Michael Saylor is the leading advocate for Bitcoin, Chairman of Microstrategy, author of The Mobile Wave: How Mobile Intelligence Will Change Everything, and founder of Saylor Academy, which provides free education to students. In speaking with our CEO Jennifer Grossman on June 23rd, 2021, Saylor discussed his obsession with property rights, referencing Ayn Rand's observation that "without property rights, no other rights are possible." Read on to learn why Saylor lost faith in fiat currency during the pandemic, the "thermodynamics" of Bitcoin, Austrian economics, and how he maintains equanimity in the face of adversity. Watch the interview HERE or check out this transcript below.
JAG: Welcome to the Atlas Society Asks. My name is Jennifer Anju Grossman. My friends know me as JAG. I am the CEO of The Atlas Society. We are the leading nonprofit introducing young people to the ideas of Ayn Rand in fun, creative ways, like our graphic novels, animated videos. Today I am very proud to announce that we are joined by Michael Saylor.
Michael Saylor grew up on various air force bases and was set to join the AirForce as a pilot himself before a misdiagnosis changed his trajectory, depriving the country of potentially a great pilot, but giving us someone who would later pilot MicroStrategy, a company he co-founded after graduating from MIT to become one of the country’s leading providers of enterprise software and mobile solutions.
JAG: In 2012 he published The Mobile Wave, which anticipated how mobile cloud and social networks would disrupt the status quo across most industrial and political domains. In 2009, he established the Saylor Foundation, which has donated millions to philanthropic causes, including children's health, refugee relief, education, environmental conservation, and support for the arts. The foundation runs the Saylor Academy, which has provided free education to over 800,000 students.
More recently he's become one of the most prominent advocates of Bitcoin. He's also someone who's putting his money and his company's money where his mouth is with MicroStrategy now owningover two-and-a-quarter billion dollars worth of Bitcoin. Michael, welcome again. Thank you so much for joining us.
MS: Thanks for having me, Jennifer.
JAG: So, you wrote Mobile Wave, how mobile intelligence will change everything, nine years ago in the context of a career that is not a long time, but in the context of mobile technology, it's certainly been more than enough time for all of the predictions that you made in the book to come true. So first, tell us what inspired you to take on such an ambitious project -- which encompasses not just a history of technology, not just a prophecy for its future, but a manifesto on mobile computing?
MS: You know, I wanted to go to Yale and study history, but I didn't have any money. So I went to MIT because I could get an Air Force scholarship and I studied spaceship design. But while I was there, I also still wanted to study history and MIT had a really good history of science program. So I studied the history of science at MIT and, and the history of science is the history of paradigm shifts. And, how does society, how does the political system, how does the order of civilization get upended by railroads and by nuclear power and by guns, germs, steel, computers, and fire? And, when I left college, my first order of business was to make a living. So I started a company and I thought that would work for a while.
And if it didn't work, I'd go back and get a PhD -- if it failed, but it didn't fail. So I never got the PhD, but I always had on my list that maybe I should write a book. But, I was too busy during the internet revolution to write a book. And by about 2009, it was pretty clear to me that there was going to be something that was going to come after the internet wave. If I look at the waves of computing, there was, you know, there was the first wave, which was software running on mainframe computers and it was trapped in the back office and it revolutionized the back office accounting function. And the second wave of computing was departmental computers and those seeped into factory floors and became more broadly distributed throughout the corporation’s departments, not just accounting.
The third wave of computing was the PC and that got on the desktop of white collar workers. And if you were an analyst, your work with a PC needed spreadsheeting and maybe a little bit of email. The fourth wave of computing was the internet which allowed software to reach a billion people. The fifth wave of computing was what happened when Steve Jobs created the iPhone. The iPhone 1 was a toy. The iPhone 2 was a toy. The iPhone 3 was no longer a toy and you could run applications from an app store on it. It became pretty clear that the iOS and Android were going to be the platform that was going to deliver software outside of the white collar world to the next 5 billion people, maybe to everybody. Right now, I think we have 6 billion mobile devices for 8 billion people on the planet.
I think it's only a matter of time before everybody above the age of three has a device. And when I saw that coming, I saw there was a business opportunity. So I moved my own company into mobile intelligence and it was very successful for us. Then I, as a personal investor, I started investing and I invested, I bought a lot of Apple stock and a lot of Facebook and a lot of Amazon and Google. And I thought this is a really big thing. Then I thought I'd write a book. So the book, The Mobile Wave is a history of science, but it touches on the subject of what happens when software materializes from solid state to liquid state, to vapor state. And it's all around us.
