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It's my pleasure to welcome. Michael Saylor to the MIT

Bitcoin Expo this year.

Michael is a technologist,. entrepreneur,

business executive,. philanthropist,

and best selling author.

He currently serves as chairman. of the board of directors

and CEO of MicroStrategy.

Since co-founding the. company at the age of 24,

Mr. Taylor has. built MicroStrategy

into a global leader in. business intelligence,

mobile software, and. cloud based services.

In 2012, he authored. The Mobile Wave,

How Mobile Intelligence Will. Change Everything, which

earned him a spot in the New. York Times best seller list.

Michael is an MIT alum,. having double majored

in aeronautics and astronautics. and science technology

and society.

Welcome, Michael.

Thanks for having me.

Yeah, it's a pleasure.

We know MicroStrategy. owns over 9,000 Bitcoin,

being one of the biggest. institutional adopters

to the Bitcoin standard.

90,000.

More than 90,000.

I apologize.

However, you, personally. and through MicroStrategy,

have put a lot of. effort into education.

Can you expand as. to why that is?

Why not just buy HODL. and just let it be?

I think we're going. through a paradigm

shift in monetary economics.

It happened in a low. level for the past decade

while Bitcoin was. expanding at 200% a year.

But since March of. 2020, Bitcoin has been

expanding at 600% a year plus.

So it's the conversion. of fiat money

and analog money. to digital money,

the digital transformation.

Base layer money has. accelerated dramatically.

Bitcoin's now a trillion. digital monitoring network.

It's the fastest growing. thing in our lifetimes.

It's the most powerful. technology of our lifetimes.

It's going to continue to. disrupt every industry.

It's going to change the lives. of eight billion consumers,

of 100 million businesses, of. every investor on the planet.

It's going to impact the. valuation of $500 trillion

of assets.

99% of the world. doesn't understand it.

They think it's a fad.

They think it's a bubble.

They think it's a rally.

They think it's a strange thing.

And so if there was ever a. thing that needed to be educated

or there's ever. an idea that need

to be introduced to society and. if it was ever good for people

to learn a new thing, I. would say that this year,

this thing is the single. most important thing

of our lifetime.

And so it's a worthwhile. pursuit to explain

to the world what Bitcoin is,. what an open monetary network

is, what a digital. monetary asset is, why it's

good for the human. race, how it's

going to change. their lives, and why

it would be irrational and. tragic for them to dismiss it

as another speculative fervor.

Yeah.

And you mentioned. this paradigm shift.

And previously, I've. heard you talk about how

with a paradigm shift,. either the idea that slowly

or it takes like a shock. to the system for people

to adopt this new paradigm.

So it seems like. the pacifist way,

right, to educate. people into Bitcoin

without having some drastic. thing change and people

flock to adopt it.

If you wanted to. introduce electricity

to every home in the. world, then you'd

probably start by explaining. what electricity is

and why it'll make everybody. stronger and better

and why it's safe and. how to handle it safely.

And the same would be true with. the automobile or compressed

air or hygienic running water.

So they're all just. requiring education.

Luckily for us, the cost of. education in the year 2021

is a penny, is minuscule. compared to the cost

of education even 20 years ago.

So information moves quickly.

This is an idea. whose time has come,

but it's a new idea,. sophisticated idea.

And it's going to be much. rougher and more turbulent

in its adjustment. if people don't

get their heads. around what it is

and how they should manage it.

I think to that note, I've. heard some people kind of refer

to how if you like Bitcoin. you're not patriotic

because it doesn't allow. for the United States

to use the petrodollar. system to do what

it wants to do geopolitically.

But I think for a lot. of things you've just

mentioned, I was wondering if. you could spend like maybe how

Bitcoin is actually. patriotic and not unpatriotic

to be holding it,. to be a part of.

I think it's pretty. clear at this point

that the way that the. world is going to evolve,

we're going to have one layer,. which we call the currency

layer, and it's going to be. dollars or euros or the fiat

currency of every legitimate. effective government

on the planet.

And there's going to. be an underlying layer,

a store of value layer,. called the asset layer.

And that's either going to be. pure base layer of money, which

is what Bitcoin. is, or it's going

to be a hybrid mixture. of like an investment

and commercial real estate or. a stock that the people feel

has a portion of asset in it and. a portion of speculation in it.

So that being the case, you're. looking at eight billion people

And the killer application. is a mobile wallet,

like the BlueWallet. or the Moon Wallet

or the Square Cash wallet or. Apple Pay or fill in the blank,

there'll be 1,000. of them downloaded

on them on a mobile device.

