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BTC175: MicroStrategy Deep Dive w/ Jeff Walton (Bitcoin Podcast)
We Study Billionaires - The Investor’s Podcast Network
Micro-Strategy and the Future of Bitcoin Collateral
Micro-Strategy holds a significant amount of Bitcoin, making it a financial powerhouse in the new ecosystem. As Bitcoin gains wider acceptance, companies like Micro-Strategy can leverage their Bitcoin holdings as collateral to generate yield. This collateral utilization is a crucial aspect that the market often overlooks. Micro-Strategy's stash of Bitcoin positions it to become a future banking entity offering liquidity to the Bitcoin financial system by providing loans backed by Bitcoin collateral. Currently, the volatile nature of Bitcoin makes this practice impractical, but as volatility decreases in the future, Bitcoin will be used more frequently as collateral for loans. Michael Saylor, the CEO of Micro-Strategy, can demand high-risk premium for lending out Bitcoin due to its significant potential for appreciation. As the ecosystem matures and Bitcoin becomes less volatile, lending out Bitcoin could offer more reasonable returns in about a decade.
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