And liquid software is when it's running on your laptop and you can move it from the office and home again. But vapor state software is software. That's in your clothing. It's software that you sleep with, you live with, you take it to the movie theater, you take it to dinner with you. And that's a mobile device, and eventually a wearable device. So I wrote The Mobile Wave and I said, well, what if software was something you slept with? And you wore, and you lived with. Instead of a billion people that use software two hours a day, what if 5 billion people used software 16 hours a day? And what if the phone could chirp at you while you're sleeping? And that's a profound thing because that changes the way you would think about software running in the world.
Of course, The Mobile Wave is all about when software leaps off the computer and it becomes fashion, and it replaces your purse, and it becomes jewelry, and the mobile wave is the dematerialization of paper. When books go away, when libraries go away, when wallets go away, when phones and cameras go away, you know, when all these things go away, when eight track cassette tapes and VHS tapes and DVDs, when they all dematerialize, when maps dematerialize. And the idea that was fascinating to me was that Rand McNally is a company worth $500 million because they publish a book that weighs 30 pounds, which has maps in it. That's the 20th century map. I can engineer a map if I think like an engineer and that map gets dematerialized, and there's no 30 pounds. There's no cost to production. Now I can create a weightless map.
I can give it to a billion people. It weighs nothing. And the variable cost is nothing. So giving away the map to a billion people takes us from publishing maps that cost 30 bucks to free maps that are ad financed. And that's worth maybe a bit more, but I didn't just read science fiction when I was young. I read fantasy. Now I read every science fiction novel.. I read Robert Heinlein’s stuff. Three times. I read Ayn Rand's books, all the good ones. I think they're all good. I read them all. Yeah. All good. And then I played Dungeons and Dragons and I read the fantasy stuff. The difference between fantasy and science fiction is if I know science fiction and I think like an engineer, I take a baseball, I throw it across the field. It goes 300 feet. And it drops. If I take a baseball to outer space, and I understand engineering, the science fiction writers teach me I can throw the baseball around the earth. It'll orbit the earth forever.
But if I read fantasy, I realize I could throw the baseball and turn it into a dragon and burn down a city, and it can fly back, become a hundred doves and convert themselves into like, I don't know, chairs, and six can be dwarves that will actually perform Shakespeare for me while you know, three of the dwarves feed me grapes and bring me beer. Okay. That's magic. And so oftentimes the people that didn't understand software are afraid of it. They just stuck with the map. You know, the book, the engineers converted the book into a weightless thing and gave it to a billion people. But the magicians created a magic map and a magic map goes onto a billion devices, keeps track of how fast they're moving and tells you how fast the traffic is. Then it tells you how many people are in the restaurant.
Then it tells you when you should go, then it tells you whether your friends liked the restaurant. Then it gives you directions. And that becomes Google maps. And that's not worth 500 million anymore. It might be worth 50 billion. So The Mobile Wave is about thinking about the world, transforming it into software. That's like vapor making it worth a hundred times more with a combination of engineering, science fiction and fantasy ideas. And what would the world be like if every single thing transforms, if everything -- economics, entertainment, politics, retail -- if at all transforms. And if you think right, you do Google maps. And if you think wrong, you put in your Rand McNally map. You remember the early maps where they would just scan the map and they put it in and it was like a PDF file with 500 pages of maps and you could download the PDF and that business did not make it.
So that's The Mobile Wave. I wrote the book and it gave me a chance to indulge my interest in the history of technology. And, I look back 2000 years and look forward a few thousand years and then think about what kind of businesses would work and what kind of things were going to fail. And it was a good time.
JAG: So, as I mentioned, it's really fascinating to read it nine years later. Most of what you predicted in the book did come true, but in hindsight, was there anything that you feel you missed, or how do you feel the book has held up? And is there another book in your future? I sure hope so.
MS: The lesson of the book is if you know the future and you write the book, you know, you may make $50,000 in royalties, but if you know the future and you buy the stocks, you'll make hundreds of millions or billions of dollars. So the lesson is, if you do know the future, you need to figure out how to buy a piece of it because, you know, you're holding a book and the irony is, of course, that everyone downloads these books out of the Apple store, and you probably would be better off just to buy the Apple stock. It all came true.
The one thing that I didn't have as much of an appreciation for then that I understand now much clearer is although it's pretty clear we're going to dematerialize books and music and video, and we could dematerialize license and credit cards and keys to open doors. The part that I didn't spend a lot of time focused on is the idea you could dematerialize property in cyberspace. And that's what Bitcoin is. Bitcoin is digital property invented for the first time in the history of humanity. And we dematerialize the concept of property on a decentralized network, such that you could move digital property from device to device in a friction-free fashion. And you can build a literal 21st century economy in cyberspace that is beyond the reach of a company, a CEO, or a government. And so that idea that you needed, you needed a decentralized monetary network to create digital property.