And that mobile wall, it's. going to have a fiat currency

layer and a payment. rail that moves probably

dollars or the equivalent. and then underlying,

there's got to be a savings. account asset layer.

And that's going to. emerge as Bitcoin.

So I don't think Bitcoin is at. all threatening to the dollar.

I actually think that if we. look right in front of our face

what's happening, the. Argentine peso is collapsing.

The Nigerian currency. is collapsing.

The Zimbabwe currency. is collapsing.

Probably the currencies in. the weakest 50 countries

in the world, they're. all collapsing.

And what everybody. wants is they want

to do their medium of. exchange in dollars.

And so the US dollar. is actually going

to spread on that Bitcoin base. layer to Nigeria, Venezuela,

all of Africa, half if. not most of South America

all through Asia because if. the government can't maintain

a currency which is strong. enough to be effectively pegged

to the dollar, then. it's going to lose

control of the currency.

So you see, you've got. three types of currencies.

You've got the rich countries,. Switzerland, UAE, Europe,

Singapore.

They manage to maintain. parity to the dollar

roughly because they're well. managed and they have assets.

Then you have the countries. that are weakening

and they're losing 20% of their. strength against the dollar.

And then you have the countries. where the currency is literally

collapsing, right.

Lebanon, Iraq, Afghanistan.

Or there is no currency.

So if you're interested in doing. the best thing for the world,

what you want to do is deploy. this open monetary wallet

with Bitcoin as a base. layer asset protocol,

and then with a stablecoin rail,. which is probably the US dollar

because if you're going. to go to in a currency

other than your. local currency, you

might as well just go. right to the one that's

90% of the world.

That's what you'll see.

You're either going to do. that on a proprietary network

like Square Cash or PayPal. with a compliant payment rails,

or you're going to do it. on open network that's

probably lightning based.

And it'll be open protocol. because maybe Square's not

operating in Zimbabwe, right.

But if the Zimbabwe. currency hyper-inflated

to a billion Zimbabwe, buys. you less than a cup of coffee,

it's pretty obvious. you can't use that one.

And so what are. you going to use?

You're going to basically. flip it for the dollar.

What we're seeing is Bitcoin. as an open monetary protocol

is making it possible. for 100,000 Bitcoin banks

to spin up in cyberspace.

They're all going to settle. with each other on the Bitcoin

protocol.

They're all going to do payment,. billions of transactions

and payments and other trust. transactions on lightning

rails or other. proprietary rails,

settle with each other. at a slower frequency,

and this is the way that. the best technology spreads

all eight billion people.

So coming back to the question. of is this good for the US,

well, it's good. for the US dollar

because the US dollar. is going to become

the medium of exchange for. the next 3 billion people

on the planet that. currently are struggling

to use the Zimbabwe whatever. it is, right, or the bolivar,

right.

So you'll see that the US dollar. moving on that Bitcoin base

layer.

It's also good for the US. because the mobile wallet's

coming to everybody. on the planet

whether we like it or not.

And if it doesn't sit on. Bitcoin controlled and owned

by American investors and. American companies running

on American technology,. spreading American values,

spreading the US. dollar, it's going

to sit on the Chinese yuan.

What happens if you. don't want to spread

the dollar to five billion. people for daily payments?

What are they going to use?

I think when I got started. in business people used

to say a really good marketing. strategy or a good business

strategy is one. that you would hate

to see your competitor pursue.

So either US. technology and Fintech

is going to be built on top. of 21st century crypto asset

network Bitcoin or we're not.

And the six billion. people on the planet

that need such a thing are. going to go to somebody else.

I mean, the truth. of the matter is

they'll probably go to. Bitcoin, but they'll just

be running instead of. US dollars on Bitcoin,

they'll be running Chinese yuan,. renminbi, on Bitcoin, right.

But they're going. to run something.

We know they're not going to. run the naira or the bolivar.

And in Argentina, the official. inflation rate this year

is 45%.

The unofficial. inflation rate is 85%.

And that's 40% plus last year. 40% plus the year before that.

What are they going to do?

And the question really. is, is the United States

going to provide. technology that's

going to solve the problem. of monetary economics

for the entire planet?

Or are we going to abdicate. our leadership role?

And all that means is the. capital moves offshore,

the technology moves offshore,. and people don't use--

maybe they don't use. English or the dollar,

they use Chinese and CNY.

I don't really think that's. good for the United States.

So once I think. technologists think about it,

and once anybody. thinks about it,

I think they're. going to go, yeah, I

stronger, than the old way.

And are we going to do it?

Or are we going to abdicate. responsibility for doing it?

So yesterday we had a couple. of people from the FCC talking.

One of the things. that they talk about

is how the process to regulate. is slow and just inherently so.

