{"id":6645,"date":"2024-12-27T19:47:56","date_gmt":"2024-12-27T18:47:56","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=6645"},"modified":"2024-12-27T19:47:56","modified_gmt":"2024-12-27T18:47:56","slug":"michael-saylors-misconceptions-about-bitcoin","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2024\/12\/27\/michael-saylors-misconceptions-about-bitcoin\/","title":{"rendered":"Michael Saylor’s Misconceptions About Bitcoin"},"content":{"rendered":"

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Connect with Frank on X<\/a>.<\/figcaption><\/figure>\n

On a recent episode of the Galaxy Brains podcast<\/a>, Michael Saylor argued that bitcoin is not a currency and suggested it should be regarded purely as capital.<\/p>\n

He also indicated that Tether (USDT) and Circle\u2019s USD Coin (USDC) are the genuine digital currencies and disclosed his so-called “evil genius strategy” (his own terminology) aimed at persuading society to adopt U.S. dollar stablecoins instead of bitcoin.<\/p>\n

In this\u00a0Take<\/a>, I\u2019ll reference some of Saylor\u2019s comments from the podcast before explaining why many of his arguments are misguided.<\/p>\n

Capital, Not Currency<\/h2>\n

\u201cIt\u2019s not a currency, it\u2019s capital,\u201d stated Saylor around the midpoint of the episode.<\/p>\n

\u201cYou just have to come to terms with it \u2014 it is not digital currency. It is not cryptocurrency. It is digital capital. It is crypto capital,\u201d he noted.<\/p>\n

I looked through the Bitcoin Whitepaper<\/a> to determine how often the term \u201ccapital\u201d was mentioned.<\/p>\n

It does not appear even once.<\/p>\n

Yet, in both the title and abstract of the document, bitcoin is described as \u201celectronic cash.\u201d While cash can certainly also function as capital, it is not limited to that. To view bitcoin solely as capital overlooks several of its most fundamental attributes \u2014 such as the capacity to transact freely with anyone, anywhere around the globe.<\/p>\n

Rejecting bitcoin as a currency negates a significant aspect of its value proposition. Bitcoin\u2019s functionalities as a Store of Value (SoV) and a Medium of Exchange (MoE) are intrinsically linked. For additional insight on this, I would recommend you (and Michael Saylor) read Breez CEO Roy Sheinfeld\u2019s article \u201cBitcoin\u2019s False Dichotomy between SoV and MoE\u201d<\/a>.<\/p>\n

As the podcast continued, Saylor persisted in (poorly) arguing why bitcoin qualifies as capital rather than currency.<\/p>\n

\u201cThere are many maxis who go, \u2018No, we want it to be a currency. We want to be able to buy coffee with our bitcoin. Pay me in bitcoin,\u2019\u201d he remarked. \u201cIt\u2019s like saying, \u2018Pay me in gold. Pay me with a building. Pay me with a share of your professional sports franchise. Pay me with a Picasso.\u2019\u201d<\/p>\n

In reality, it\u2019s not analogous to that at all.<\/p>\n

Granted, bitcoin possesses scarcity, somewhat akin to gold, Manhattan real estate, sports franchises, or renowned artworks, but it has several other characteristics that distinguish it significantly from any of these other assets.<\/p>\n

To illustrate a facet of that argument, I\u2019ll quote my colleague Alex Bergeron:<\/p>\n

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I encourage anyone who believes Bitcoin is similar to gold to launch a custodial gold wallet.<\/p>\n

I\u2019ll wait.<\/p>\n

— Alex B (@bergealex4) December 22, 2024<\/a><\/p><\/blockquote>\n

Then Saylor referenced \u2014 you guessed it \u2014 Fed Chair Jerome Powell\u2019s opinion on bitcoin to reinforce his stance that bitcoin is capital, not currency.<\/p>\n

\u201cThe reason bitcoin surged past $100,000 is that Jerome Powell onstage told the world, bitcoin does not compete with the dollar, it competes with gold,\u201d he asserted.<\/p>\n

Interestingly, Saylor made this comment without recognizing that the individual who made this claim is the head of the entity that Bitcoin should, in theory, replace.<\/p>\n

USDT, Not BTC<\/h2>\n

During the interview, Saylor emphasized that the true digital currencies are U.S. dollar stablecoins.<\/p>\n

\u201cThe cryptocurrency, the digital currency, is Tether (USDT) and Circle (USDC),\u201d he stated. \u201cIt\u2019s a stablecoin U.S. dollar \u2014 that\u2019s the digital currency.\u201d<\/p>\n

This was the moment I began to feel unwell.<\/p>\n

For those who may not be aware, Bitcoin emerged in the aftermath of the Great Financial Crisis of 2008, when the U.S. government in collaboration with the U.S. Federal Reserve chose to print U.S. dollars en masse<\/em> (debase the currency) to rescue failing banks, leaving the financial burden on both U.S. taxpayers and worldwide U.S. dollar holders.<\/p>\n

