century

solution was the gold standard

and the 21st century solution is the

bitcoin standard

and so that's what i mean when i say

adopt a bitcoin standard

well bitcoin has of course uh generated

a lot of attention and a lot of

animosity recently

everyone from bill maher to charlie

munger is attacking it very viciously

and very vocally

let's start off with the monger who of

course is the berkshire hathaway vice

chairman and at the latest annual

meeting michael

he called bitcoin and i quote disgusting

and contrary to the interests of

civilization i want to play this clip

for you

and get your thoughts on the other side

let's watch i don't

welcome a currency that's so useful and

to kidnappers and extortionists and so

forth

nor do i like just shuffling out a few

extra

billions and billions and billions of

dollars to somebody who just invented a

new

financial product out of thin air

so

i think i should say modestly that i

think the whole

damn development is disgusting and

contrary to the interests of

civilization contrary to the interests

of civilization now michael it doesn't

look like mongers any in any hurry to

adopt the bitcoin standard

what do you say to that i think they're

baiting a 97 year old man and uh it's

colorful the mainstream media wanted to

comment

they didn't ask him about tick tock

netflix amazon

apple facebook google microsoft

they didn't ask him about any of a

hundred other new technologies

if you want to understand bitcoin you

you reasonably

scratch the surface in 10 hours you

start to understand it in 100 hours

i don't think charlie munger has spent

100 hours studying bitcoin

so i think it's kind of unfair to poke

him

with the question but i mean i'll state

for the record i mean

isn't isn't berkshire hathaway a

generation behind

all technology despite the fact that

warren buffett is best friends with bill

gates

warren buffett never invested in

microsoft and microsoft was founded in

1976.