It allows some. time to watch, see

kind of how this new technology. and this new ecosystem

develops.

And then kind of be able. to act on kind of how

things manifest themselves.

Do you think that is beneficial. in this space at this time?

They have a complicated job.

I think you have to do it very. carefully and constructively.

I think that regulatory. clarity develops

that'll be really. good for the industry.

I think there's a. lot of inefficiency

and wasted energy due. to the uncertainty

of the regulatory environment.

And so I think as clarity. develops, that's good.

But I also think it needs. to be good regulation.

So I'm in favor of. doing the right thing.

By the way, my. view on regulation

is the same as my view on. Bitcoin core development.

We should move forward. progressively yet carefully.

Yeah, no.

And I agree there.

It's important.

We don't want to make sure. that we don't hinder something

by stepping into. regulation too early.

We also don't want to. maybe move too slowly where

people are uncertain. and maybe don't want

to act for whatever reason.

I have another question for you.

I think it's appropriate because. we're at the MIT Bitcoin Expo.

But I heard you. reference Bitcoin

as it is a technically. thermodynamically

superior as an asset.

It's a technically. thermodynamically superior

asset.

So I wonder if you. could maybe expand

on what you mean by that because. to someone that hasn't heard

about Bitcoin and. is just learning,

they would just hear that and. be like, what does he mean?

I mean, the basic. principle of thermodynamics

is a closed system or. an adiabatic system

is closed to matter. coming or leaving.

And if I have a closed. system or adiabatic system,

I can solve for the problem.

And if I don't have. a closed system,

if I keep introducing. mass in the system,

I can't solve the problem.

So an example of a. thermodynamically sound

swimming pool would. be one without a leak.

And if you have a leak. and you wait a day

and you jump into. a swimming pool,

you're going to break your neck.

And an example of a sound. fuselage in an airplane

is one without a. leak and if you have

a leak when you get. to altitude, the air

gets sucked out and. everybody suffocates

and the plane crashes, right.

And if you have a monetary. system, you need two things.

You need a monetary. asset, which is fixed,

closed asset if it's going. to be mathematically proper.

And then you need. a monetary network

to move the asset. around, to change

the ownership of the asset.

So if I create a. compressed air system,

right, a good one would be. the balloon without the leak.

And the bad one would be. the balloon with the leak.

OK?

So if we look at all the. other monetary systems--

so we try gold.

The problem with gold is it's. got a 2 and 1/2% leak per year

in it, which means it's got a. half life of 30 years, which

means the energy is bleeding. out of the system constantly.

And there's a big difference. between a half life of 30 years

and a half life of infinity.

In one case, you live forever,. right, a million years.

Like I shine a flashlight in. outer space or a laser beam

and it goes forever.

And the other case,. it goes for 30 feet.

So not only is it. a superior idea

to have an asset which. is capped at 21 million,

it makes it mathematically. proper, right?

The 21 is equal to 21. and it'll be equal to 21,

and that makes it adiabatic and. solvable in a closed system,

I mean, the fundamental. principle in aeronautics

is every single thing. that starts with assume

an adiabatic system.

And then, dot dot dot,. you can do something.

And what if we assume. not an adiabatic system?

Well, that's a. beautiful airplane,

and when shear smashes it. to a pulp in one second

because wind shear.

And what's the. equivalent of wind shear?

It's like a politician printed. 10x more money, like wind shear

in Zimbabwe or in Venezuela.

You just saw it, right?

Now why is Bitcoin special?

Because it's the first effective. worldwide asset network.

You can build a crypto. asset network that

is not thermodynamically sound.

Dogecoin has $100. billion doge, right.

And you keep adding it.

So if I keep adding more. tokens, that's not sound.

The protocol could be wrong.

And on the other hand, in. the absence of Bitcoin,

people change to. another asset network.

So we just saw a. massive $10 billion

wipe out last week with. Archigos because you had someone

shorting Viacom's stock.

But Viacom's stock is. not a closed system.

It works fine unless. the CEO of Viacom

wakes up and says my. stock is overvalued.

I have a fiduciary. obligation to sell stock.

So Bill Long had--

I don't know-- $50 billion. in leverage on an assumption

that the share count of. Viacom wasn't going to change.

When the CEO of Viacom. decided to issue $3 billion

worth of stock, he diluted it.

That was the pin in the balloon.

Everything collapsed.

The entire capital structure of. the leverage trade collapsing.

And $10 billion, $20. billion got wiped out.

Why?

Because stocks aren't closed. systems, nor is debt, right.

