In a recent interview at ETF Think Tank, Michael Saylor explained why his company purchases bitcoin directly, custody it themselves, and doesn’t lend it out. The CEO of software intelligence company MicroStrategy also said that people underestimate bitcoin and overestimate everything else in the blockchain and cryptocurrency industries.
Saylor is known for his clear-cut approach to bitcoin – buy and hold. However, considering the uprising of many platforms offering the opportunity to earn interest on BTC, he was asked why MicroStrategy hasn’t loaned out any of its bitcoin holdings, responding that the single-digit yield that can be gained is not worth the extra risk.
“I think the counterparty risk is large; there’s a regulatory issue, there’s an audit and there’s a legal and accounting issue,” Saylor said, citing the extra work and the additional risk lending bitcoin would entail for his company. “So the point really is you’re taking 100 times as much risk and it’s 10 times as complicated – to get 5% more [per year].”
An interesting side effect Saylor’s company has experienced from holding bitcoin relates to brand awareness. According to him, the decision to buy bitcoin over a year ago has increased MicroStrategy’s brand awareness by a factor of one hundred.
“Bitcoin is one of the most, if not the most disruptive technology of the decade, and it’s disrupting the energy industry, the investment community, the technology community,” Saylor asserted. “That means it’s disrupting politics and economics in general. So it gets people’s attention and it’s progressive and it gets people focused.”
But real focus is something investors in the blockchain sector currently lack, Saylor explained. As people grow fond of the “crypto novelty,” pushed by strong marketing from founding teams, less energy is dedicated to Bitcoin.
“I think it’s pretty important to understand that Bitcoin is pretty much the most predictable thing in the entire blockchain universe, everything else is uncertain,” Saylor added. “There’s massive technical, security, legal, and execution uncertainty. And so I think people overestimate the certainty of the value of everything else and underestimate the value of Bitcoin.”
Along those lines, many people often criticize Michael Saylor and MicroStrategy for focusing on bitcoin only, supposedly dismissing other projects built on a blockchain. But the software company CEO said Bitcoin is the true diversifier, allowing its holders to diversify against the traditional economy.
“I think that when you get into the blockchain area, there’s just a huge stack of risk,” Saylor said. “So I think people typically underestimate all the risks of not buying Bitcoin, and they’re underexposed. The value is not in trading 250 or 500 different crypto coins. The value is in slurping 50 trillion dollars out of bonds into Bitcoin and slurping 50 trillion dollars or 100 trillion dollars out of real estate. People…should be more exposed to Bitcoin and less exposed to everything else in the world.”
According to the CEO of MicroStrategy, a laser focus on bitcoin is not something that should be left for technology and fintech companies only. Saylor added that every company and government on the planet could have their problems solved if they bought bitcoin.
“If El Salvador, Cuba, Turkey, Japan, Russia, the U.S., the U.K., or France buy bitcoin, they fix their balance sheet,” Saylor said. “Every company on Earth, if they buy bitcoin, they fix their balance sheet. So Bitcoin is the solution to hundreds of thousands of entities.”
And when it comes to individuals, bitcoin is also the answer. Saylor explained: “if you are a saver and you are thinking about buying land or gold or some other very scarce asset for 100 years, digital property in the form of Bitcoin is by far the best idea we’ve come up with in the century.”