Michael saylor, the ceo of microstrategy, made a billion dollar bet on bitcoin last year. Microstrategy has now acquired over 70 000 bitcoins, making it one of the largest public holders of bitcoin in the world.
So it's, a gift. Once in a thousand years, do you actually see the invention of a fundamentally new thing? This is our once in a thousand year opportunity you get to buy into it early in august 2020, microstrategy confirmed it had made bitcoin its primary treasury reserve asset.
Then, in september the firm doubled down by purchasing an additional 175 million dollars of btc sailor touted. His commitment to bitcoin on twitter by advising elon musk to convert tesla's, balance sheet into bitcoin a month later.
Tesla did just that. However, sailor wasn't, always a staunch bitcoin supporter in 2013. He claimed bitcoin's. Days are numbered and compared bitcoin with online gambling times have changed since then, along with the opinions of large corporations, sailors advocacy of bitcoin in 2020 earned him a spot in cointelegraph's, top 100 notable people in blockchain.
In fact, he took fourth place. So why does the fourth most important person in blockchain claim his company will hold bitcoin for the next hundred years? Watch this interview to find out, but before that don't forget to subscribe to our channel austin davis, co-founder of community electricity, sat down with michael saylor to bring you this interview.
Take it away austin what's up everybody! Austin davis! Here interviewing the the uh famed michael saylor, we're, going to be chatting about bitcoin and about uh success and failure and glory, and all the above, how you doing michael, i'm.
Well, thank you, amazing, um. So last time i got to chat with you. I i wanted to ask you a question, but i kind of forgot: what is that boat behind you? Is this the uh queen anne's, revenge? We're looking at here.
What boat is that? You know it's? Actually it's, a 19th century antique model handmade of a 17th century galleon, so it's, a it's, an old uh, an old galleon and and uh. It was made very intricately and about 150 years ago by hand and it's, a it's kind of a work of art, and so i keep it around it's, one of my mascots.
It's very motivational, since you mentioned, you know, history, and that thing seems to like has a lot of history to it. Um you're. You're, a history buff right, you've uh, you've uh. Have a background in the history of science.
I believe is that right yeah. I got a degree in the history of science at mit, so uh. What what draws you to history? Because that must have started at an early age right? I i always loved history. You know from uh from the point i was in secondary school and i just think it's fascinating to read about the exploits of humanity.
What happened? Why did it happen? How did it all turn out? Hopefully there's. Some there's, some good lessons in there that we can draw upon for the modern era absolutely yeah and um, and you also studied engineering right yeah spaceship design.
I studied uh. You know astronautical engineering, so i at mit. You know there are a lot of engineers, but i, but i thought it was really nice to be able to blend, to study the humanities and sociology and economics and politics and history of science, which is all about what happens to civilizations.
When you have new technology introduced into them, what happens when we invent x-rays or railroads or communications or airplanes or roads in general and and they all have a profound impact? So if you're, just the engineer and you don't consider the consequences economically or politically, then you only get half the picture.
I i think it's very interesting to see the interplay of the two so that that leads me to one of the uh the interesting topics of today, bitcoin right. It's bitcoin week in miami um. So there's, a lot going on around bitcoin around the world.
You're. Obviously, a huge advocate of it these days and you believe in it, which is amazing, um, to have someone in your position who uh, who actually has done the research and and decided it was a good investment and a good uh, secure a way to secure the Future um, so so that leads me to the kind of tying engineering to this.
So i love it when you uh kind of bring the thermodynamic principles and the laws of thermodynamics into uh explanations of bitcoin, and why you think it's. A very sound money, because of that so can you can you touch on that? A little bit um on thermodynamics and bitcoin sure i mean i think, that a lot of times the bitcoin story is, is told through uh, an economic lens or spiritual lens, or a mathematical lens, or sometimes a financial lens, and you know in the extreme it gets Called an uncorrelated speculative asset, which i hate right uh.
I think the story that needs to be told much more is that bitcoin is a masterpiece of monetary engineering and there was no class in monetary engineering at mit, but we studied servo mechanisms and cybernetics and the principles of control system uh are are critical for aerospace.