If you buy up all the. debt of New York City

and you drive the. price to infinity

and you tell all your friends on. Reddit to buy all the New York

City debt, the mayor. of New York might just

go ahead and issue another. $20 billion worth of debt.

Just like people. say, oh, GameStop.

They should issue stock.

Well, this is a news flash.

Don't short a system which. isn't the closed system.

Right?

And that means the. problem is real estate.

If you're buying. apartments in Manhattan,

they can build another. building next to you

and put more apartments. on the market.

With debt, if you buy up. all the government debt,

they can issue more debt, and. that doesn't work for you.

And if you buy equity,. they can issue more equity.

If you buy gold when. the price goes up,

they will mine more gold.

And so we've got $500 trillion. worth of assets that are

being used as a store value.

They're all defective, Daniel.

And they're all. thermodynamically defective,

but if you don't like the word. thermodynamics because that

seems like a big word. and adiabatic is just

for aeronautical. engineers, I have another.

We can just go back and we. can use Newtonian mathematics

and say because. arithmetic, right?

Because you could also look at. Principia Mathematica and say,

well, I'm just going. to design an asset

based on the principles. of mathematics.

Well, how does that work?

Well, I issue 21. million units in my bank

and we just agree that. for all of eternity

there are not going to be. more than 21 million units.

And so if you and. all of your friends

decide to buy up all. the units and if you all

agree that you're not. going to sell the units,

then you have a hard. point to stand on.

And you don't have to worry. about the CEO of Bitcoin

issuing another 21 million. units and diluting you out

with a rug pull.

I think I'll end this little. soliloquy with Archimedes.

Archimedes said give. me a lever long enough

and a fulcrum upon. which to place it,

and I can move the world.

And all the non. engineers as a non

physicists, they. think that quote

would sound a lot better if we. shortened it to give me a lever

long enough and I. can move the world.

But it doesn't work unless. you have the fulcrum.

The fulcrum is the. point at which I can

put a million pounds of force.

And the fulcrum has. to be able to support

a million pounds of. force to move something

on the other end that. weighs a million pounds.

Yeah, definitely.

And once you. understand that idea,

I need a fulcrum,. what does that mean?

I need something that's not. going to move in the universe.

What's the most stable thing. in the economic universe today?

And the answer is Bitcoin.

If I have a trillion. dollar monitoring network,

it's like a gyroscope. spinning so fast, right.

Intuitively you know a. trillion dollars of energy

is more than a million dollars. of energy or dollar of energy.

I can muscle around $1. or a million or billion

or $10 billion.

It's hard to muscle. a trillion dollars.

Now, can I actually put. $100 trillion of leverage

on a trillion dollar network?

Probably not.

Like, I would not advise that. you go and borrow $100 trillion

and buy Bitcoin to. drive the price up,

pull yourself by. your bootstraps.

You can't do that.

But can you borrow a. billion dollars of leverage

and buy Bitcoin?

I did that.

You can do that.

And as the liquidity. of Bitcoin grows,

as it goes from about a billion. a day to $2 billion a day

to $4 billion a day to $8. billion a day to $16 billion

a day to $32 billion. a day, you'll

be able to get more. leverage on that fulcrum,

and you can literally. move the world.

That's a really good. way of putting it.

I think one last thing. I want to talk about,

and that is with. MicroStrategy you

guys had that conference that. really focused on businesses.

And there's like, rightfully. so, the institutional adoption

is very important for Bitcoin.

But I was wondering. if then for the people

that don't have a. business or maybe don't

think in the scale. of a business,

if you can maybe just talk. about the different perspective

between like acquiring. Bitcoin for your business

fiduciary duties and. acquiring Bitcoin

for your personal. fiduciary duties?

I think people that understand. Bitcoin understand that what's

going on is exchanging of. soft money for hard money

or conversion of analog. assets to digital assets

or taking open paper sitting. in a box in your backyard

that anybody can borrow. or steal and convert it

into an encrypted money. that's in a bank in cyberspace

that nobody can steal.

That's a transformation.

The way that people. understand Bitcoin is they

think it's a speculation.

Sorry.

If they don't understand. it or they're afraid of it,

they think it's a speculation. and it's an investment

and they're thinking Bitcoin. versus silver versus gold

versus GameStop versus Tesla.

That's what they're thinking.

When they understand. it, they say

it's just a conversion. from a soft asset

or an analog asset. to a digital asset.

So how should an. individual think of it?

Well, if you're going. to make $100,000 a year

for the next decade. and if the US dollar

is going to weaken. at 15% a year,

you should discount your cash. flows by 15% next year, by 30%

the next year, by 15, 15,. and 15 cubed the next year,

and by 15% to the 10th. power the 10th year.

