Michael Saylor is an American businessman, co-founder, and director of MicroStrategy, a company dedicated to developing business intelligence, mobile software, and cloud services. He is the book’s author: The Mobile Wave: How Mobile Intelligence Will Change Everything, published in 2012.
The CEO of MicroStrategy believes that he entered the crypto community through the “front door” after investing $425 million from his company in Bitcoin. In an interview with Bloomberg, Michael Saylor mentioned that MicroStrategy changed its treasury plan upon learning about the latest inflation policy of the US Federal Reserve; as a result of this news, MicroStrategy reinforced its allocation in Bitcoin (in August 2020 already had made an allocation of $250 million).
In this way, Saylor came out into the open and has taken on the rival ‘safe haven’ asset (gold), declaring to Bloomberg: “We are confident that Bitcoin is less risky than having cash and less risky than having gold.”
Saylor shared some keys to have a corporate financial strategy (based on bitcoin) for businesses that decide to enter or consolidate in the digital world; below, we share some of these keys:
The balance in Bitcoin
Saylor recommends using the Fiat money available in the treasury and converting it into Bitcoins; he mentions that the principle of market dynamics is that capital will flow from weak assets to stronger assets, hence the need for companies to stop maintaining assets in weakening currencies. This is what makes Bitcoin so attractive to various companies.
Convert Fiat derivatives into Bitcoin
According to Saylor, this consists of converting to Bitcoin the Fiat derivatives that the company owns, such as shares, assets in dollars, and bonds in American currency. The reason is that according to Saylor, Fiat derivatives are a “false respite and a path to servitude.” As Fiat degrades, its performance is also diluted more and more. It is best to convert those stocks and bonds into Bitcoins to protect them from devaluation and fluctuations in government monetary policies.
Orient efforts towards the development of new businesses
This strategy consists of suggesting companies approach Bitcoin and blockchain technology with the expectation of creating new businesses. In this sense, it proposes to develop tools based on Bitcoin and blockchain technology, to offer better products and services to its customers so that those who decide to start on this path ensure the development of “non-custodial” services; this means that if customers buy Bitcoins (BTC) through a mobile application, and then they are not allowed to mobilize these funds, then they will be becoming a bank.
Limited number of Bitcoin units and comparison with gold
Investors turn to both Bitcoin and gold as a hedge against inflation, but the digital currency is “disrupting” the precious metal because the number of Bitcoin units is limited to the issuance of 21 million coins; that amount is finite and is backed by its blockchain technology; gold, for its part, has been mined for many years and is still being mined today, although there are indications that after a certain number of years it will no longer be possible to extract, there is no guaranteed finite number, this means that the Gold is limited, but the exact total amount and the deadline for mining it is not known, which generates a difference between the two assets, and that is that while the supply of Bitcoin is fixed, the supply of gold is elastic.
Buying Bitcoins to preserve the purchasing value of reserves
The strategy of buying Bitcoins is functional; it consists of waiting for the movement, making purchases, and replacing it. The purchase of Bitcoins in the case of MicroStrategy will have a lasting impact on its valuation since its initial plan was to preserve its cash reserves’ purchasing value in US dollars and then convert them into Bitcoins. Still, due to the rebound of the Bitcoin prices to a new all-time high, this plan has worked very well, so MicroStrategy decided to increase its resources for this purpose.
What do you think about this topic? Would you convert your company’s assets into Bitcoins?
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