Engineering, the plane won't fly. If you don't have stability. Avionics are all about control um in electronics. You know there's, plenty of examples of control systems and in every other engineering discipline people understand uh the principles of controls, thermodynamics uh.
You know the study of energy as a manifest itself and heat and work right is critical to making any machine work and um. You know when i think about bitcoin, i think well, first of all it's. The first successfully engineered monetary network in the history of the world one day they'll, probably have a a class or they'll, have a degree in monetary engineering at universities, uh next to chemical engineering or electrical engineering.
It makes sense. Um, what is money uh? Well, i think most people want to ask the question. I think money is monetary energy. I think it's, the apex energy, and, as soon as you understand money to be energy, then it stands to reason and that a monetary system that applies the the principle of conservation of energy is a pretty good idea.
If i create a bathtub with a you know, with the sink open it doesn't work. If i have a swimming pool with a leak in it, it doesn't work. If i have a ship with a leak, it doesn't work, a plane with a leak.
Doesn't work, electrical engineering systems, you know, and power grids, with short circuits don't work. In fact, nothing in the engineering world aqueducts don't work right bridges with a leak in them.
Don't work. So every engineer knows you have to apply the laws of thermodynamics. You need to apply conservation of energy. If you're a mathematician, you'd, call it arithmetic right, the rule that says that if i add 9 plus 9, it better add up to 18, because on the day that it adds up to 19, some horrific thing is going To happen right uh, so once you understand money as monetary energy and you understand, bitcoin is a monetary energy network.
Then uh, you start to appreciate the fact that it either does or does not respect the laws of thermodynamics. If it doesn't, then that means that uh it has a leak. You know the the term, the colloquial term for a leak in uh in monetary economics is inflation, inflation is the leak, and you know inflation is, is a hole.
You know in the container and in the reactor and and uh your water, your electrical power, your reservoirs, your hydraulic systems, your pneumatic systems, your fuselages and your holes. They all fail, everybody dies.
If you don & # 39, t, have conservation of energy and so um. I you know, i respect bitcoin because a it's, a monetary system b, it's, engineered uh in a conservative fashion and the classic definition of conservative would be derived from conservation of energy.
If i give you 10 items, will you give me back the 10 items or will you change the number to 11 or downgrade it to nine? And if you're, not conservative in your appreciation of energy, then no machine works.
Nothing works! That's right yeah. I wish more of our economic policies would would learn from uh the principles of thermodynamics as well. Right i don't. Think i don't. Think printing uh was it between 23 and 26.
I believe in 2020, we printed of the entire us dollar amount ever created that's, pretty it's, pretty insane right, because it goes back to what you're talking about the expanding monetary supply. Your salaries are staying roughly the same, the monetary supply is expanding, your purchasing power of your dollar is shrinking.
Most people don't even think about that they just spend their dollars and you know, maybe, if you're, not holding the dollars, it doesn't matter as much, but it's. That's, the problem they try to. I guess the powers that be want to hold everybody in that position to some degree so that they can keep printing, so that kind of takes me to uh to scarcity a bit because, based on those principles, there's, only 21 million bitcoins.
That will ever be created. Now i had some some folks yesterday asking questions about the scarcity of that. You know what happens as we approach that you know in your mind, what happens as we approach 2141 when the last bitcoins are being mined um? What does the world look like? Um, you know regarding bitcoin and the use of it at that point.
Well, i think scarcity uh just means integrity, it means math, mathematical purity or it means conservation of energy, and if you have integrity in any engineered body or reactor, that just means that you're, not going to be leaking pressure or leaking fluids.
It's, a closed system thermodynamically or an adiabatic system, and, of course, what you learn in engineering is. You can't solve for a non-adiabatic system. There's, no solution because it's, uncertain as to how much fluid or how much mass will enter or leave the system that makes it impossible.
So scarcity, really, to my mind, just means we've decided to create a conservative adiabatic system such that we can solve an economic problem um. You know once we've done that. What do i think will happen? I i think that uh the system uh, you know the bitcoin monetary network - will gracefully evolve into a monetary network, that's funded by transaction fees and the transaction fees will finance the miners to provide transaction processing, power and security, and it'll be all market driven and, as the network gets more broadly distributed, the demand for scarce bandwidth on the network will increase and the transaction fees will increase and the and uh and the transaction size and monetary value will increase.