and uh and so they never invested in

apple until 40 years later and then it

was a person that worked for them

that invested in apple and they didn't

invest in google when it came public and

they passed on it every year since so

so uh i think that uh the

this many controversy is just because

bitcoin

is the fastest growing most disruptive

force in the world right now

objectively speaking it went from zero

to a trillion dollars in 12 years

that makes it the most disruptive

technology in your lifetime

in my lifetime more disruptive than

amazon apple facebook and google

more disruptive than anything in our

lifetime maybe we went back to the

automobile and henry ford in 1910

we might find something that changed the

world

in a decade but not you know that

doesn't come along

often so all these people are getting

poked and asked their opinion

when i'm 97 if you stand me if i'm still

working

if i'm lucky enough to still be alive

and still working if you ask me about

the latest greatest

hologram simulation technology startup

that's taking the world by storm that's

used by my grandchildren

and i don't quite get it i you know i

i wouldn't expect to get it so i i mean

isn't charlie monger old enough to be

your

great grandfather michelle like i mean

do you go to your great

grandfather for investment advice on new

technologies

so i like them i like i like warren

buffett they've been successful

but they haven't been successful

technology investors

this century and i would just leave it

at that

all right well i'm not an aegis michael

so

i did not necessarily determine

someone's level of knowledge by their

age either to the younger or older side

but i get your point that berkshire

hathaway

has been very much a late adopter and

not exactly

early on the technology adoption curve

but i want to focus a little bit on this

comment that he said that it's used to

that it's useful to kidnappers and

extortionists and so forth

and the reason i want to focus on that

is because

it does seem to be an angle

that other people may take in order to

force some kind of harsher regulation

on bitcoin we've seen uh janet yellen

for example say that she's concerned

that bitcoin will be used to finance

terrorism or used in money laundering

and then

turkey central bank has banned the use

of cryptocurrencies for payments

turkey has now added crypto asset

service providers

to companies affected under anti-money

laundering and terrorism funding laws

so do you think that that aspect or

viewpoint whether

it's correct or incorrect could be used

as a premise for a crackdown on bitcoin

or regulation

um well i mean let me characterize my

comments again

i don't think that charlie monger is not

qualified to opine on bitcoin because

he's

97. i think he's not qualified to opine

on bitcoin because he hasn't spent

the time and the energy to understand

how crypto asset networks work

and nor do i i don't think he prepped

for 100 hours on the subject with an

open mind

and i i think that it's a mistake to

think that any investor that's been

successful in

a particular field is thereby an expert

in every other field

that we can imagine there's there's a

thousand fields that i'm not an expert

in so

i i don't know why people would if you

ask me my

opinion on on something in biometrics or

in medicine i wouldn't opine on that

either it's just it's inappropriate

with regard to privacy um

bitcoin is is not nearly as private as

as

many other crypto currency networks

like zcash and monero and the like

and we've seen just in the past few

weeks that law enforcement is able to

trace back transactions all the way

through a decade

the entire blockchain is completely

transparent immutable

and every transaction never took place

is traceable

so if anything uh i think there's a

consensus that's forming

amongst regulators and law enforcement

that bitcoin is

probably the the safest and

the most um the most manageable of the

crypto asset networks

and if there's any risk with regard to

regulation in this regard

it's probably on some of the other

crypto application and crypto asset

networks because

they actually have a much greater um

intent to promulgate privacy

applications i think that uh the

bitcoins

bitcoin's mission is to be a crypto

asset network the idea is not to move

money fast and privately the idea of

bitcoin

is to store a billion dollars for a

hundred years

securely and um the network and the

architecture has been designed with that

in mind

so as interest and of course this is

something that you would know if you

sat through 40 hours of lectures on

crypto economics and crypto technology

but again i don't think that charlie

munger did

i have and many other people in the

crypto industry have

so as as regulators become more

interested in privacy

i think it's going to be a net benefit

to bitcoin because what you

determine is bitcoin is the crypto asset

network that you want

to support that you can build a 21st

century economy on

that that does fit well within the

regulatory framework and law enforcement

frameworks of the western world

well i i guess the the bigger point that

i'm trying to get

to michael is that bitcoin to some

degree has to be

some kind of a threat to central banks

to governments to treasuries it's not

likely that they're just going to give

up

control over their currencies and there

is this notion

that they'll use this angle of uh

anti-money laundering terrorism funding

laws as a way to crack down on it we saw

turkey central bank

banning the use of cryptocurrencies and

then

adding it to the list of companies

affected under anti-money laundering and

terrorism funding laws

and not too recently well not not too

long ago u.s treasury secretary yellen

said that

the misuse of cryptos like bitcoin for

terrorism is a growing problem

and that the national defense

authorization act

requires uh to be updated with regards

to money laundering

and countering the financing of

terrorism now whether she's put in

the 40 50 hours of work to really

understand what's going on or not is

another matter

the question is will they use this angle

as a way to potentially crack down on

bitcoin

i think the people that spend a few

hours uh poking around in cryptocurrency

they often times

come forward with this observation that

the cryptocurrency is a threat to

central bank and they've privacy

concerns and the like but it's generally

only those that are spending a few hours

if

if you spend 100 hours or enough time to

understand

the situation then uh

then you start to embrace a more

sophisticated model which is money can

be

decomposed into a currency component and

an asset component

and these aren't really cryptocurrencies

they're crypto assets

and uh bitcoin is a crypto asset it's

not a cryptocurrency

currency is defined in the law as

um as something you can exchange

as a medium of exchange or in a

transaction without incurring a tax

obligation so bitcoin hasn't been a

currency by law in the united states

since 2014 when the irs determined it to

be property

and that's well understood by the

regulators and i think that

if you look at comments public

commentary by jerome powell by christina

lagarde by the deputy

governor of the china central bank

by gary gensler they've all

commented that this is a digital asset

it's not a digital currency and um

and if you read the 140 page of

testimony by janet yellen you'll see

she's a very progressive informed

regulator that understands that

that crypto assets or digital assets

like bitcoin

are a cornerstone for a 21st century

economy

and a force of good and can be used as a

force of good

and all regulators will will say state

as a matter of fact and and because it's

appropriate

that of course we have to make sure they

