In this episode of “Y.E.L. 2.0”, host Peter Voogd, Entrepreneur, Mentor, Speaker, Best-selling Author, and Founder of the prestigious ‘Game Changers Academy’ talks with guest Mr. Michael J. Saylor, CEO of The Business Analytic Software for MicroStrategy. He is deep-diving into Bitcoin, sharing facts, and strategies to buy it. Michael is talking about it from a political, social, economic, and legal standpoint.
Episode Highlights
- Michael says, when you evaluate economics, you have to be able to think from first principles, what does currency mean? What is a bond/stock/property? How do you value property/stock/ bond/currency?
- When you think about inflation, you realize there isn't one inflation rate; a million inflation rates are changing everywhere all the time for every product.
- Peter enquires why don't more people think for themselves and try to get the first principle.
- If you had the right teachers, and they poked you the right way, then that's helpful. So not everyone has the benefits of the best education.
- If we simply just wiped the deck clean you could be anywhere and do anything you wanted. That would allow you to move very aggressively.
- We need more independent thinkers to push this culture forward.
- We need to find a Crypto Asset that looks like gold on a big tech network that you can move at the speed of light.
- If you look at the experience of Bitcoin from 2018 to 2020, the entire asset class hardens institutionalize and stabilize. It was pretty clear that Bitcoin was going to be the dominant winner proof of work, not Bitcoin cash, and not Bitcoin Satoshi vision.
- It's challenging to develop the gold or generate yield on gold.
- They're all forms of property but they're all 20th-century property that's expensive to maintain, slow to move, and hard to develop.
- Bitcoins are a 21st-century property, we can move to the speed of light.
- If you want 8 billion people to do business with each other and 100 million companies at the speed of light with no friction across 20 or 30 or 40 billion mobile devices across every political domain.
- Bitcoin fixes everything because it's pure energy.
- A lot of times people that are promoting gold own gold miners.
- If you move too fast, you generate sparks and friction.
- If we fixed all this tomorrow Bitcoin would be trading at $10 million a coin and you wouldn't be able to afford it as it is right now.
- Peter says you're still not sure if it takes you 30 years to notice something which is a dominant network, and then your career is over.
- Michael has been pleasantly surprised by the support coming from regulators and politicians.
- The one thing that's certain in the crypto sphere is Bitcoin is digital property. It's not security, and it’s okay to own it.
- The debate was, is it a currency or is it an asset, and so, people have established it is an asset it's not a currency.
- The world is waiting for clarity from the regulators on what is the security, and what is property, says Michael
- The Safe Harbor is a digital property on the Bitcoin network as a store of value.
- If you're an individual, you can't carry more than $50,000 worth of capital outside of China, it's a capital control thing.
- It'll be a problem to own Bitcoin in a country where you have no property rights; you're not allowed to own any property.
- When you understand it as property then you figure out what kind of property you want to own, what jurisdiction you're in, then you can kind of figure it out.
- If you're a saver, and you have pesos, convert them to dollars, that's a stronger asset and if you have dollars, convert that to Bitcoin, that's a stronger asset
- If your choice is starved to death, or own something in the gray market or the black market, you've got to do the right thing for your family.
- Some are trying to crack down on Bitcoin mining was a scare but Bitcoins come back roaring better than ever.
- Peter asks, what is that strategy of borrowing against the assets?
- Michael points out, as long as the appreciation rate is greater than your expense ratio, you can borrow forever.
- You need an asset that's going to appreciate, what will appreciate scarce desirable assets.
- There is competition and Bitcoin banks are coming online, there'll be more competition.
- If Bitcoins go up 100% a year it cost you 5% to borrow the money. Borrow $1,000,000 of 5%, loan it out to Bitcoin for 100% scrape the 95% arbitrage you make $950,000 a year off of a million-dollar loan.
- You should raise capital as cheaply as you can and invest in a business that's growing that is going to appreciate.
- Peter says when I first watched that it did open my eyes to a different way to build wealth, and I feel like that's the right way in this new economy.
- The opportunity would be different if the money supply was inflating at 0% a year and the interest rate was 6%.
- When the rates go low, and when the money supply expands faster in an inflationary environment, it's very important.
- You would get a 200% return if all you did was borrow a million pesos and buy dollars because the peso went from one to the dollar to 200 to the dollar. So, if you understand that frame of reference, then you realize that certain things make a lot more sense.
- How do you think we could best deliver that to include people in the process?
- Michael mentions a lot of education is to be done. One thing you can do is you can create specific education for certain constituencies.
