Microstrategy #Bitcoin for Corporations conference, Ross Stevens with Michael Saylor

Michael, thank you very much. It's a pleasure to be here. And like each of the many conversations you and I have, I'm sure I will enjoy and look forward to this one.

Well, I think a CEO has two jobs, right? Executive, but also capital allocator. The first one is obvious. The second is more important. Capital allocation is a CEO's most important job, I think. All of us CEOs work in capital allocation. In fact, we specialize in it, whether we're good at it or not, we specialize in it. Said differently, whether or not we choose it, capital allocation chooses us. And I would say a capital allocation framework for a CEO used to be one thing: how do we turn our liquid assets into illiquid assets, and how do we turn our illiquid assets back into liquid assets? Are we going to buy something? Are we going to sell something? Are we going to fund a business? Are we going to close the business? What's changed, though, is that it's now also about our liquid assets as their own thing, your cash reserves, because what used to be safe and not volatile is no longer safe and it's highly volatile.

I mean, it's always been relevant. What's relevant is the urgency. What's new is the urgency. What's new, I think, is the outsized role of central banks in all of our lives and the role of central banks on corporate balance sheets. I mean, cash is now a liability, no longer an asset. And I think that has profound long-term implications for corporations. We can go back and start a lot of different places, but we can go back. One of my favorite Federal Reserve, sort of central bank persons, is Hayami Governor Hayami from Japan. He's not a name you hear a lot about now, but he led the BOJ in the year 2000, and he joined right out of college post-war, 1947. It's hard to imagine Japan back then, but there was hyperinflation. Imagine Japan in a hyperinflation. And those hyperinflationary years when he was out of college left an indelible scar on Hayami, understandably. And as he was rising through the ranks of the BOJ, he was known for repeating the phrase, "If you debase the currency, you debase the country," in his internal meetings. So he was a strident anti-inflationist. Now, we think about Japan back in 2000, right? It's ten years after the bubble burst. Their benchmark rate, basically their Fed funds, had gone from 8% to zero. And given Hayami's personal background, his anti-inflationary stance, he thought free money was nuts, right? So he decided to do something about it. Now that he was finally in charge, he took the radical step of raising rates 25 basis points. Pretty radical. So he made money slightly non-free. But he didn't just do it. It's really what he said. He kind of had this speech and he thundered, "Risk must be priced. Risk must be priced." Which is really academic jargon for saying the market must determine the price of money, not bureaucrats. So what happens? Very predictably, first of all, the prime minister goes ballistic. He says, "This is just unacceptable. It's an unparalleled display of independence of a central bank." As if that's not the entire point of central bank independence. And what happens in markets? The Nikkei gets crushed, drops 20%. The politicians predictably in Japan freak out and they demand a return to zero. And seven months later, Hayami retreats. He completely capitulates and moves the rate back to zero. And probably not surprisingly, soon thereafter he's out of a job. So we can think about the journey starting there. Let's fast forward 18 years, December 2018. Let's talk about our own country and what I think is the greatest reversal of monetary policy in our country's history. And I say that when I measure it based on the swiftness of the reversal and the impact of the reversal. So we're December 2018, Fed meeting day. The markets are down 8% for the month, so nerves are frayed. And Powell comes out of the meeting and he says, "The balance sheet runoff, so coming out of QE, it's on automatic pilot." And with those two words, the market just loses its mind. It just drops 5%. Trump says he's gonna fire him, and things kind of go ballistic at that point. And I don't know if you know this, but Fed policy is that the day after a meeting, nobody in the Fed's allowed to talk publicly. But the day after the day after, they are. And at the very first opportunity that Powell has to walk back his remarks, he saves space into it himself, but he trots out Williams, who's the Fed President of New York, and Williams says, "Plans are not promises. We will reassess the data." The market knows exactly what that means, and it rockets up 15% in the next month. So like Hayami, complete capitulation. Hayami took seven months. Powell took two days. Let's do one more. Let's fast forward to last March. The ECB, Christine Lagarde is in charge. Let's talk about March 12th to be exact. And she is president when spreads on Italian bonds, so what they are essentially over German bonds, they're blown out. And she says her version of "Risk must be priced." She says her version of "automatic pilot." Remember what she said? She said, and I quote, "We are not here to close spreads." Like, are you sure, Christine? The markets go ballistic. During the press conference, spreads keep widening and widening out. She actually doubles down. She says, "It's not the function or the mission of the ECB to close spreads." She kind of thunders that. Spreads blow out even more. And do you remember what happened? Complete capitulation. Except it didn't take Lagarde the seven months it took Hayami or the two days it took Powell. Two hours. It took her two hours. In the press conference, two hours after the speech, she completely walks back her comments with the quote, "I am fully committed to avoid any fragmentation." All is okay. It turns out she was there to close spreads after all. And in fact, her capitulation was so complete that the ECB took the unprecedented step of revising the speech with the conference afterwards. They've never taken the remarks of a press conference and appended them to the speech. I think what I take away from these stories is that a central bank can control the supply of their money. They can't make their people value it. It seems like Hayami, Powell, and Lagarde each felt they had no choice.

