Last week I attended the Microstrategy Bitcoin for Corporations 2022 conference. This is the second conference that Microstrategy, a publicly traded company, has hosted since going all in with Bitcoin on their balance sheet in August 2020, increasing their market cap by over 4x as of this writing.
The conference kicked off with the keynote from Jack Doresy, CEO of Block (formally Square) and co-founder and former CEO of Twitter. In my opinion, Jack seems to be the only “Big Tech” exec who is innovating in this space. I found the conversation between Jack and Michael Saylor, CEO of Microstrategy, fascinating. What struck me most was Jack's comment that if Bitcoin was around when Twitter was founded, they would not be so reliant on advertising as a business model, that there would be a much more healthy balance on multiple business models at once. We would see a lot less of the issues that advertising brings up in terms of privacy and what he termed “surveillance capitalism”.
We also learned that Block is working on a Bitcoin hardware wallet that’s an important security need for owners of Bitcoin. It protects their holdings longer term if their intention is investment, and they want to retain control of their BTC, typically referred to as self custody. In other words, a third party bank or institution does not have custody of their BTC holdings.
And as of today, the Bitcoin lightning network is now available on CashApp, enabling ease of use for small businesses and consumers to transact in Bitcoin. (Maybe this is why PayPal’s stock crashed last week? From a personal point of view, it’s nice to see such an innovator continue to lead the charge in the crypto and blockchain economy, just as he leveraged smartphones for small businesses to conduct transactions anytime, anywhere easily and securely in the last decade.
I also heard talks by Fidelity Digital Assets and Genesis, two other early leaders in BTC. You may be familiar with Fidelity which apparently has been involved in Bitcoin since 2014, and, if you’re looking to put Bitcoin into a 401k, they can help. Genesis opened the first OTC Bitcoin trading desk in 2013. If you're an accredited investor or institution with $10 million or more in assets, they may be an option to check out. You should hurry though because according to one of the last sessions, Michael Saylor mentioned that he keeps hearing rumors that hedge funds will be getting into Bitcoin in a big way in 2022. Supporting evidence is a recent report from Galaxy Digital that VCs invested $33B in crypto and blockchain startups in 2021. The data shows VCs invested over $10.5 billion in Q4 2021, the most of any quarter last year and more than all of 2020 combined.
Some more interesting figures I heard tossed out were: 36% of the under 30 workforce would like to have some of their pay in Bitcoin, and 43% might leave a job for another in order to get paid in Bitcoin. Also according to Bitpay, Bitcoin is the preferred payment method of the world wide gig economy (free lancers and affiliates) because of ease of cross border payment and low transaction fees.
If you’re a business owner looking to attract customers you may want to look into Bitcoin as a rewards program, and accepting Bitcoin for payment of products and services. According to NYDIG, 40% of customers who pay with Bitcoin are new customers. Customers prefer to get rewards in appreciating cryptocurrency instead of depreciating points. (This fact was confirmed with a Fintech executive I had a call with this morning.)
But the most interesting session for me was between investment strategist Lyn Alden https://www.lynalden.com/ and Michael Saylor. I have been following Lyn on Twitter for more than a year and find her macroeconomic views intriguing and spot on, not just in Bitcoin but other investments such as energy. Lyn drew comparisons between the current economic climate (debt, GDP, inflation) and that of the 1940's. (Most pundits compare our current state to the 1970’s inflation rates, raising interest rates to mitigate inflation, and a move to bonds and gold.)
One big difference from the 1940’s is today investors can hold Bitcoin as a hedge against inflation and economic decleration, instead of hoarding cash, a losing proposition as the dollar’s purchasing power declines rapidly in this economic climate. Separately, Lyn also pointed out most of the Bitcoin supply is in what is called cold storage. Another sign of the economic times, which means most of the largest Bitcoin holders are keeping their Bitcoin off exchanges and wallets so there is simply not that much supply which will drive up demand and value.