Satoshi just invented that around 2009, at the same time The Mobile Wave was happening, and it flickered. And now looking back on it, it's the most disruptive force on the planet, in my opinion. And, I didn't fully grasp that when I first saw it. I thought, oh, it's another thing going on. I knew the power of peer to peer. I got that. It was interesting, but I didn't see it as maybe the most important thing the human race has stumbled on in the 21st century, which is my view right now.
JAG: So it seems like your thinking on Bitcoin, not just as as a currency, but perhaps more importantly as an asset, came into a paradigm shift, if you will, during, the past year and a half when the United States government's response, and response of governments across the globe, led in many cases to a expansion of the money supply and concerns about inflation. And you also have a different take on how to measure inflation and how it impacts different sets of people and how you need to think about the kinds of things that you would be consuming, or you would be investing in, to really understand the true threat or the true impact of inflation. So, can you share with us a little bit of your evolution in thinking about Bitcoin and inflation?
MS: Well, let's start with a general theme. In the course of nature, studying the physical world, there's a tendency for things to collapse from a higher energy state to a lower energy state, like in chemistry, it's this crystallization, you know. When you have ice, and it collapses, it gives off energy. If it’s boiling water, there’s steam as it condenses, it gives off energy and it becomes ice. And it gives off more energy. When water's moving downhill, it's bleeding off potential energy, and you can capture and harness that energy. If you look at all the books behind you, The Mobile Wave and the success of the iPad is all about what if I took 10 billion books, dematerialized them digitally, put them into iBooks, or put them into Google books? And then I move the electrons around. I could give 5 billion people a library of a million books each for the cost of electricity. So the modern environment of dematerialized books is how you unleash energy and create abundance.
Andrew Carnegie. He took all of his money and he created libraries. And that was the best idea, a hundred years ago, to put libraries everywhere in the world. And now, of course, libraries are obsolete. You know the library in Washington, DC, you know what they did with the Carnegie library in DC? They turned into an Apple store. Talk about profound irony. Irony. Yes. Apple destroyed the library with the iPad. Now there's no reason to have a library of books because you can have a billion books for free on the iPad. And that is a lower energy state. How long, how much does it cost me to give every human being a rich person's library? Right. A million dollars. Okay. Well, I'll give a million dollars worth of books to 5 billion people. Well, the human race can't afford to do it that way.
Well, what if we do the same thing with Amazon music, how much if I give you 50 million songs? How much is it going to cost? $9? Okay. All of those are dematerializations that are crystallizations where you have all of the property, the intellectual property, music, books, collapsing onto a network. And that idea is the same with Google maps, right? Do you have any idea how many pages are in Google maps? Like if I gave you 500 million pages of maps, it wouldn't be what Google maps gives you. They have more, right? So we have this extraordinary amount of wealth created by the dematerialization of property. What is Bitcoin? Imagine that I took all the land in the world and I just collapsed it into cyberspace. Now, what if I took all the value? You have a billion dollars. You could buy 16 city blocks in New York City.
What if you bought every city block and every city on earth, and then you bought every building on top of every block? And every collectible: What if you bought all the money and all the gold? And then what if you took all that stuff and you collapsed it onto a network and divided it by 21 million Bitcoin and made them all subdivided by a hundred million? So have 2.1 quadrillion Satoshis. Then I put that on a network. I blew it into cyberspace and I ran it on hundreds or thousands and thousands of decentralized nodes in places you can't even find so that no one person can stop it, no matter what, even if they tried, they couldn't stop it. I released it. I dematerialize the thing. The blockchain for Bitcoin is DNA. I dematerialized it in cyberspace. I let it go. But now you don't actually need all the land.
What if you didn't need the gold? We spend a hundred billion mining gold. And if the purpose of gold is to store property and I spend a hundred billion a year and I do it for a hundred years, I spent $10 trillion. What if I just put it all back? So Bitcoin is this simple idea, digital property. Okay. Has it ever been done before? No. Satoshi created the first, he was the first monetary engineer or she, or they were the first monetary engineer. Bitcoin is a monetary engineering feat. In fact, it's a digital property network. And the first one we ever got to work, we tried it dozens of times before; they all failed. People have tried to create monetary networks afterwards. None of them have succeeded in displacing Bitcoin.