Well, I don't know. The sequence of Hayami makes me think of the great philosopher of modernity, Mike Tyson. He was the best at philosophy. And his most famous phrase was, "Everyone has a plan until they get punched in the face." I love that one. I think of it often. I think of it often too, and I've been punched plenty of times. These bankers, they got punched in the face really hard, and they felt pain and they felt fear because they're human. You would have and I would have also. They got scared, they retreated. I think though, what it really tells us about the world is that these central bankers, as well-intentioned and as smart and as really good as they are, they're just up against forces far bigger than themselves. I think it tells us the economic choice they'd like to make of short-term pain for a long-term gain, it's just out of scope for them. I think it tells us that their choice is short-term pain for economic catastrophe and certain political extinction. So they'll just keep printing. They're just going to keep printing, and that just makes corporate reserves, kind of the point of the conference, just riskier and riskier and more volatile. And what it really tells us, though, I think, is the system itself is the problem. The system is so over-levered, so dependent on free money, that just a little huff and a little puff and the whole thing gets blown down. Can I tell you just one more story? Let's go back to Jerome, our guy, last March. He's learned the lessons of Mike Tyson's wisdom. He doesn't want to wait to get punched in the face. And the markets start to fall, some people start to lose some money, and Powell's view through his actions, not his words, is that no level of pre-crisis irresponsibility, no level of over-borrowing, irresponsible over-borrowing, no level must be allowed to have consequences. The new Fed mandate is not price stability, it's not full employment. The new Fed mandate, again through his actions not his words, is let's decouple risk-taking from the consequences of risk-taking. The new Fed mandate is let's finally, once and for all, institutionalize moral hazard. So to foam the runway for this new mandate, what does he do? Jerome goes out and he starts buying securities at a scale the world has never seen or imagined was possible. He starts buying about a day's worth of US GDP. A day's work. So I want to put that in human terms. All the work, all 350 million of us do, we wake up in the morning, we get our kids to school, we go to work. All of the work of all of us. I picture Jerome kind of getting to his desk, gets the keyboard out, and just like Control-P, click. All Americans' collective daily labor, he just prints. Now, as I said, I don't question central bankers are well-intentioned. I strongly believe they are. But humans are not supposed to have that kind of power over other humans. In the same way that a stock certificate is titled to company capital, money is titled to human time, Michael. People sacrifice their time for money, which enables us to trade our time for the time sacrifices of others. That's how it's supposed to work. So a tool that can command human time, the central bank keyboard, Control-P, that keyboard steals time. And it steals time from some particularly and most powerfully the non-asset owners, the most vulnerable, and it redistributes that time to others, most notably the existing asset owners. It adds rocket fuel to wealth inequality, and it leaves the fidelity of the signal content of prices just in tatters.

I mean, a lot. In my view, kind of everything. I can start with the conclusion. I'll work backwards.