We'll end up moving large blocks of money million dollars, 10 million 100 million, whatever the fiat currency is it'll, be large blocks with high transaction fees, and then all the small blocks will move off chain in, in essence, bitcoin Banks like paypal or square or binance or coinbase, which are in essence bitcoin banks that are moving hundreds of millions of small transactions off-chain or maybe enlightening if you will and uh and and it'll be great.
It'll, be fine. So do you think that uh, you know let's, say invoices will be thought of in bitcoin in the future instead of right. Now it's. I guess globally accepted that the us dollar is a good comparative uh currency um.
When you're invoicing, do you think that we'll start to switch because it's, so universal? What i, what i think is there's, going to be five? Let's say today. There's, 500 trillion dollars worth of monetary energy money in the system and it's, divided between currencies like the euro and the dollar.
It's, divided in tangible hard assets, maybe real estate trophy assets, art gold, silver, bitcoin, and then there's, a portion of it sitting in bonds and stocks and bitcoin is going to grow from that 600 billion dollar asset to become A 10 trillion dollar asset like gold, then it will subsume gold and it & # 39.
Ll become a 20 30 40 50 100 trillion dollar asset and that'll, be the core of the monetary planet. If you will right now, we're still going to have picasso and people will have value for their picasso paintings.
You're still going to have your diamonds, you're wearing and your gold rings, and you're, going to have your beach house, because you're, going to want your beach house. If you're going to own stocks, you're, going to own them, because you love the companies, because you wanted to make an investment in the company because you love the company, you think it's, going to go Up faster than the rate of monetary expansion, i think that the currencies will be mandated by the governments.
As long as there's, a united states government there & # 39, ll, be a dollar and the dollar will be legal tender and and people will buy things and sell things transactionally in dollars, and the reason why is because the irs gives the Dollar currency tax treatment - if i give you a hundred dollars a year ago and if the dollar appreciates against the peso over the next year - and it's, worth 10 million gazillion pesos.
And you give me the hundred dollars. The us government is not going to charge you a capital gains tax right, so it makes sense for you to move dollars as currency because there's, no tax obligation. But if i give you a bitcoin a year ago and the bitcoin is now worth it was worth ten thousand a year ago and it's worth a hundred thousand next year.
And you give it back to me, you're, going to owe the federal government 35 000 in capital gain. You're, not giving me the bitcoin. Keep the bitcoin give me the dollars right. You want to give me you want to give me money, borrow against the bitcoin fund in the bitcoin currency and then give me the dollars or convert something into dollars, and that's, so your your currency is dictated by the government.
You know you start your own island austin. You can have your own. You know you can spend satoshis on your own island. If you want to, but as long as there's, the eu central bank or the u.s or the whatever their tax authority will determine the currency based upon whatever they designate as currency.
If the irs had designated bitcoin as currency, there would be no capital gain to move that back and forth. When the irs designated as property. It implies it's, digital gold. You should treat it like gold, you should buy it and hold it forever and then my advice to you would be to borrow against it.
Tax free, never pay capital gains, never take an operating income. You know if you must sell it. I don't think you should, because it's, the highest quality property in the world. In the history of the world.
We never invented a technically more thermodynamically, sound pure monetary property than this right. This should be the container for the money you're, going to hold for your grandchildren. This is it better than gold better than a stock better than real estate better than a picasso.
Even if you love a picasso right right, so i think that i think bitcoin is property in cyberspace and i think that currencies aren't going away as long as governments are with us and i'm going to hope.
The government will stick around because i think there's, some good things about having a government and when the dust settles you're, going to have maybe a hundred trillion dollars worth of pure monetary energy in bitcoin.
You're gonna have 100 trillion dollars worth of stocks or 200 trillion, and they'll, be pri price discovery. The value the stock should decrease until the returns are expected. Risk adjusted returns on the stocks are rational.
