“Bitcoin Will Rise 30% a Year for the Next 20 Years” | Michael Saylor Speech

Bitcoin as Digital Capital [00:33]

• Bitcoin is identified as "digital capital," on par with gold as metallic capital, real estate as property capital, and the S&P 500 as equity capital.
• This classification is supported by a broad consensus from prominent figures within the US administration and financial regulatory bodies.
• The argument is made that the US's influence in financial regulation means its approach to digital assets will have global ripple effects.

"Bitcoin is special. Bitcoin is an asset without an issuer. It is the dominant digital commodity in the world."

Financial Institution Adoption of Bitcoin [03:10]

• Major US banks, including BNY Mellon, Wells Fargo, Bank of America, Charles Schwab, JP Morgan, and City, have transitioned from not banking Bitcoin to issuing credit against it or Bitcoin derivatives.
• Wells Fargo and City have announced plans for Bitcoin custody and will begin extending credit in 2026.
• This indicates a significant shift, with Wall Street, the banking establishment, and regulators endorsing Bitcoin as digital capital.

Digital Treasury and Credit Vehicle [04:06]

• The speaker's company positions itself as the world's first digital treasury company, leveraging Bitcoin as digital capital.
• They have accumulated 660,624 Bitcoin and are acquiring $500 million to $1 billion worth weekly, having acquired nearly $50 billion.
• The company's strategy involves creating Bitcoin-backed credit and a digital credit vehicle to transform credit markets.

"In essence, we're winding up the network. We're powering it up like an engine is coiling life like a torsion spring of sorts."

Transforming Capital into Credit [06:25]

• The company's purpose is to transform capital into credit, offering immediate gratification through credit instruments versus the long-term, less liquid nature of capital assets like undeveloped real estate.
• Bitcoin is digital capital, which is volatile, but the world runs on credit, requiring readily available funds for daily life.
• The company aims to make Bitcoin an investable asset class by creating credit that provides cash flows.

Stripping Risk and Volatility from Bitcoin [09:19]

• The company converts digital capital (Bitcoin) into digital credit by overcollateralizing credit instruments by 5 to 1 or 10 to 1, ensuring principal protection even if Bitcoin falls 90%.
• This process aims to strip risk and volatility, converting a volatile asset into a more stable instrument with a yield.
• For long-term investors who can stomach volatility, holding Bitcoin directly and aiming for 30% annual growth is an option, but for others, a 10% dividend yield from credit instruments is preferred.

"Strip the risk, strip the volatility, convert a 45 ball asset to 20 ball or 10 ball or five ball and then extract the yield, pay you 10% dividend yield forever."

Digital Credit Instruments: STRK, STRF, STREAM [12:28]

• The first digital credit instrument created was STRK, a preferred stock offering an 8% dividend and conversion rights to common shares, functioning as a 100-year call option and a 100-year bond backed by Bitcoin.
• STRF was created as a perpetual bond paying a 10% dividend yield forever, borrowing money indefinitely to invest in Bitcoin indefinitely, matching duration for a senior instrument trading above par.
• STREAM is a Euro-denominated version of STRF for European investors, also paying 10%.

Digital Money and Stablecoins [30:30]

• The evolution continues to digital money, where digital credit is plugged into the traditional finance economy.
• Digital bills, like Stretch (short-duration digital credit), are seen as powering money.
• A digital money fund or stablecoin can be created using 80% credit, 20% currency equivalence, and 10% cash reserves, aiming for a stable NAV of $1 and an 8% yield, tax-deferred.

"The formula and the recipe for digital money is 80% credit, 20% currency, and 10% cash re."

The Future of Banking and Capital Flow [35:08]

• The pitch to nations is to become the digital banking capital of the world, akin to the Switzerland of the 21st century.
• This involves three ideas: investing sovereign wealth in digital capital (Bitcoin), integrating digital credit into credit portfolios, and issuing digital equity.
• The biggest idea is creating digital money through a bank, offering a digital money account that pays a high, stable yield, which would attract trillions of dollars of capital globally.

"If you give people free money, give them money that's better than every other bank on earth, all of the capital in the world will flow into that country, that bank."