Yeah, I'll give you the answer. The answer is bitcoin is not volatile. That's the answer. And let me explain. Learning bitcoin is like, at least to me, it's like learning a foreign language. You live in Spain for a year or you live in France for a year, and at some point you get good enough. It takes some time, but with immersion, you think in Spanish, you think in French. Something clicks for you. You make that switch. You're no longer thinking, "How do I say 'where's the barber' in Spanish?" and doing that English to Spanish translation in your mind. You just think the question in Spanish. I now think in bitcoin. It's taken me eight years of morning study. You are much faster than me. I'm a slow learner, but I get there. It's taken me eight years of morning study and a lifetime of lessons studying the markets, but I now think in bitcoin, and it's very freeing. And through that lens of thinking in bitcoin, bitcoin is not volatile. Fiat is volatile. The price of college is volatile in fiat. It keeps getting cheaper in bitcoin. The price of prime real estate, very volatile in fiat, keeps getting cheaper in bitcoin. The price of all of my long-dated denominated liabilities, like a mortgage or retirement, or we do a lot of work with insurance companies, they're long-dated fiat-based liabilities, a death benefit for life insurance contracts or annuity payments, those are extraordinarily volatile in fiat, and they each keep getting cheaper in bitcoin. And so to understand really what's going on and why this is happening, I think we need to ask ourselves two things. One, what is money? And why is bitcoin an excellent money, or even is it an excellent money? So what's money? Money is technology. It always has been technology, whether it was seashells or salt or cattle. It's always been technology. It's technology for making our wealth today available for consumption tomorrow. And virtually all of us, Americans, we just take for granted that there's a sharp line of distinction between what's a money and what's not. But that's false. There's not a line of distinction. In fact, throughout history, various monies, plural, have always co-existed along a continuum of soundness, meaning good money to kind of bad money, and they've always been subject to competitive network effects, like any competition. In fact, English language and language for humans in general, that was the first network, and money was the second. It also means that given enough time, at any given time including right now, no money is absolutely the best money on all dimensions. There are always trade-offs. Some are better, some are worse. Some are better at this, some are better at other things. It also means that all money is temporal. No money has ever been or ever will be forever, including bitcoin. Bitcoin will not last forever. It may last 100 years or 250 years. Maybe forever for practical terms for everybody at this conference, including you and I, but it will not last forever, because money is just a good like any other good. But what makes money as a good unique among all goods is that we value it not for its own sake, but for its prospective exchange utility, which means we hope the vessel, whatever we choose to store our money in, we hope that vessel keeps its value long enough so we can trade it in the future for stuff we actually want. Nobody actually wants green little pieces of paper. Nobody actually wants bitcoin. What we want those things to do is to hopefully allow us to trade them for things in the future we actually want: a vacation, a college education, property, whatever. So it's not that we want the money. We don't want the money. We want what the money can do for us in the future, what we can trade it for. So then why is bitcoin excellent money? Well, I think that's for everybody to make up their own mind. I'll tell you how I think about it, though. There's really two primary dimensions that I think money should be evaluated on: saleability across time and saleability across space. Saleability across time just means will the money keep its value through time, or will it depreciate? The oldest fiat money that's in existence today is the British pound. And 371 years ago, in a kind of modern British pound started, it was equal to one pound of silver. One British pound bought you one pound of silver. Today, do you know what one pound of silver buys you in terms of British pounds?

A little bit. 174. So you used to buy one for one. Now a pound of silver buys 174 British pounds. And the key here is to understand what changed and what did not change. The silver itself did not change. 371 years ago, it weighed a pound. Today, it weighs a pound. 371 years ago, the silver had certain chemical properties. It's got the same chemical properties today. The silver did not change. The fiat changed. It depreciated more than 99%. So silver crushed fiat. I hate the 99% number. I just hate that one.

But it's 99.763812, I don't know. It's a lot. It's basically worthless relative to silver. But people talk about gold. What about silver versus gold? And the reality is gold has been far better and far more reliable. It's a much better store of value than silver because it's scarcer and it's got a much lower supply growth. Gold grows at about 2% a year. Silver grows about 20-30% a year. So gold is a much better money than silver. But let's compare it to bitcoin. Gold still does grow. You print through mining. You print gold at about 2% a year, and bitcoin's on an asymptotic journey to 0% inflation per year. So 2% a year roughly times 50 years, and gold essentially depreciates completely versus bitcoin. So bitcoin will be worth far more than gold in the future once it clicks for people that gold is printed at a much higher rate and that compounds over 10, 20, 30, 40, 50 years. But there's another property of gold that makes it weak relative to bitcoin, and in fact this is a property of bitcoin that makes bitcoin truly unique among any money in history, which is that bitcoin is the first store of value ever in which its supply is entirely unaffected by its demand. If we take the example of gold to prove this point, if gold went to $100,000 an ounce, it's up 50x overnight, you and I know what's gonna happen tomorrow morning. The miners can get to work very early. We would drop the phone and start mining. We're gonna start mining. We're looking around our house for gold. We're gonna melt it down. We can't skyrocket the supply, but we're going to drive up the supply. We're going to drive down the price of gold. If during the course of this conversation, people really feel like bullish on bitcoin and bitcoin goes to a million, I'm saying that with a smile, what's gonna happen in supply of bitcoin? Nothing. Nothing. That's incredible. Bitcoin is the first store of value in human history where its supply is never, can never, will never be affected by any amount of its increased demand. So the conclusion is that bitcoin is better at being gold than gold, because it's more saleable across time. Now, the other characteristic about money that's really important is saleability across space. Can you move the money around the world efficiently? And this is another place where gold has a really acute flaw. It's just hard to transport. If you get paper gold, you're back in sort of fiat land and all the problems with fiat. Gold is just hard to transport. And this is where fiat, for all its flaws, fiat really shines here. You can move it around the world. And it's sort of an internet world where network power is everything. This ability to sell across space is critical. However, I want to clear up a pretty common misperception, which is that bitcoin is slower than fiat. The reality is the opposite. Bitcoin moves much faster across space than fiat. The key, though, is to compare apples to apples: final settlement. And in final settlement, there's no comparison. Bitcoin increases our capacity for final settlement. For example, international settlement by 500,000 transactions a day and completes the settlement with finality in about an hour. In international settlement, you're talking two, three, four, five days, seven days, it can be a month, depends on the two countries. You may not get there. And even within a country like ours, Michael, don't confuse the speed of your Visa payment with its final settlement, because it's not finally settling when you go to Starbucks and buy coffee with your Visa card. No final settlement occurs. What actually happens is your bank and Starbucks' bank, they have some credit risk to each other for two or three days. Usually it's fine, but sometimes with disastrous results. And then there's final settlement. Bitcoin settles every hour, and it's a bearer instrument. It's the first ever electronic bearer instrument, so credit risk is not a concept. We said earlier that bitcoin is better at being gold than gold. What we're saying now is bitcoin is better at being fiat than fiat. It's more saleable across space, and because it's not debt like fiat, it has no credit risk. So the conclusion is that bitcoin is the best money we have. Maybe it's the best money we've ever had. And that's why I've learned the language. That's why I now think in it.