You would expect the value of bonds would decrease such that the coupon on the bond is rational price. That is called price discovery returning those markets. You would expect that the value of gold will decrease and or will start to equalize to its ornamental value.
What is it worth to you as an ornament? What's, your art worth as an ornament? What is your beach house worth for your value and use? And then there'll, be a layer of cash and dollars and euros and pesos and yen and juan that will circulate around and that layer of cash will probably not hold value.
Because we know we're going to keep inflating it, and you know you ever calculate in the wan. I do it's like it's like a 10 000 won to the dollar and it's. It's, measured in billions of won, it is, you know it used to be.
A peso was one peso to the dollar, and you know it's, shooting up to 140 argentine pesos to the dollar on the black market right now. So, eventually that the currencies will fall, but they'll be used from day-to-day transactions and if you're wise, your wealth preservation strategy would be put all your money into bitcoin.
Don't ever sell it and then borrow against it. You know, and if you borrow against 10 of your bitcoin and then your living expenses, don't go up more than 10 a year and a bitcoin goes up. 20 percent a year your debt to equity ratio will fall forever.
You will never pay capital gains tax. You will never have income tax yeah. You just need a bank that that handles bitcoin and the bank for bitcoin is evolving right now so also earlier, you mentioned something about scarcity, um tying it to.
You know thinking about precious metals right like yeah. In the near term, they're, probably going to do good and go up but long term. There's, a non-trivial effort going into asteroid mining right now.
One person gets it right. One group of people get that right and they start bringing payloads back. You know let's, say they. They hire elon, musk and say you & # 39. Ve got a lot of assets up there help me get this stuff from a to b and all of a sudden we & # 39.
Ve, got a steady stream 24 hours bringing precious metals to the planet. You know there's more platinum on one asteroid than we've ever mined on planet earth. So i think precious metals long term, don't, make sense uh forever, but bitcoin you know, could get thousands of years out of it.
Right depends on what happens to humanity. I guess look the i mean the problem is: if i want a system of mathematics or engineering, it needs to be based on arithmetic mathematical, integrity or conservation of energy.
It can't, be based upon an analog approximation of integrity like it's really hard for us to find rocks and we found 21 rocks and we're gonna. As long as nobody finds a 22nd rock, then we're, going to add up to 21.
, it can't, be an approximation which is what gold is. It needs to be a. It needs to be an exact thing, so bitcoin arithmetic is a protocol. You know, bitcoin is a protocol. English is a protocol, a language is a protocol.
You know if everybody in the world agrees to communicate with the english language. A thousand years from now we'll still be using the english language, and we'll, be using it because billions of people agree to communicate in the english language right.
If everybody agrees to move their money around in bitcoin a thousand years from now, we'll, be storing our money in bitcoin, so worrying about whether we find some more silver or some more gold right is, is kind of silly right.
It's like the truth is we just should abandon commodity monies in the same way that you abandon the abacus or i don't know i'm trying to imagine like caveman, with, like 47 rocks in the dirt, And they're like this is our way of keeping track of what we have, and at night there's.
Someone standing guard over the 42 rocks to make sure that someone doesn't accidentally drop a 43rd rock and destabilize the power structure. It's like that's. You know it's, a it's, an open system, not a closed system; it's defective and it's kind of like just changing the rules of arithmetic.
Your bridge is going to crash your ship is going to sink. Your airplane is going to crash and burn. So i i don't even think about asteroid mining because it's. Such a silly notion. To think that, i'm, going to save my money in gold and hope that no one mines an asteroid.
It's about as stupid. As saying i'm gonna save my money in gold beads in sub-saharan africa, and hope that nobody with a ship shows up with more gold with more glass beads right right. It's like the glass bead money or like the seashell money.
As long as no one treks over to the to the beach and finds more seashells, i'll, be a rich man right! Well, good luck with that. I mean that didn't work with any civilization that i can remember it's about as dumb as the giant stone coin of the app people.
And so, if you're saving your money in gold, it's, the modern equivalent of saving your money in the giant, stone coin of the yak people and as long as no westerner and a ship shows up with other stones.