- Bitcoin uses real energy and real technology because that gives it thermodynamics substance and political substance in the real world.
- Bitcoin turns out to use maybe $4 or $5 billion worth of energy a year to create something that's got a $1.1 trillion value.
- If you look at Bitcoin, you say that we can upgrade analog energy to digital energy.
- You need to keep the proof of work on energy to be politically and thermodynamically sound and unique.
- What is the most efficient strategy to convert payroll for a large company into paying them in Bitcoin?
- If I paid you in Bitcoin that I had acquired a year earlier, I would have capital gains tax on it. So, I would be accelerating the tax bill. But if I pay you in US dollars, there's no tax bill.
- As the governments expand the currency supply, there is inflation.
- If you have a billion dollars of Bitcoin, you can move down at the speed of light anywhere in cyberspace.
- Peter asks, is there anything you can share what you predict the end of year Bitcoin and then two-year Bitcoin and maybe 10 or 15 years down the road?
- Michael says, it flips gold, and then it replaces real estate, and eventually there's no reason why it can't become a multi 100 trillion-dollar asset.
- Bitcoins are going to appreciate because of a. inflation, b. adaption, c. utility, and d. productivity. And by that he means in your frame of reference, states Michael.
- If you want to get rich and stay rich, you have to own high-quality property forever.
Three Key Points
- You need to think from the first principle; it is that philosophy that has allowed you to understand Bitcoin when you first started consuming that and studying it.
- Bitcoins are digital energy; it's the basis of 21st-century civilization. You just got to think hard about it and once you start thinking hard about it what you realize is, that this is just the profound opportunity of the century.
- The first thing you want is a scarce desirable asset. The second thing you want is a bit of monetary inflation. The third thing you want is a low-interest rate, and the fourth thing you want is a bank that you trust.
Tweetable Quotes
- “People need to adapt to conceptualize that idea first principle because that was eye-opening to me.’ – Peter Voogd
- “I think that the United States traditionally has encouraged more independent thinking than certain other cultures around the world.” – Michael J. Saylor
- “You're oscillating; you're vibrating at different frequencies. Right and that way there's some balance to the way that society adjust to new ideas.” – Michael J. Saylor
- “I think the war on COVID was accompanied by a war on the currency.” – Michael J. Saylor
- “The goals were $10 trillion. And if I take a billion dollars and I buy gold, I have a 30,000-pound lump of gold sitting in a vault in the basement of JP Morgan in New York City.” – Michael J. Saylor
- “I can take 1000 room hotel I can decompose it into 1000 virtual rooms.” - Michael J. Saylor
- “I can use Bitcoin over the Lightning Network to provide Cyber Security to everybody on Twitter and Facebook and WhatsApp and YouTube.” – Michael J. Saylor
- “I can't find a single person that it's that supports gold that has more than 50% of their portfolio invested in it.” – Michael J. Saylor
- “You don't want everybody to move too fast, right because Bitcoins going up 170% a year for a decade.” – Michael J. Saylor
- “If everybody understood it, you wouldn't have any opportunity.” – Peter Voogd
- “If I had a million dollars in Argentina, I couldn't just wire it out of the country tomorrow.” – Michael J. Saylor
- “If it's illegal to own Bitcoin in a country, but it's legal to own the dollar and I'm holding the Bolivar I'm swapping to the dollar right.” – Michael J. Saylor
- “What's the worst thing? China crackdown on Bitcoin mining. What was the result? Hundreds of billions of dollars of capital flow to the US and Bitcoin became embraced by the Western world.” - Michael J. Saylor
- “Find long term loans at low rates, invest in something intelligent and wait, why to wait, this is the basic principle of all businesses everywhere.”- Michael J. Saylor
- “If you have all these books, and they're written in English, and then you go to Brazil, and they're not in Portuguese, right, you're not going to reach a lot of the people.’ – Michael J. Saylor
- “If you're going to stop the burning of oil or coal, then 99.9% of all of that energy usage is something other than Bitcoin.’ - Michael J. Saylor
- “When you have excess cash flows or Treasury balances, you immediately sweep that into a treasury asset and convert it to Bitcoin.” - Michael J. Saylor
- “If you have a billion-dollar building in New York, you can't move it. If you have a billion-dollar company, you can't move the either.’ - Michael J. Saylor
- “I expect it to go up by a factor of 100 to 200 or more.” - Michael J. Saylor
- “It's an appreciating asset. That will be progressively less volatile, progressively slower growth, but it'll be high growth an entire decade.” - Michael J. Saylor
Resources Mentioned