I think about it a lot. And I think that if people take nothing away from our conversation, I hope they take this part away about how I think about bitcoin's use of energy. Let's start with some facts. Bitcoin consumes a ton of energy. The amount of energy that bitcoin consumes, you can think about it as the sum of all the mining equipment in the world. There's no central registry for mining equipment, so we don't really know exactly, but I think an excellent estimate is about 10 million humans' worth of energy. So it's enormous. And in a warming world, how can this be good? Well, let's set some context. What is the problem of energy? It's never been scarcity. We can produce tons and tons of energy. It's always been our ability to channel the energy geographically, that means to move it where it's needed most. And before bitcoin, that was always where humans lived. We needed to move the energy to where humans lived. But bitcoin's mining energy, it's just solving a different problem. It's solving a math problem, not a transportation problem. And because of satellites and wireless internet connections, a math problem can be solved anywhere. So bitcoin mining can be located anywhere. And the long-term implications of this, I think, are world-changing. For example, bitcoin can make monetizable isolated energy sources all over the world. Think about waterfalls or running rivers. We can create dams in places that are now entirely untapped because they would be cost-prohibitive to move that energy to the electric grid near where residential or commercial uses would be possible. It's just cost-prohibitive. So here's the key insight. As bitcoin's price rises, it's high enough now, but as it continues to rise, bitcoin mining will be the most profitable use of energy in human history that does not need to be located near human settlement to operate. That's a big deal. Bitcoin is going to fundamentally change the economics of energy. And that's because with bitcoin mining, we've got a highly profitable use of energy that's location-independent. We've never had a highly profitable piece of energy that was location-independent. Now we do. And since fossil fuels are already too expensive for bitcoin mining, I think confidently the only long-term profitable bitcoin mining will be powered by clean energy. So imagine a future where bitcoin mining firms, unsubsidized, and I think that's key, are in extraordinarily isolated locations. Let's visualize a waterfall, a powerful waterfall in a population-free part of an African country that's destitute, people living in abject poverty. And we can easily connect that waterfall to the bitcoin network. We can build the energy infrastructure to monetize the local clean energy source for bitcoin mining. But once we've got the infrastructure, let's extend it. Let's build roads, let's build houses, let's build schools, let's build human settlement. Let's move humans there. And I think the net result will be more and more of humanity clustering around cheap and, key, clean energy sources. Historically, our challenge with energy has been to move the power to the people. Bitcoin will allow us to move the people to the power. Now, think about the world's major population centers. I'm in New York, you're in Miami. Think about Tokyo or Paris or London. They developed where they are geographically because of natural seaports or trade routes or waterways. The placement of those cities had nothing to do with energy, because they're all pre-energy, pre-fossil fuels. With more and more of the world's population now able, in the future with bitcoin, to congregate around abundant energy, and this is the key, with extraordinarily low marginal costs of production, that's the part that matters. Because cheap energy in the natural form equals human flourishing. That's an equation: cheap energy equals human flourishing. We can sign all the climate accords we want. We can add our name to anything. We can virtue signal whatever we want. Sign them all. They're all irrelevant. They've been irrelevant. They will be irrelevant. What's relevant is this: because when you have people with a profit motive, and for the first time ever we have a huge pull towards clean energy with a profit motive, that's when things change. So from my perspective, beyond the revolution in monetary policy that bitcoin already represents, bitcoin also represents the biggest catalyst the world has ever known for the development of abundant, clean, cheap energy, and therefore one of the biggest catalysts the world has ever known for human flourishing. It's going to take a decade or two, but that's one of the things that bitcoin can do.