Yeah. You're gonna, be fine, you think about it. You know, and the asteroid mining thing is the equivalent of what. If someone shows up with a ship with glass, beads or sea shells or oh it's exactly the same thing.
It crashes our economy, yeah. The answer is: maybe you'll, actually have computers and arithmetic. You should have used the computers and arithmetic to base your economy on and not stone coins of the yap people, yeah yeah for sure you mentioned something earlier about um.
You know money being a kind of a language, and i've kind of kind of agreed with that. I've said that over the years um and it just dawned on me, like man, the guys who invented esperanto, i forgot who it was um back in the day and tried to create a universal language right, that everybody could easily learn and use.
Bitcoin kind of is that new thing right, everybody can use it. It doesn't, take much to understand it at least not under to understand how to use it to understand. It takes a lot of brain power and time really to understand it.
If you look back but but at a high level to use it and understand how to use it, doesn't, take any just it's, pretty simple um, especially since more and more companies are supporting it um. So, at any rate, i don't want to dive into that too much, but i thought that was interesting, um well.
Look i'll, say on that subject the people that are skeptical of bitcoin they generally they don't, have historical appreciation of protocols like they think like well, like i even see a famous hedge fund manager saying well, bitcoin is something And someone will invent a better version of it one day or replace it.
It's like well do. Do you not realize that railroad tracks are that width, because roman war chariots were that width and 2 000 years have gone by and nobody managed to change the railroad gauge right? Good luck with that, we still have.
I mean latin lasted 800 years. The english language is circulating. We're using a arabic arithmetic. How trace those numbers back and try to figure out how come no one change the system of arithmetic yeah, you know, and why don't you look at the power plug in the wall, look at the power supply and the voltage and the prongs And then ask yourself how hard would it be to change that and then once you go change like you know, pounds and inches for the metric system, because people been talking about doing that since i was a kid in first grade: yeah protocols last tcpip last english Language last all of these technical protocols and weights and measures.
We have things that go back, thousands and thousands and thousands of years they go back two thousand years before christ and we're still stuck with certain of these protocols, because once they get in to the civilization and everybody agrees that they're going to use those protocols.
You know it's, a basic common sense idea. Even warren buffett articulated it, but he didn't understand. It is a protocol when he says brands have value. The reason coca-cola as a brand has value is because a billion people on the planet have in their head that the word coke means something safe.
I can drink that taste, fizzy and good, and when a billion people have it in their head, if you were to nuke all factories, all distribution, the entire supply of coca-cola everything on earth, the idea of coca-cola in in the head of a billion people has value And you have to murder the billion people and start again with the civilization to replace the brand with something else, and so the bitcoin brand and the protocol for moving money around is something which very well can go for hundreds of years, if not thousands of years And once people realize that they realize no, it's, not about inventing something better there's.
You know any number of people came up with the better railroad card that was 12 inches. Wider good luck with putting that on a 100 billion dollars worth of rails, railroad tracks and bribing 10 000 politicians that let you rebuild the railroad so that you can run your rail car with an extra one foot of width, it doesn't work.
Do you think there's, a future of decentralized mining for bitcoin, where everybody you're, not going to make a ton of money, but you'll, be supporting the network right. You know the virtual power plant would be the centralized thing that is maybe earning the most money, but individuals could be running nodes as as a lot already are, i i think it's, most likely that it's going to scale Up and it'll be containerized like people building these big shipping containers that are full of miners that have thousands of miners in a container that they can ship anywhere on earth and just drop on a pad, and i think it & # 39.
Ll migrate in these containers to the edge of the power network. It's, going to migrate to the place where you're, not going to be stealing power from manhattan where you're competing against human beings, because human beings are going to bid more for the power like it's worth, for example, you would pay 10 cents a kilowatt hour.
You would pay a dollar a kilowatt hour. You would pay ten dollars a kilowatt hour if the, if your choice was to do it yourself or do it with the mule right or buy electricity, so so human beings are always going to pay more for the power you have to go to places where there Is power that - and there are no human beings places where the humans can't consume all the power and where the power is either it's, either stranded where we have to keep producing it, we can & # 39, t stop Producing it and there are no human beings or there's, no other uses of the power, and then presumably you know be.
