Michael Saylor Explains the Digital Credit Revolution

But for the most part, you're going to have three categories of Bitcoin treasury companies. You're going to have the pure play digital credit issuers that are laser-like focused. Our company, a MetaPlanet, someone like a probably a Strive. I'm going to guess someone with a lot of equity capital that's going to just sell equity and pure credit and they're going to be laser-like focused. They're going to 100x or a 1000x. Those are going to be the screaming equity winners. Those are going to be the next Mag 7 stocks.

Then you're going to have the strong Bitcoin players. Maybe they're not the single dominant player in their market, but they're strong Bitcoin. They got a lot of stuff going on. They'll 10x, 20x. You know, they'll be good. They'll win, but they won't be the next Mag 7.

They'll be like, you know, companies that are very, you know, they buy a lot of Bitcoin and do some, it's not their laser-like 150% focus, but they'll do some and they'll be strong performers.

And then you'll have companies that just buy some Bitcoin and they'll buy some Bitcoin and they'll have another business and over time, you know, the other business may trade sideways and the Bitcoin will actually support the equity market cap of the company.

And so they're the ones that can't lose that, but because they're not 100% focused on Bitcoin, because they have another business, they have other liabilities, they'll, you know, they'll grind up with the S&P and they'll be successful even if their core business doesn't work.

Right? And I think you'll see all of that and it all comes down to the conviction of the management team and the business model. You know, if you're saying, 'Well, what would I like to be?' What you'd like to be is a pure play Bitcoin treasury company that issues equity and issues high quality Bitcoin credit. And you want to own that capital market. You want to be the category killer in the UK, in France, in Brazil, in Norway, in Japan.

The home champion is always going to have a home court. The national champion will have a home court advantage. You're going to have tax advantages, issuance advantages, regulatory advantages, marketing advantages, language, cultural advantages, and focus advantage. Right? When you get up and you issued the first digital credit instrument in pounds, you're smarter and you're doing a 100 pound perpetual Bitcoin-backed credit in London or than you do in euros on the Frankfurt stock exchange, right? Or you do it in yen in Tokyo, right? At that point, you're selling the strongest, highest yielding credit instrument in a capital market that's got garbage. Like, go to Switzerland. You know what the yield is for short-term money in Switzerland? It's negative. Okay? You have $10 million, you put it in a Swiss bank, they take money away from you. In fact, the yields are negative out to four years on the yield curve. Okay? So the risk-free cost of capital is literally less than zero. A Swiss company with Bitcoin capital selling something that pays you 400 basis points in Swiss Francs is offering four or 5% more than everything else. And okay, well there's like 800 billion dollars that's getting eaten.

Yeah.

Yeah.

Yeah. Well, I think the endgame is we accumulate a trillion dollars worth of Bitcoin and then we grow it 20, 30, you know, Bitcoin appreciates 21% a year in 21 years and then we grow that capital by issuing more credit. So we're growing faster than 21%. So the endgame is get to a trillion dollars of collateral growing 30% a year, be issuing $100 billion of credit a year growing 20, 30% a year. And that credit is yielding two, three, 400 basis points more than all of the real estate-backed credit, the corporate-backed credit, the fiat-backed credit, or any other type of credit instrument in the world, right? And what's going on there then is you reinvigorate the credit markets. Instead of people having a credit, you know, they're sick in Switzerland, right? Instead of getting zero in Switzerland, you know, if someone is issuing if half the credit in Switzerland is digital, then the zero goes to two or 300 basis points. And because it goes to 300 basis points, maybe the risk-free rate goes up and financial repression becomes less common and more difficult, right? You're actually improving the traditional credit markets and you're offering Bitcoin believers something 3% better. Same thing in yen, right? Eventually, instead of trillions of dollars yielding 50 basis points, the average blended yield will go to 300 basis points or 400 basis points. And you return health, you know, and integrity to the credit markets everywhere in the world. And it's done by some combination of Bitcoin treasury companies working in concert with each other, right? The Bitcoin network becomes a multi-hundred trillion dollar network. The amount of digital credit, 10 trillion, 20 trillion, 100 trillion, right? What if there's a hundred trillion dollars of digital credit and hundreds, by the way, a hundred trillion in digital credit backed by 200 trillion worth of digital capital would be not fractional banking, right? You haven't got to one to one, you're still 2x over collateralized, which would be better than the very best AAA corporate investment grade debt in the United States is like two and a half times overcollateralized. So it's all AAA investment grade but with more yield and more transparency. So I, you know, I see the endgame as the credit markets are reinvigorated and digitally transformed to be backed by Bitcoin, digital gold, digital capital. And I see the equity markets are reinvigorated because the equities, the equity indexes all start to hold these companies, right? We creep into the equity indexes. Metaplanet gets into the equity indexes and then pretty soon all these companies in the S&P 500, they all have Bitcoin. And if all these companies have Bitcoin, then the S&P index is substantially got a component of Bitcoin. And Bitcoin's going up 21% a year, right? So companies get healthier, credit gets less risky, yields, you know, your savings account doesn't give you 0% in Switzerland or half a percent in Japan or 2% in Europe or one. It gives you six, seven, 8, 10. Right? So I think the 20th century banking networks get transformed. The 20th century credit networks get transformed. The 20th century equity capital markets get transformed. Bitcoin becomes the foundation of the 21st century digital credit, digital equity, digital banking, digital capital, digital economy. And Bitcoin treasury companies are the engines, the drivers, the dynamos powering up that network. And you know, the experimentation is extraordinary. There's a Cambrian explosion of ideas. You know, the way you do it in South America is different than the way you do it in North America. And at some point, Bitcoin will find its way on the balance sheet of insurance companies and it'll find its way on the balance sheet of actual banks and tech companies. And if you start to re-imagine insurance powered by Bitcoin, it's a different world, better insurance. And reimagining bank accounts powered by Bitcoin, what happens when your bank offers you a money market that's not fiat powered? Because the fiat powered money market would pay you 420 basis points right now, but a Bitcoin powered money market would pay you 10.2%, 1,020 basis points right now. So as banking gets reinvigorated and as insurance gets invigorated and when the Apples and the Googles are, you know, custodying and offering Bitcoin via all their rails, then you've got a digital transformation that's an invigoration and we start to reach a digital economy which is smarter, faster, stronger, 10x better, 10x more productive, maybe a 100x more productive, and the people that are in that economy win. And the people that are blocked from that economy look like the North Koreans where their lights go out at night. You know, they get locked off the power grid. And hopefully it'll be such a compelling future that no one will want to be locked off the grid. Your choice is to be smart and fast and strong and rich or you could be stupid and slow and broke and weak and poor.