So what does this mean, really? Because most people say it, but they don't think about what it means. Digital property. It means that I can slice up $387 worth of property, and I can give it to 8 billion people, friction free at the speed of light and deposit it onto a mobile device. And maybe into their head, you can't do that with gold or silver, right? There's not enough ounces of gold to give everybody one ounce of gold. The markup would be 40%. It would cost you 40% more to ship the gold and take you eight weeks. And if you wanted to sell it, it would cost you 30% to sell it. It's just not practical to dematerialize -- in fact, gold is material property, right? I can't do it with cash. I can't do it with gold.
Remember 40 acres and a mule? I mean, people came to America - why? For civil rights and property rights. They were going to get murdered because the Protestants were murdering the Catholics in the north of Europe and the Catholics were murdering the Protestants in the south of Europe. And everybody was murdering the Quakers everywhere. And everybody's murdering everybody that didn't have the right religion. If they weren't murdered, they all fled. They wanted to get away with their lives. And the second thing they wanted was land, land was literally property, and now let's go back to Ayn Rand. She said, without property rights, no other rights are possible. That's the quote, right? Most people don't get that. Life, liberty, and property. That's the phrase. We scrubbed that out and called it life, liberty and pursuit of happiness. But there is no pursuit of happiness if I strip you of property.
What is property, metaphorically speaking? And what is money? Money is energy. Money is the apex energy of the human race. Money is monetary energy. Property? If there is only energy and mass, you convert energy into matter, and matter back into energy; property, therefore, being the solid state form of energy. Once you understand it that way you realize that every economy requires money to backhaul the energy in order to balance the goods and services you ship in the other direction. So no economy is possible without strong money and no economy is possible without property rights. Bitcoin is digital property. Bitcoin is the first time in the history of the human race that you can give property rights to 8 billion people. Now I just put a period on it.
This is the first time in the history of man that we have a technology that allows us to grant unfettered property rights to 8 billion people. There's nothing. The closest thing to that was the dream of gold, but gold doesn't work. It's not practical to give gold to 8 billion people. You can't run a 21st century economy on gold. And I could just shoot you in the head and take your gold. Gold has invited violence since the beginning of time. And the history of humanity is the history of people murdering people to take their gold. Which is the same as I give you a farm. Okay. I murder you and I take your farm. It happened in Zimbabwe. It's happened throughout history.
If you have money, whether it's a dollar or a hundred dollars, a hundred thousand dollars, a million dollars, a billion dollars, you want to preserve your property. Your choices are you buy land in California. The governor of California can seize it, tax it, take it via right of eminent domain. And if you get driven out of the country, then you lose it. Right? The Germans in the 1930s were able to murder the Jews because they couldn't get their property out of the country. You can't get your gold through the airport. You can't get your land. You can't move a building. You know, you can't move stocks. If you own a billion dollars of Apple shares, you can't move them. There is no other property that we have in this world that you can take personal self-custody of. And so the real power of Bitcoin is this idea that a corporation or an individual could take self-custody of their own property. And that is critical to sovereignty and freedom and liberty.
And Satoshi, whoever he, she, they were, came up with a technology network, a decentralized technology network based upon cryptography software engineering, borrowing some themes that pop up over and over again in electrical engineering, servo mechanisms, you know, first order, negative feedback loops. They created that engineering system and gave as a gift to humanity, a monetary energy network. And what that means is we have, for the first time, the ability to collect energy, store energy and channel energy through time and space with de minimis power loss. Metaphorically speaking, this is a dam that's captured the potential energy of gravity in the form of a liquid water, and you're going to use it to generate electricity, or it's compressed air, or it's running water. You get a water tower and you're using a water tower to generate water pressure, or an aqueduct. Or it's fire, which is just harnessing chemical energy or it's electricity. And I'm harnessing electricity. We have harnessed monetary energy on a network. And that, I think, it's just as profound as electricity or fire. But it’s very poorly understood.
And why do you discover it? The reason I discovered it is because the money got broken last year. I mean, the money's always been broken. The history of humanity is empires creating a strong currency with integrity and durability. Like the Lidians striking a coin, the Romans striking a coin, the British striking a coin. Then it gets debased as the government becomes corrupt. As the money gets devalued, it gets counterfeited. Eventually the currency is debased. The money breaks. The economy goes into hyperinflation. The economy collapses, the empire falls, another empire rises. They replace the old broken currency with a new currency. It goes on thousands of times, thousands and thousands and thousands of times.
The last time it broke was 1971. What happened was the US was on a gold reserve standard and based on Bretton Woods, and then the US defaulted on that standard. And they decided to go off the gold standard. Every other country was tethered to the dollar. When the US defaulted on gold and they went to a more inflationary environment, they started inflating the currency 7 to 8% a year. So the currency started collapsing at 8% a year. But you know, you can almost not notice 8% a year. If you're getting paid 5% of your interest, maybe you might get through it.
