Microstrategy Bitcoin Strategy – The Most Genius Financial Move Ever or Imminent Collapse: Part II

Reflecting on the Emergence of Bitcoin as the Next Digital Monopoly

As the CEO of MicroStrategy, I worked for ten years with 2,000 people to generate $500 million in annual revenue. This is why the experience of ten years of hard work, compared to holding assets that represent a monopoly and generating returns 20 times over, is deeply engraved in my soul. So, March 2020 came, and I said that the last time I saw this a decade ago, I just bought digital monopolies and waited. 

Naturally, I asked myself, “What is the next digital monopoly?” and I thought it must be a digital monetary network needed by billions of people, one that no one can stop, and only a few understand. The answer came naturally – Bitcoin. Its supply is limited, it can move at the speed of light at almost no cost. No one can freeze or halt a transaction, unlike all other known forms of assets. 

So, since Bitcoin is almost perfect, the question is whether it will be banned. Will it be hacked? Will someone copy it? I think the answer to this question, despite Bitcoin being theoretically designed as the perfect synthetic sovereign store of value, is that we can’t really know for the first decade. So, is Bitcoin like Yahoo or Google? Is it MySpace, or is it Facebook? Is it like Apple, which made the biggest profit in the mobile phone market, while all its competitors lost money? 

So, as always, there is a winner and followers. Is Bitcoin the winner? It’s hard to give a final answer to that question for now, but one thing we can say for sure is that Bitcoin hasn’t lost to any other form of digital asset, despite many challenges. From Litecoin, which was designed as digital silver, to Bitcoin Cash, Bitcoin Gold, and many other failed Bitcoin copies.

Why Bitcoin Won’t Be Banned or Hacked

When it comes to the regulatory ban on Bitcoin, our conclusion is that it won’t be banned, because it is a form of digital property. The US IRS has already classified it as an asset, not a currency that could be banned. In addition, President Donald Trump has announced that the US plans to form a Bitcoin strategic reserve and that Bitcoin should not be taxed with capital gains tax. 

So, the following question would be, is it going to be hacked? No, because it is the safest network in the world and runs on millions of computers. Even if any government, including the U.S., tried to hack it (which would not happen if the US formed a Bitcoin strategic reserve), they would not succeed due to the raw computing power of the Bitcoin network. 

This is how we have come to realize that Bitcoin is an institutional reserve asset in the crypto world. Bitcoin is also the only liquid, limited asset that you can buy as protection against inflation, and its value could grow faster than the rate at which money loses value.

Bitcoin vs. Gold and Real Estate:

Saylor also compared Bitcoin to real estate and gold. He said that Bitcoin is digital gold, and he would rather buy a block of it and sit on it for decades, rather than invest in physical real estate. 

Gold is an imaginative, mythical idea, but in his opinion, it is not a winning idea. It is hard to find among the top 100 wealthiest people in the world who got rich by investing in gold. Why? Because gold cannot be rented out or developed. It is dead money. No one wants to rent someone else’s gold. It is impossible to improve gold. The main and proven strategy for getting rich with real estate involves knowing that the money supply will increase by 7% annually and that you can borrow money at 3% or 4% interest. 

Then, you borrow a billion dollars and buy a billion-dollar property. Property values rise by 7-10% annually, while your interest on the loan is 3-4%. The arbitrage is plus 6 or 7. Everyone in New York knows this. The time-tested way to get rich is to borrow a billion dollars, buy a billion-dollar property in New York, hold it for 20 years, and then refinance it, never selling it.

Bitcoin’s Global Mobility vs. the Limitations of Real Estate Investment

On the other hand, what is Bitcoin? Well, Bitcoin is a digital asset. The advantage of Bitcoin over gold is that I can have a billion dollars in Bitcoin, and I can rent out each Bitcoin or part of it to someone. The advantage of having a billion dollars in Bitcoin over a billion-dollar building in New York is that the building in New York is interesting to people who want to do business in New York, but a billion dollars in Bitcoin is interesting to someone who wants to do business in Singapore, Monaco, Hong Kong, London, Paris, or San Francisco.

In fact, you can teleport it anywhere on Earth. And that is a huge advantage. Suppose you are lucky enough to buy a building in New York, great for you. But what if you are unlucky and buy a building in the wrong city, or what if war breaks out, and you own a building in a war-torn area? 

That’s the problem with real estate. What if you bought a billion dollars in real estate in Kansas or Dayton, Ohio? Does it appreciate at the same rate as Manhattan? The answer is no. So, you have to choose the right location for your billion-dollar investment, while with Bitcoin, you invest a billion dollars and can move anywhere, anytime.

The Advantages of Bitcoin: Scarcity, Mobility, and Flexibility in Digital Ownership

There are several other advantages to Bitcoin. When you think of it as digital ownership, imagine that I conceptualized Manhattan as 21 million city blocks and prevented the creation of more. In the physical world, there is always the possibility of expansion because people can create more land. If you go to Dubai or Abu Dhabi, you can see that they are literally creating new land. 

Additionally, developers can always build buildings with 70 floors instead of 50. Thus, political interference and capital incentives to create more square footage prevent the guarantee of space scarcity. However, if the initial limit is 21 million square feet in the digital space, no such option exists.

Another advantage: imagine I have a hotel worth a billion dollars. I might be able to rent rooms to people who want to be in New York. But what if the Olympics are in Tokyo, and I want to move the hotel to Tokyo for a week? I can’t do that. But if I have digital assets, I can move them wherever the highest offer is, at any time. 

Things can get even better. You can rent a hotel room for just one day, but I can cut my digital asset into pieces and rent it by the minute. And not just the whole room, but only a part of it. Figuratively speaking, what if I have a hotel and can rent each room by the minute, and if I can split the hotel into 10,000 pieces and move it to Tokyo, Paris, and London, always choosing the best bidder, without worrying about the wear and tear or maintenance of the hotel? 

Also, if someone wants to charge me a huge tax in New York, I’m stuck in New York. But in the case of high taxes on Bitcoin, I can easily move it to Singapore or elsewhere. So, there is a much lower cost for owning and transferring digital assets. 

The Global Liquidity and Long-Term Potential of Bitcoin as a Digital Asset

Digital assets also offer higher returns. Additionally, you can sell Bitcoin to anyone. You can only sell a building in Istanbul to someone who wants a building in Istanbul. But you can sell Bitcoin to anyone, anywhere in the world. You may be completely sure today that Paris is the place where you want your property, but are you sure that in 100 years, Paris will still be where you want your property? 

Perhaps New York will impose rent control. Maybe you’ll find that your property in Moscow isn’t worth as much as it was last year. The appeal of Bitcoin as a digital property is that I don’t know where in time or space I can find the highest offer for rent or sale. This uncertainty opens up opportunities. If I take all the business experience and education I have and reduce it to one thought, I believe it all boils down to keeping your options open.

MicroStrategy offers investors the option to gain exposure to Bitcoin by simply investing in MicroStrategy shares. This allows them to avoid the need to buy and store Bitcoin in their wallets. The market has recognized Bitcoin as a long-term investment opportunity for company growth. 

This recognition has led to significant growth in MicroStrategy’s stock. The stock followed Bitcoin’s price increase and outperformed the S&P 500 index. The latest news is that MicroStrategy has entered the elite club of the NASDAQ 100. It outperformed every single stock, including NVIDIA.