Yeah, it may take a decade or two to realize the vision, but given the way the economics of mining works, especially as bitcoin's price rises, I think the energy vision makes perfect sense. It's inevitable.

Well, our own resources. What are we doing? I don't know if you can read the books in the back. There's a lot of Tellebooks we like. So I'm going to rephrase your question a little bit, which is: Ross, don't tell me what you think, show me what's in your portfolio. That's a Tellephrase. Our reserves are now in bitcoin. It's been true since 2017. And other than what we keep for convenience for salaries and rent and things, cash we need like fiat, our liquid reserves are in bitcoin. So how did we get there? I think great questions are underestimated. And I think we got there through a great question that our team asked, which is: what do we have to believe to be true to move to the bitcoin standard? What do we have to believe to be true to move our reserves from fiat into bitcoin? And our answer was that if we allow ourselves to focus only on point-to-point risk, meaning point-to-point in time from today until our long-dated fiat liabilities are due, and remember we're corporations, so theoretically infinitely lived, of course we're not actually infinitely lived, but yes, we have salaries and rent next week, but we have salaries and rent in 10 years, 20 years, and 30 years too. So we can think about those liabilities. If we just think about point to point, the only thing we really have to believe is that over the next 10 or 20 years, the dollar will depreciate relative to bitcoin. And I believe that. I have no idea what the dollar is going to do tomorrow, next week, next month, next year. But I have a high degree of confidence, and I voted with my dollars, not certainty, but a high degree of confidence, that the dollar will depreciate versus bitcoin over the very long term, as it has. 80% depreciated in the last two years, as it has 30% appreciated so far this year. So this insight allows us to ignore US dollar volatility along the way, focus on point to point, focus on end-state economics. Now, like anything in life, a point-to-point perspective doesn't make it a risk-free perspective, but it is our perspective. And the net result has been, and I believe will be, enormous competitive business advantages, certainly relative to other firms in our sector in financial services. For us, everything's getting cheaper. Paying rent, paying salaries, M&A, recruiting, it's all cheaper. And the stock market's making new highs every day. For us, everything's on sale. Abstracting from Stone Ridge, though, if you take Company A and Company B in the same industry, one adopts the bitcoin standard and one does not, just think about the macro environment as the money printer goes brrr. If it continues to, I think it will, as credit creation just continues to explode, as real rates on riskier and riskier assets continue to go negative, when we cross the Rubicon when real rates on corporates went negative recently, consider the implications for the dollar in one year and two years and 10 years. I don't know. Lower. A lot lower. Certainly versus bitcoin. That's my view. Versus Europe, I don't know. But certainly versus bitcoin. Remember at the very beginning we talked about every CEO's most important job: capital allocation. The decision of whether and how to adopt the bitcoin standard, I believe that will be the single most important decision every CEO makes in the next 10 years. The most important decision, whether they realize it today or not. And I acknowledge well under 1% would acknowledge that's going to be the most important decision they make in the next 10 years, but it will be. And whether they actively make it or not, they make it, with high consequence.

Well, for a while we were trying and nothing was actually happening. I recently learned how bamboo grows. It's pretty fascinating to me. It spends its first five years building an extensive root system underground, basically doing nothing visible. And then it explodes 90 feet in the air in six weeks. That's bamboo. It's not a terrible analogy to NYDIG, Stone Ridge's bitcoin subsidiary. We started in 2017. We put a great team together. We had a bunch of capital. We worked and worked and worked. We laid our root system. We operated largely in stealth. It's true that we operate in stealth, but it's almost as if it didn't matter that we operated in stealth because no institutions really cared. And it wasn't for lack of trying. We knocked on a lot of doors. We were just too early. But we kept at our craft. We built our root system. We thickened and strengthened the roots. And we worked quietly, out of view, which is our style. The firm has had a no-press policy since its inception in 2012. But if you fast forward to today, NYDIG is a full-service, vertically integrated, bitcoin-only financial services firm. The first billion during that dark, challenging five years, it took 1,200 days to raise that first billion. The first billion is always the hardest. 1,200 days. The last billion took six weeks. A year ago, we had 25 institutional clients. Today, we have 280 institutional clients. We've got a pipeline in the onboarding process of 96. We can put 75 institutions through the pipe a month. That's our current capacity. We've got over six billion dollars in bitcoin now between what's in the door and what's committed from institutions. And we are Vanguardizing this asset class: best product, best price. And as we scale, we're driving prices down, down, down. Our pricing today is 70% lower than it was a year ago. And by the end of the year, Michael, I am confident we'll have over 25 billion dollars of bitcoin. I've got this order book. I'm not guessing. I see what's happening.