fit into a regulatory environment

uh and a framework so they're used for

good and and not by male factors

so all of these um all of these

conversations are oftentimes just cherry

picked comments

uh neither the head of the eu central

bank nor

the head of the us central bank nor the

head of the chinese central bank has

actually suggested that uh

people should be banned from owning the

asset and in fact

in the example of turkey you named what

they said was

they didn't want people to use it as a

currency

that's no different what the irs said in

2014 in the u.s when they actually taxed

it

on transfer they also effectively said

you can't use it as currency

so so basically stating that we don't

want something to be used as a currency

because it threatens our currency is not

the same as the private people of an

asset and even the turkish central bank

hasn't deprived

or hasn't limited turkish citizens from

owning the asset

so i think that um it's very very

important to understand that the future

of the world is people uh eight billion

people with mobile wallets

with a currency layer and an asset layer

and the currency is going to be the

dollar and the euro

or the chinese view on and the asset

layer is going to be bitcoin and then

whatever other assets you chose to

hold in them and um and

uh the government's providence or the

government

will will of course demand control of

the currencies

and where you have strong governments

like the eu

and china and the us they will have a

strong currency and those currencies

will be successful

and where you have weak governments like

in venezuela

or zimbabwe you will see the currencies

collapse

they will lose their currency privileges

the citizens in those countries

will download stable coins that will

either be the u.s dollar

or the the chinese uh remember

and uh and the underlying asset

framework or asset protocol and network

that we use to synchronize all those

wallets

is going to be bitcoin all right so

you're saying that as long as

bitcoin is viewed as an asset and not as

a currency

you're not ultimately concerned that

governments or central banks

will intervene crack down on it outlaw

it

or in any other way try to eliminate it

i would say that you know scanning every

utterance of every regulator in the

world

i haven't seen in the any indication

that they view it as anything other than

an asset

jerome powell two weeks ago said hey

it's digital gold like gold

christina lagarde said yeah it's a

speculative asset people speculate with

it's not like a currency

they're going to be concerned about

stable coins

like the ability to move billions of

dollars of euros on a crypto rail

or the ability to move billions of

dollars of u.s dollars on a crypto rail

that's going to draw the interest of the

banks

because currency is the providence

of the bankers and and the government

and they're going to be concerned about

controlling their currency

that's why you can expect aml and kyc

regulations on the custodians that allow

you to move large sums of those digital

currencies

but i think that the most common

misconception people in the world have

is cryptocurrency is the right word it's

not the right word

in fact you know if you roll the clock

back number of years

lots of very intelligent people and i

could probably think of

six regulators that are currently

running the world

have all said it should be deemed a

crypto asset

mark carney uh actually said two more

than two years ago

it's a crypto asset and so once you

understand it to be a crypto

asset then you understand it's not

competing with the dollar and the euro

it's competing with gold

and silver and and etfs

and stocks and gamestop and derivatives

and and to a certain degree perhaps

savings accounts that are used as

long-term store of value

and in in kyc

custodians all right so then you're not

concerned

about governments viewing it as

competition to the currency at least

major governments because of their view

that it's an asset so michael what would

you say

is the biggest existential threat to

bitcoin

if there is one

i don't think there is i think that

bitcoin is going to be

the emergent uh strong money

store of value asset in the 21st century

i think it's pretty clear that it has

won uh

this space there are eight billion

people

that need a strong money are a monetary

asset if they're going to live a decent

life

that asset needs to be digital and needs

to flow to eight billion mobile wallets

you need three things you need an asset

which is deflationary

you need global network to synchronize

all those mobile wallets

and all those applications and then you

need an open protocol

so that you uh maintain uh real-time

settlement and synchronicity

between all the various layers if you're

going to maintain the integrity and the

trust of the network

and bitcoin has those three things as

the asset has the network has the

protocol

and uh silver doesn't gold doesn't

can't do with real estate can't do with

stocks can't deal with bonds can't do it

with any fiat currency

if you look at all the other

cryptocurrencies the proof of stake

currencies don't offer the security or

the stability

uh of a proof of work and of the

proof-of-work crypto asset network

bitcoin is 100 times bigger than the

next best one

so i think it's it's pretty clear

bitcoin's the solution

to you know the economic problem of the

21st century

and what would you describe that problem

as being

the problem is billions and billions of

people

uh need sound money in order to store

their economic energy

so if i if i'm

don't have a bank and if i don't have a

currency and i don't have access to an

asset

then i'm living hand to mouth day by day

and in the week or in the day when i

can't get food or can't get money i'm

going to starve to death

you could imagine if if i if i take away

insulin from a type 1 diabetic

type 1 diabetics they can't they have no

insulin they can't

form fat so when they eat they can't

store

that excess energy it means that they're

doomed to a life of

or like a a fate of starvation

as they waste away no matter how much

they eat

um the problem in the world is

if you're unbanked and there are a

billion people that are unbanked

and if the currency won't hold economic

energy

you live in a country with a collapsed

currency or a or a weakening

currency then your economic vitality is

being

sucked out of you so i would say

sound money is a human right the

solution

to the economic prosperity of 8 billion

people on the planet

is to install a thermodynamically

sound digital asset which will store

their economic energy

over time and then allow the

synchronization of all those wallets

over

space so that they actually have the

ability to

function that's that's the problem

like you want to put a value on that

well i mean for the two or three billion

people at the bottom of the pyramid the

value is like life

that's the value right how you live a

decent life without

money and assets but if you want to look

at it from the top of the pyramid

the 500 trillion dollars worth of money

in the world

is sitting in fiat derivatives

presumably conservatively losing 10

percent of its value a year so you've

got

something like a 50 trillion dollar

energy

drain or or inefficiency in the economic

battery of the world

the solution to the problem is install a

digital monetary network

that doesn't bleed energy in essence a

trust network

that allows hundreds of thousands if not

millions of

mid-sized banks and corporations to all

trade with each other settle with each

other and store their economic

energy without corruption and

without power loss which

we sometimes call inflation but it's not

just inflation

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