Some combination of i find renewable power. You know in a place that's very cold, so my cooling is free. What you really want is infinitely renewable power stranded in a place where it's, freezing and - and i don't to pay to cool the thing.
I dropped it and there are no people there and i run a long line there and i just mine, bitcoin and and uh. You know offsetting that will be. These containers will be moving because politicians will be changing the laws and they'll, be seizing them.
They'll, be taxing. They'll, either tax them. They'll, outlaw them. They'll. Seize them or they'll leave you alone, and the rates will change, and so i you know i don't think it makes a lot of sense to build fixed mining capacity, because eventually the politicians will tax you or or the Power will go up if you want to play this game, you have to have access to the equipment.
You have to be able to spin up the data center quickly, but you have to find stranded power energy that there, for which there is no better use where you can buy it in essence, buy it for effectively zero right near zero.
A penny is good. Zero is better, of course, right and and two cents is okay, but ultimately anybody on earth can compete and mining against you, and so you're, going to be competing against nation states that we'll, give away the power for free Yeah in order to generate the hard currency - and so you know you really got to you almost got to be thinking about - will nature - give me free cooling, so i got to go the arctic circle.
Can i find free energy with a hydroelectric power supply that was accidentally built? Can i find a political government that won't tax me out of existence and then can i keep uh first generation or our current generation shaw? 256 hash power.
I don't know we'll, see but uh. You know it's. It's, going to be a very dynamic business, very dynamic, very competitive business and it's good for bitcoin, but it's like if i had a hundred million dollars right now.
I wouldn't, invest it in mining. I'd invested in bitcoin right. Okay coin is the monopoly digital dominant network mining. Is you choosing to compete against everybody on earth right, but you better have a built-in edge.
You know if you're intel or you build chips, or if you're amazon, you have data centers or if you, if you're iceland and you already own a bunch of hydroelectric or geothermal power that yeah you're. If you're bit made and you're, you're using your first gen and selling all of your second gems to you know whatever you know, vice versa, you're selling.
The the new models, but you've, already used the old models and you're, just rotating them. Something like that like if you're first in line at bitmain or one of the miners right, um, so yeah. That's interesting.
I just wanted to touch on that and get your perspective on bitcoin mining um all right, so so we can wrap but uh before we do any any uh motivational words for folks that uh should get into uh to bitcoin.
I know you've been great at calling people out. You know top level people that that should get in, but in general to the public, any uh motivational words of uh why they should pay attention to this thing called bitcoin.
Look, i think, bitcoin's, a bank in cyberspace. It's, you know, and your choices are you save your money in a traditional conventional fiat bank and you're, going to watch your purchasing power dwindle down over the next decade to the point where it & # 39.
Ll buy nothing or you can gamble in the stock market. That's, maybe rigged against you. You know, and if it's not rigged against you, then then you'll, be buying companies that are generating cash flows and fiat currency that is collapsing in value.
So, even if you think you & # 39, ve avoided the problem of currency. Weakening of storing your money in a bank. You haven't really, because if you're buying real estate, bonds or stocks that also generate fiat currency and that currency is collapsing in value, you & # 39.
Ve got the same problem. It's a now. You have a fiat derivative or you can uh save your monetary energy, save your purchasing power and your wealth and bitcoin, which is not a fiat derivative that is not collapsing in value.
That is going to appreciate against all these other currencies as they collapse in value, and you don't have to gamble on whether or not apple will ship a good, iphone 14, or you know the next generation of this product or that product, or This service or what that government will do to this company and what that ceo will do all very complicated anxiety inducing bitcoin is a simple thing right.
It's. You're buying into a thermodynamically sound, engineered monetary network, the first workable monetary network in the history of the world; first, digital monetary network, in the history of the world.
You know it's. It's, a gift once in a thousand years, do you actually see the invention of a fundamentally new thing? This is our once in a thousand year opportunity you get to buy into it early. You know what would be like if you own 10, of all the electricity that was ever gonna be pumped or what, if you could buy one percent of all the running water, that's ever going to be pumped right.