Michael Saylor On Bitcoin Yield

Summary

Matthew from Bitcoin University discusses the debate on earning yields on Bitcoin, referencing a podcast with Michael Saylor and Saifedean Ammous. He explains the concept of lending and borrowing in banking, the risks involved, and how it applies to Bitcoin. Matthew argues that while lending Bitcoin is riskier than Fiat due to its scarcity, there will still be demand for credit. He concludes that the decision to lend or store Bitcoin is personal and should be based on individual risk tolerance and beliefs about the future of money.

Takeaways

• 📢 Michael Saylor and Saifedean Ammous debated the concept of earning a yield on Bitcoin in a podcast.
• 🏦 The script explains how bank lending works, including the role of banks as intermediaries and the spread they earn.
• 💼 It discusses the historical context of lending on a gold standard versus a fiat standard and the implications for a Bitcoin standard.
• 🔐 There is inherent counterparty risk in lending, whether it's gold, fiat, or Bitcoin, including the risk of theft or government seizure.
• 🌐 Saylor argues that the US dollar, government, and banking system are stable and that lending Bitcoin to established banks for yield could be rational.
• 📉 Ammous contends that lending Bitcoin is riskier than lending fiat because Bitcoin is scarce and can't be printed unlike fiat money.
• 💹 The script explores the idea of 'hyperbitcoinization', where Bitcoin becomes globally used as money, with lending and borrowing as part of its ecosystem.
• 🏡 People may borrow Bitcoin for large purchases, like homes or cars, leveraging future earnings to acquire assets now.
• 💰 Third-party custodians may offer varying yields on Bitcoin deposits, similar to how banks compete for savings today.
• 🌐 The decision to lend or store Bitcoin is personal and depends on an individual's risk tolerance and beliefs about the future of Bitcoin and the global financial system.
• 📈 Investors must weigh the potential returns against the risk of losing their capital, a calculation that will continue to be relevant in a Bitcoin standard.

Q & A

What is the main topic of the podcast discussed in the transcript?

The main topic is the controversial statements made by Michael Saylor and Saifedean Ammous about earning a yield on Bitcoin and the implications of lending Bitcoin in a banking system.

What is the role of a bank in the context of lending and borrowing?

Banks act as intermediaries in lending and borrowing, diversifying risk across many loans and providing a matchmaking service between lenders and borrowers.

How does the bank earn a spread in the lending process?

The bank earns a spread by charging borrowers a higher interest rate than it pays to depositors, keeping the difference as profit.

What are the risks associated with lending money to a bank?

The risks include the bank losing the deposited funds, refusing to return the funds, or defaulting due to borrowers not repaying their loans.

How was lending and borrowing different on a gold standard compared to a fiat standard?

On a gold standard, physical gold was deposited and interest was paid in gold, whereas on a fiat standard, fiat currency is deposited and interest is paid in that currency.

Why is lending Bitcoin considered riskier than lending fiat money?

Lending Bitcoin is riskier because Bitcoin is extremely scarce and cannot be printed, unlike fiat money which can be created by central banks to bail out institutions.

What is Michael Saylor's view on the future of the US dollar and Bitcoin?

Saylor believes that the US dollar, government, and banking system are not going away soon, and there will be a demand for credit even on a Bitcoin standard.

What is the concept of 'hyperbitcoinization' mentioned in the transcript?

'Hyperbitcoinization' refers to a future scenario where Bitcoin is globally adopted as money, with people earning, spending, saving, and borrowing Bitcoin.

Why might someone choose to lend out their Bitcoin for a yield?

People might lend out their Bitcoin for a yield to earn additional income, despite the associated counterparty risk.

What is the importance of return on capital versus return of capital?

Return on capital refers to earnings such as price appreciation or interest income, while return of capital is about getting the original investment back. Both are important considerations for investors.

What does the speaker suggest about storing Bitcoin in the future?

The speaker suggests that in the future, people will have choices about storing Bitcoin, including self-custody and third-party custodians offering various yields.