The one-liner is all kinds of institutions are adopting bitcoin: public companies, private companies, hedge funds, private equity funds, credit funds. Even investors who, if you asked me a year ago would they come in, I'd say absolutely not. The most conservative, but also the most sophisticated, most careful investors in the world: triple-A and double-A life insurance companies, double-A P&C insurance companies. Today, they have more than 500 million dollars of bitcoin exposure through NYDIG. And I know for sure because I'm not guessing. They're just getting started. And these institutions want to do more than just own bitcoin. That's table stakes. Within a year, America is going to be able to get a portion of their income annuities paid in bitcoin. Americans will be able to get a portion of their salaries paid in bitcoin. You want that paltry interest on your CD paid in bitcoin? You'll be able to get that too. There's going to be an explosion in bitcoin-driven financial innovation. Another interesting phenomenon we're seeing in our book is exactly zero clients have walked back their allocation. That may not be true for other firms, but that's true for us. So once people get off zero, they either stand pat or they increase. Now, I don't want to overstate this. It's been a year, but that's what we're seeing so far. And another phenomenon we're seeing is among family offices. A year ago, we had zero family offices. Today, of our six billion, two billion is from family offices. And the average account size of a high net worth individual is seven million dollars. So we serve retail, but the average account size is seven million.

Well, I definitely don't have a crystal ball, but I think at least from a framing perspective, I'll tell you how I think about it. I think about the first chapter of bitcoin as kind of the genesis block until, let's call it now. And that's been all about bitcoin the asset, which is really the theme of this conference. And what's driving right now accelerating institutional adoption is the view of bitcoin being de-risked. And I think that's why you're just going to see a wall of money. I know it. I have an order book. A wall of money coming into the asset class. So let me put you, to sort of frame this out in the mind of an institutional investor, me. I'll put you in my mind. My partners and I bought more bitcoin in 2020 last year than in 2013 through 2019 combined. And as our fiat businesses continue to inflate and accelerate, which they are, I expect we'll buy more bitcoin in the next two years than we did in the previous eight. So what's going on? We're conservative institutional professional risk managers. It's what we do for a living. And it's why investors, including the most conservative investors in the world, have entrusted us with 20 billion dollars in our alternative businesses, our non-bitcoin businesses. And to us, conservative us, bitcoin is de-risked. Why? Well, when I look at bitcoin, I see it above 500 billion dollars of market cap. I see millions of people using it every day, with a clear line of sight to tens of millions of people using it every day, and then billions. I see 12 years of uninterrupted safe operation of the network. When I look at all that, the left tail of the zero outcome is gone. And that is the key observation. So when I talked to institutional investors a few years ago, I would get the question, "What's the chance of bitcoin going to zero?" And a few years ago, that was an interesting conversation. Last week, a client asked me, "What's the chance of bitcoin going to zero?" So what's the chance of Christianity going to zero? It's just not. It's left the station. And so remember, at Stone Ridge, we are risk managers. We do it professionally. And what you're talking about here with bitcoin is an extraordinarily asymmetric upside asset. We can debate whether it's good or bad, but I think we can't debate the asymmetric upside to it. It's perhaps the most asymmetric potential right-tail asset in the world in history. And you chop off the left tail, we all know what happens to the mean. It just explodes. You chop off the left tail, the mean explodes. And you combine that with the macro environment, the money printing presses running at full tilt, the blue wave in the US, complete political dysfunction around the world. For us at Stone Ridge, fiat reserves are like a hot potato in our hand. We make them in this business. We can't get them out of our hands fast enough and put them into bitcoin. We convert them as quickly as possible. So we're risk managers at Stone Ridge, but we're also capital allocators. You can't eat risk management. You can eat making money in the markets. And we believe in the power of bitcoin. But if we didn't think we'd make money, we wouldn't invest a penny.