It isn't a hard sequence. to figure out, right?

Your purchasing power is. going exponentially to zero.

All you got to do. is fill in what

is the percentage. weakness of the money

to figure out what your. purchasing power is

going to be.

This is the same. math you would do

for an individual. dentist or an engineer

or small business. or large business.

Or if you held a. bond and the bonds

paying you $100,000. a year, right, it's

the same exact math.

It's just discounted cash flow.

Once you figure that. out, then the question

is, what are the. consequences of me continuing

to work in the US dollar?

The answer is you. have to basically grow

your salary faster. than the rate at which

the currency collapses.

So if you can raise your salary. 15% a year every year forever,

then you'll have the same. amount of money in 10 years

as you have now.

By the way, you won't get rich.

[INTERPOSING VOICES]

You'll be getting paid a million. dollars a year at some point

and it will buy you nothing.

But that's one strategy.

The other strategy is you. convert your existing assets.

If you are fortunate. enough to have assets

invested in bonds. commercial real estate

or equities that are. valued on cash flows

or sitting as cash. in the bank, you

convert that into the hard. asset, which is Bitcoin,

as much as you dare.

Some people say 5%.

Some people say more.

I've done a 400%.

My view is, first, I. convert all my stuff then

I borrow money then. I convert that.

But everybody makes. the decision as to how

invested they want to be in. the digital asset universe

versus the analog asset.

Once you do that, after. you after you decide

what portion of your existing. assets you should convert,

you can decide if you. want to forward finance

your cash flows.

And maybe you do.

I did.

But then you decide you want. to finance your other assets.

You have a house?

You have a million dollar house?

You can borrow $800,000 of it.

Maybe you can borrow an. $800,000 home equity line of 2

and 1/2% interest.

Well, if I borrow. $800,000, pay 2 and 1/2%

interest, invest it in. Bitcoin paying 250% interest,

it's a 247% arbitrage, right?

It's a great deal.

OK.

Some people are. afraid to do that.

I would say, well, you get to. borrow money against your house

to buy a dominant digital. monitoring network growing

more than 200% a year that's. got a monopoly on money that

should grow by a factor of 100.

Sounds to me like a better-- by. the way, the same people that

are afraid to do that will. start up their own business

to complete the next Snapchat.

Well, it seems to me like. creating the next Snapchat's

a lot more risky than. buying a piece of a monopoly

digital network that's. more powerful and more

useful to everybody on. Earth than anything ever

invented in your lifetime.

Everybody assesses risk. differently, right.

Our brains are. wired differently.

If I was giving. advice to my niece,

I would say if you can. finance your house,

finance your house if you're. lucky enough to have it.

If you can sell equity in. yourself or in your business,

you want to sell equity. in your business.

OK, good idea.

Invest in something. related to Bitcoin

because it's growing. by a factor of 100.

Better idea, buy some. Bitcoin with the money,

and then borrow against the. Bitcoin to invest in the thing

that you think is cool. because there's a 99% chance

that a new business fails.

But in the 99 probability that. your Snapchat substitute fails

or your TikTok competitor. fails, if you finance

the business in Bitcoin. instead of in US dollars

while you were failing,. you're going to get rich.

And so this is the. thing a lot of people

can't get their heads around.

It's less risky to launch a. company with your treasury

invested in Bitcoin. than to launch

the company with your. treasury invested in dollars.

And it blows their. mind because they

think that the dollar. is the safe place

to put their cash until. their business works.

And the answer is if. there's a 200% arbitrage

between the dollar and the--

the dollar is collapsing. at the rate of 200% a year

against Bitcoin for. the next five years,

it won't have been. a prudent thing

to save your money in dollars.

So I think everybody's got. to think of it the way they

want to think of it.

You can't you can't tell people. how to invest their money

or how to treasure their money.

But I do think the. road to serfdom

is working exponentially. harder for a currency growing

exponentially weaker.

And the strategy does matter.

If I drop you, Daniel, in the. middle of Argentina or Zimbabwe

or Venezuela a decade. ago and I said go at it

and create whatever you. do whatever you want.

And let's say you're the best. person in the entire country,

the smartest person. in the country,

and you have the best idea. in the entire country.

Can you come up with. an idea that's better

than convert all your. money back into dollars

before you do that?

I think that's a. really good spot

to kind of end. this conversation.

I think we could go. on forever, but we

have to continue. with the conference.

Michael, thank you so much. for this conversation.

It was really insightful.

I had a really good time,. and I hope everyone else

watching had a good time.

And I think up next we're. going to have Tomas kind

of introducing our next talk.

Thank you so much, Michael.

Thanks, Daniel.

Go tech.