Bitcoin is a decentralized form of currency that was invented as an alternative to the U.S. dollar and all other fiat currencies. Attempting to persuade individuals that bitcoin is not this is disingenuous at best, and deeply manipulative at worst.<\/p>\n

However, this was not the worst of Saylor\u2019s comments in the episode.<\/p>\n

He went on to suggest that the banks rescued during the 2008 financial meltdown should issue their own stablecoins, which would bolster the U.S. debt market.<\/p>\n

\u201cThey should establish a standard procedure to issue digital currency backed by U.S. treasuries,\u201d Saylor commented.<\/p>\n

\u201cThe U.S. should create a framework so Tether relocates to New York City. That\u2019s your goal, right? And then we should essentially allow a free-for-all where JP Morgan or Goldman Sachs can issue their own stablecoin,\u201d he continued.<\/p>\n

No, Michael Saylor, that\u2019s not my intention. In fact, it\u2019s quite the opposite.<\/p>\n

I don\u2019t want Tether near New York City (my hometown) and I don\u2019t want JP Morgan and Goldman Sachs to be issuing U.S. dollar stablecoins that they manage, which are essentially akin to CBDCs.<\/p>\n

When I think of Goldman Sachs, the first thing that pops into my mind is award-winning author Matt Taibbi\u2019s characterization of the institution from his New York Times<\/em> bestseller Griftopia<\/em><\/a>.<\/em><\/p>\n

\u201cThe first thing you need to understand about Goldman Sachs is that it’s ubiquitous,\u201d Taibbi began in the book. \u201cThe world’s most influential investment bank is a great vampire squid wrapped around the face of humanity, relentlessly inserting its blood funnel into anything that appears to smell like money.\u201d<\/p>\n

Goldman Sachs, similar to the U.S. Federal Reserve, is an institution that drains the life essence from society. Bitcoin was designed to strip power away from such organizations, not reinforce them.<\/p>\n

As the episode drew to a close, Saylor outlined his grand vision for bitcoin and U.S. dollar stablecoins.<\/p>\n

Here it is:<\/p>\n

\u201cEveryone outside the U.S. would gladly sacrifice their left arm to invest in U.S. bonds. So, my strategy would be \u2014 and I genuinely believe it\u2019s an evil genius plan; it’s so brilliant that our adversaries would despise us, but our allies would also express grievances. And the U.S. would generate $100 trillion in an instant.<\/p>\n

Here\u2019s the approach: Abandon gold, demonetize the entire gold system. Acquire bitcoin \u2014 5 million or 6 million bitcoin \u2014 and monetize the bitcoin network. All the capital globally, currently sitting in Siberian properties or Chinese natural gas or any other derivative of currency treated as a long-term store of value \u2014 Europeans, Africans, South Americans, Asians, they all divest from their inferior assets and purchase bitcoin. The price of bitcoin skyrockets.<\/p>\n

The U.S. is the primary beneficiary. U.S. corporations stand to gain immensely. In parallel, you normalize and endorse digital currency, defining it as the U.S. dollar endorsed by legitimate U.S. dollar equivalents in a regulated U.S. custodian subjected to audits. What unfolds next? <\/p>\n

$150 billion of stablecoins escalates to $1 trillion, $2 trillion, $4 trillion, $8 trillion, possibly between $8 and $16 trillion, generating $10 to $20 trillion in demand for U.S. sovereign debt.<\/p>\n

While you slightly reduce demand due to the growth of bitcoin as a capital asset, you’re reversing the demand for backing the stablecoin. [The digital U.S. dollar then] supplants the CNY, the Ruble. It replaces every African currency. It replaces every South American currency. It overtakes the euro.<\/p>\n

If you’re genuinely committed to the U.S. as the world reserve currency and U.S. principles, every single currency around the globe would ultimately merge into the U.S. dollar if freely available.\u201d<\/p>\n

At this point, I ceased listening to the episode and uncontrollably vomited all over the New York City subway car I was in.<\/p>\n

I did not enter the Bitcoin domain to assist the U.S. in orchestrating a scheme to obtain a substantial portion of bitcoin while ensnaring the world with its worthless currency, and it deeply disappoints me that an individual many in the Bitcoin community admire would devise such a duplicitous plan.<\/p>\n

Bitcoin Is Money<\/h2>\n

Bitcoin is money. It is a form of money that cannot be censored or diminished, having spectacularly appreciated in value over the past decade, establishing it as one of, if not the most, formidable instruments ever devised for individuals.<\/p>\n

To regard it as anything lesser, or to attempt persuading others that a new version of an established currency is superior to it, is to be profoundly misinformed.<\/p>\n

While bitcoin serves as capital, that is not its only function, and please don\u2019t allow Michael Saylor or anyone else to persuade you otherwise.<\/p>\n

This article is a <\/em>Take<\/em><\/a>. Opinions expressed are solely the author’s and do not necessarily represent those of BTC Inc or Bitcoin Magazine.<\/em><\/p>\n