Well, I think chapter two is going to be incredibly exciting. And chapter two builds on bitcoin the asset and adds bitcoin the network. In chapter two, bitcoin the network solely leverages bitcoin's proprietaryness as an open-source monetary network. In chapter one, we reached millions. In chapter two, we're going to reach billions, and we're going to do it quickly. And chapter two starts right now. So I'll give you a flavor of chapter two. Say I want to send a thousand bucks. I'm sitting in New York right now to a friend in Milan, Italy. Strike, Jack Mallers' firm, working with NYDIG, takes my dollars and delivers them to my Milan friend in euros instantly and for free. How did this happen? Let's go slow. First, Strike takes my dollars from my bank account, my thousand bucks, and they debit it. That's a millisecond. Second, Strike works with NYDIG and we do a trade. We convert the thousand dollars into bitcoin. It's another millisecond or two. Third, Strike works with Lightning Labs and it zips the bitcoin across the Atlantic Ocean to Milan. We're still in single-digit milliseconds, basically instantly. Over there, another FX trade. NYDIG converts that bitcoin into euros. We're still in milliseconds. And finally, Strike credits my friend's bank account with final settlement in euros. Done. So what just happened? A thousand bucks were moved from me in New York to my friend in Milan and converted into euros instantly and for free. How? Because for the first time in history, we have an electronic bearer asset. Never had an electronic bearer asset. It's called bitcoin. And an open-source monetary network, which we've never had before. It's also called bitcoin. That together can achieve cash finality anywhere in the world, anytime, 24/7/365, with liquidity in any currency pair you care about. And notice something critical in the transaction I described. The volatility of bitcoin the asset was nowhere to be found. Why? Because we didn't use bitcoin for its properties as an asset. We used bitcoin for its properties as an open-source monetary network. Now, I gave you an example of two friends moving a thousand bucks from New York to Milan. That's cute. It's adorable. Imagine the entire global import-export industry with instant and free international settlement. Imagine the entire global remittance market with instant and free global settlement. Imagine the entire global credit card industry with no merchant fees. Use the open-source networks of bitcoin and the open-source networks of Lightning. And bitcoin the network will change the way we all interact and connect. This part, chapter two of bitcoin, has nothing to do with monetary policy. This part has nothing to do with central bankers, with dollar depreciation. Zero. However, there will be this virtuous, beautiful feedback loop between bitcoin the asset and bitcoin the network. And working together, the bitcoin the asset specialists at NYDIG and the bitcoin the network specialists at Strike and Lightning, they're going to get this chapter two flywheel in motion, and it is going to hum. So just stay tuned for more.

