in a <a target="_blank" href="https://www.galaxy.com/insights/podcasts/galaxy-brains/michael-saylor-on-btc-at-100-k-and-the-future-of-micro-strategy/”>recent episode of the Galaxy Brains podcastMichael Saylor argued that bitcoin is not a currency and that it is best to think of it as capital and capital only.
He also shared that Tether (USDT) and Circle's USD Coin (USDC) are the real digital currencies and revealed his “evil genius strategy” (his own words) to get the world to adopt US dollar stablecoins instead of bitcoin.
In this take, I'll quote some of Saylor's own words from the podcast before explaining why many of the points he raised are off base.
Capital, not currency
“It's not currency, it's capital,” Saylor said about halfway through the episode.
“You just have to accept it: it is not a digital currency. It is not cryptocurrency. It is digital capital. “It is cryptocapital,” he added.
I searched in <a target="_blank" href="https://bitcoin.org/bitcoin.pdf”>bitcoin White Paper to see how many times the word “capital” appeared.
It is not mentioned even once.
However, in both the title and the summary of the text, bitcoin is referred to as “electronic cash.” While cash can of course also be capital, it is not just capital. To think of bitcoin only as capital is to deny certain of its most essential properties, such as the ability to use it to transact with anyone anywhere in the world without permission.
To deny bitcoin as a currency is to deny much of its value proposition. bitcoin's functions as a store of value (SoV) and medium of exchange (MoE) are inextricably linked. For more information on this, I recommend you (and Michael Saylor) read Breez CEO Roy Sheinfeld's article, “bitcoin's False Dichotomy between SoV and MoE.”
As the episode progressed, Saylor continued to explain (poorly) why bitcoin is capital and not currency.
“There are many maxis who say: 'No, we want it to be a currency.' We want to be able to pay for coffee with our bitcoin. Pay me in bitcoin,'” he said. “It's like 'Pay me in gold.' Pay me in a building. Pay me with a portion of your professional sports equipment. Pay me with a Picasso.'”
In reality, it is not like that at all.
Sure, bitcoin is scarce, kind of like gold, Manhattan real estate, sports teams, or famous paintings, but it has other properties that make it very different from any of these other assets.
To illustrate one dimension of that point, I will quote my colleague Alex Bergeron:
<blockquote class="twitter-tweet”>
I encourage anyone who thinks bitcoin is like gold to launch a custodial gold wallet.
I'll wait.
— Alex B (@bergealex4) <a target="_blank" href="https://twitter.com/bergealex4/status/1870671827493966206?ref_src=twsrc%5Etfw”>December 22, 2024
And then Saylor cited (wait for it) Federal Reserve Chairman Jerome Powell's view on bitcoin in an effort to make his point that bitcoin is capital, not currency.
“The reason bitcoin broke $100,000 is because Jerome Powell on stage told the world: bitcoin doesn't compete with the dollar, it competes with gold,” he said.
Oddly enough, Saylor said this without acknowledging that the man who said this is the head of the institution that bitcoin should theoretically replace.
USDT, not btc
In the interview, Saylor also highlighted that the real digital currencies are the US dollar stablecoins.
“The cryptocurrency, the digital currency, is Tether (USDT) and Circle (USDC),” he said. “It's a stablecoin, the US dollar, that's the digital currency.”
That's when I started to feel nauseous.
For those who don't know yet, bitcoin came into the world in the wake of the Great Financial Crisis of 2008, when the US government together with the US Federal Reserve opted to print US dollars. a lot (devalue the currency) to bail out failing banks, the burden of which fell on both American taxpayers and holders of US dollars around the world.
bitcoin is a decentralized money that was created as an alternative to the US dollar and all other fiat currencies. Trying to convince people that bitcoin is not this is at best disingenuous and at worst deeply manipulative.
But this isn't even the worst of what Saylor had to say about the episode.
He went on to propose that banks that were bailed out in the 2008 financial crisis issue their own stablecoins, which would help shore up the US debt market.
“They should just create a normal regime for issuing digital currency backed by US Treasuries,” Saylor said.
“The United States should have a framework for Tether to move to New York City. That's what you want, right? And then basically there should be a pitched battle where JP Morgan or Goldman Sachs can issue their own stablecoin,” he added.
No, Michael Saylor, that's not what I want. In fact, it's very far from what I want.
I don't want Tether to be anywhere near New York City (my hometown) and I don't want JP Morgan and Goldman Sachs issuing US dollar stablecoins that they control, essentially the equivalent of CBDCs.
When I think of Goldman Sachs, the first thing that comes to mind is award-winning writer Matt Taibbi's description of the institution from its New York Times best seller <a target="_blank" href="https://www.amazon.com/Griftopia-Bankers-Politicians-Audacious-American/dp/0385529961″>Griftopia.
“The first thing to know about Goldman Sachs is that it's everywhere,” Taibbi begins the book. “The most powerful investment bank in the world is a large vampire squid wrapped in the face of humanity, relentlessly funneling its blood funnel into anything that smells like money.”
Goldman Sachs, like the United States Federal Reserve, is an institution that absorbs the life force of humanity. bitcoin was designed to disempower such institutions, not strengthen them.
Towards the end of the episode, Saylor presented his master plan for the bitcoin and US dollar stablecoins.
Here it is:
“Everyone outside the United States would give their left arm to capitalize American bonds. So my strategy would be, and I really think it's an evil genius strategy; It's so good that our enemies hate us, but our allies will complain too. And the United States would gain 100 trillion dollars in the blink of an eye.
Here's the strategy: you get rid of the gold and demonetize the entire gold network. You buy bitcoins (5 million or 6 million bitcoins) and monetize the bitcoin network. All the capital in the world, invested in Siberian real estate or Chinese natural gas or any other monetary derivative held as a long-term store of value: Europeans, Africans, South Americans, Asians, they all just get rid of their shitty properties and their shitty capital assets and buy bitcoins. The price of bitcoin rises to the moon.
The United States is the great beneficiary. American companies are the big beneficiaries. And while doing that, it normalizes and endorses digital currency, and simply defines digital currency as the US dollar backed by US dollar equivalents at a regulated US custodian that is audited. What happens next?
$150 billion of stablecoins become $1 trillion, $2 trillion, $4 trillion, $8 trillion, probably $8-16 trillion, and $10-20 trillion created demand for US sovereign debt.
While you're taking away some demand because the bitcoin capital asset grows, you're adding back demand to support the stablecoin. (The digital US dollar then) replaces the CNY, the Rubble. Replaces all African currencies. Replaces all South American currencies. Replaces the euro.
“If you really believe in the US global reserve currency and American values, all the world's currencies would actually just merge with the US dollar if they were freely available.”
At that point, I stopped listening to the episode and projectile vomited all over the New York subway car I was sitting on.
I did not enter the bitcoin space to help the US execute a scheme where they acquire a large percentage of bitcoin while hooking the world with their junk currency, and it saddens me deeply that someone many in the bitcoin space look up. He would come up with such an intriguing plan.
bitcoin is money
bitcoin is money. It is a type of money that cannot be censored or degraded and whose value has increased dramatically over the last decade, making it one of, if not the most powerful tools ever created for individuals.
To think of it as anything less, or to try to convince people that a new version of a current version of money is better than that, is to be deeply misinformed.
While bitcoin is capital, that's not all it is, and don't let Michael Saylor or anyone else convince you otherwise.
This article is a Carry. The opinions expressed are entirely those of the author and do not necessarily reflect those of btc Inc or bitcoin Magazine.
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