Well, I think that it is awesome, it is awe-inspiring, and I think we just live in such a cynical age, with so many people devoid of feelings of awe, just kind of beaten out of us. I'm grateful for many things about bitcoin. I think one of them is it's just wonderful that I need not be among the people who are devoid of feelings of awe. I think that relates to another question, which is why people underestimate bitcoin so much and what do they underestimate most about bitcoin. And that one's easy. The ferocity of the bitcoin community for bitcoin. That is underestimated. I don't speak for the community, I speak for myself. But I think there are two core views of the community. The first, we'll call it the individualist view, is that money is not the root of all evil. Money is the root of all sovereignty. It's the authority to act in the world as we see fit, as long as we don't harm others. Money is a property right. And since we've traded our time for money, when money is printed, our time is stolen, and that is not okay. The second view I would say is the community view. Money is the greatest force for good in the world today. It's an ark. It's designed to help the most vulnerable, the most unprepared, escape the accelerating fiat flood. And it's raining outside pretty hard. So let's get as many of those living on society's fringes, not just in the US but everywhere, let's get them in the ark as soon as possible. And nothing is more important. What I would say, though, is that these two views of the bitcoin community are not mutually exclusive. In fact, every single bitcoiner I know holds both of them in their minds. One of the things that really got me going, and a lot of bitcoiners going, was last March when Kashkari, who's president of the Minneapolis Fed, he said, "There's an infinite amount of cash in the Federal Reserve." An infinite amount of cash in the Federal Reserve. You can almost hear the other 11 Fed presidents saying, "Neel, you're not supposed to say that part out loud." The American people are really smart. They may not have gone to the same schools as Neel or worked at the same firms as Neel, but they're smarter than you. And one thing they definitely can do is they can do division. If I got $50,000 in life savings, I don't really know what that $50,000 is out of, but I have a sense. And now the guy in charge of the money is telling me the denominator is infinity. I don't need to know calculus or theory of limits to know that my $50,000 divided by infinity means my $50,000 is worthless. Why would I hold my life savings in something with infinite supply? I might as well go to the beach and exchange it for grains of sand. They're in infinite supply too. So I think what Kashkari is really telling us is that fiat should come with a warning label, like cigarettes come with a warning label. But instead of the cigarette label saying these are bad for your health, the fiat warning label would say these are bad for your wealth. And the cigarette pack has the skull and crossbones on the outside. I'd like to see the Treasury start printing the infinity sign on our cash. So if you've got a $20 bill, under each of the numbers in all the corners, it would just have a red warning label that says, "Divide this number by infinity." Remember, as I said earlier, a central bank can control the supply of money. They can't make their people value it. So I think that bitcoin is massively underestimated. I think that's understandable. You underestimated it. I underestimated it until we went deep down our own version of the rabbit hole. It's underestimated. The financial establishment underestimates it. Again, I did until I didn't. I give them all mulligans. They just haven't put the time into it. Jamie Dimon calls it a fraud, yet it's much more real than fiat. Larry Fink calls bitcoin an index of money laundering. I think it's more akin to an index of money printing. Warren Buffett calls bitcoin rat poison. That one is shameful. Because bitcoin is giving life, not taking it. It's giving life right now to tens of thousands in El Salvador and Pakistan and Venezuela. It's giving life, not taking it. And soon to be millions, and with Strike and NYDIG and Lightning, soon to be billions. So fraud, money laundering, rat poison, bitcoin. It's just intellectual laziness. I think people also underestimate just how unstoppable it is. Bitcoin is unstoppable. It will have fits and starts as it has, of course, that's for sure. But it is here to stay forever. And that's for a simple reason: it's open source. China, last time I checked, pretty powerful place. They basically banned it. Price rallied in their face. India basically banned it. A lot of people lived there last time I checked. Basically rallied in their face. Pakistan banned bitcoin, banned mining. It all went underground. Usage exploded. Mining in Pakistan after the ban exploded. It was so profitable to mine in Pakistan that eventually the government themselves, the province, started a bitcoin miner, and they changed the legality of it. So these are three of the four most populated countries in the world effectively kind of said bitcoin's banned, and we're making new highs even as we speak. And I think about our own country. I really don't think a ban is in store because I don't think it's possible. But let's just go there for a second. Let's just say the US banned bitcoin. It wouldn't stop it. It would accelerate it. Remember, we kind of tried this once in 1935. We did actually ban and confiscate gold. For what I said before, you actually could do that. You can't confiscate bitcoin. And in the ensuing period of time till today, the dollar's depreciated about 85% versus gold. So it just didn't work. I imagine trying prohibition today. That's alcohol, and it would be unenforceable. Can you imagine trying to ban people from holding their own money? Forget it. No way. And it won't happen anyway because it's private property, and we've got pretty good rules in our country about private property. And it might even be speech because it's code, so it might even be protected by the First Amendment. But regardless, Michael, none of this matters. Because with regards to confiscation, if you really boil all this down, what is it? It's just a password. It's the password to a private key. And that password can easily be stored with phrase memorization in my head. So confiscation's off the table. Remember, gold has a vault. You can take the vault. Good luck confiscating my memory.

Yeah, look, I think everybody now has a choice, which is a good thing. And it's a choice they make, you make, I make, and everybody gets to make on their own. You can stay on the fiat standard. That's available, in which some people get to print new units of money in unlimited size, just not you. Or you can move to the bitcoin standard, in which no one gets to do that, including you. We finally got a monetary system governed by rules, not rulers. And given that, I've made my choice. You have to make yours, and everybody at this conference has to make theirs. I will tell you, I am working tirelessly towards the future with a globally adopted, inflation-proof, common currency for the world, one that billions can opt into as their peaceful weapon of choice. Satoshi solved the Byzantine Generals Problem. Bitcoin solves the Military Generals Problem. And when you think about trends in anything, you're a tech guy. All you gotta do is follow the brains, even more than the money. The brains know first. Where are some of the smartest people in the world shifting their careers to focus? Where are some of the best developers in the world going? They're going to bitcoin. And I'd never underestimate the power of a mass movement of developers. And don't underestimate the ferocity of the emerging decentralized class, us bitcoiners. Just like early encounters with the printing press and antibiotics and aqueducts and the internet itself, they were incalculably underestimated. People incalculably underestimate bitcoin, totally understandably. But you, Michael, MicroStrategy, your colleagues, I think you're doing everybody an incredible service by having this conference, by having this talk, and creating a platform for these ideas to be introduced. So look, you've just heard from a guy with a background in financial services and a background in bitcoin. I straddle both worlds. So I offered my perspective, but it's only my perspective colored by my experience. You're a fellow founder, you're a fellow entrepreneur, you're a fellow CEO. You've got your perspective. You're a tech guy. What do you think about this, and what do you think I've said and what I've missed?

Great to chat with you, Michael. Good to see you as always. Take care.