But, if you think about money, money is divided in a medium of exchange in a store of value. The medium of exchange is currency. Like the dollar I used to buy coffee, the store of value -- once upon a time mythically, it was gold. I buy gold because gold is going to store value and you can't debase it so fast. Then after we gave up on gold, then the store of value became sovereign debt. Bonds issued by governments. When bonds issued by governments yielded 8%, you know Paul Volker, back in 1980, raised the short term interest rates to 18%, 19%. So if you're getting paid 8%, 12% interest on a bond, then that's a store of value. Then we went to ETFs and stocks, the Vanguard 500, and we gave up on the money as a store of value or the currency. And we used equity. And, you bought the S&P 500 index, and that's been the status quo for the last decade. The S&P's generating a 10% return. The money's losing 7% of its value a year. You're getting a net 2% or 3% gain. And you're taking the risk of owning equity, which means you're getting a net nothing gain, but you're holding your value. In March of 2020, the monetary inflation rate tripled. And we went from a 7% inflation rate to a 21% inflation rate.
And the S&P in the last 12 months is up 32%. The NASDAQ's up 40 something percent. If you had money in a bank, you lost 32% of your purchasing power against equity. The average single family home in America, it was up 24%. According to the front page story in the Wall Street Journal yesterday, 24% inflation rate in homes in 12 months. If you were holding cash, it got 24% more expensive in 12 months. If your salary went up by more than 24%, you broke even. Even if you owned assets and you did nothing for the year, and you laid on your floaty in the Hamptons, you had the best year of your career doing nothing because the money collapsed and the assets went up. If you worked on main street in a job, and you worked 32% harder, you worked 32% harder to get nothing.
So I would say I lost my faith in the money in March. Like it kind of broke my faith in the money, and it caused me to go back and look at first principles. And I started studying Austrian economics. And what I realized is the inflation rate is not 2%. CPI is a lie. CPI is just a crippled, misleading metric. And it makes me think of like, you know, there's a famous statement. It's attributed alternately to Ogilvy of Ogilvy Mather, and also to Joseph Goebbels, the propaganda minister of the Nazi party. And the statement is what all of our focus groups show us. We can't tell people what to think, but we can tell them what to think about. Okay. So I can't convince you of something, but if I get you thinking about CPI, we all study CPI and CPI’s, consumer price inflation.
And as long as I define what it is, then I can tell you that the inflation rate is 2% or 3 or 4, and then there's no problem. Well, the truth is inflation was never CPI. No one thinks from first principles. If you think from first principles, if you're an engineer, you'd realize inflation is the rate at which prices change for everything we want to buy in civilization. And so if you calculate a vector, if you calculate the thousand things you might buy and you calculate the price of them this year versus the price of them last year, then you realize that the prices are changing at different rates for different things. And then you realize that they're changing at different rates in New York City than they are in Kansas. And then you realize they're changing at different rates every month. And then you realize that the average person wants different things.
Some people want a house in the suburbs and to send their kids to Ivy League schools. And some people want to sleep in their parents' basement and watch Netflix. And there's a different inflation rate for the former than the latter. And if you just want to be rich, by the way, a news flash, there's a different inflation rate. If you want to stay rich or be rich, it's different than watching Netflix in your parents' basement. The inflation rate, if you want to be rich or stay rich, was 32% this year. That's the rate at which the S&P 500 went up. So inflation's a vector, not a scaler. When people talk about inflation equals CPI, they're encouraging you to think about the world in terms of arithmetic with the scaler.
And of course the only reason they can do this, is because politicians and economists are not engineers because there's nothing that's ever been engineered in the history of humanity that was done properly with arithmetic, like Newton gave us the calculus of variations. You can't build a building, you can't build a ship, you can't build a plane. You can't build a nuclear reactor. You certainly can't build an electric power grid or a computer with arithmetic and scalers. And you can't do any kind of fluid dynamics without doing vector calculus. So if you wanted to describe the way that the economy was impacted by the printing of two or $3 trillion of currency, you can't describe it with one number. And of course, it's pretty obvious. For example, the inflation rate of cruise lines and movie tickets was not high in the three months after the lockdown, because it was illegal to take cruises and go to movies. The inflation rate of cryptocurrency or stocks you could trade on Robinhood was quite high because everyone had money jammed in their pocket and they could take their phone and they could buy a stock, or they could buy a cryptocurrency.
So the velocity of all these things are different. What I realized in the last 12 months is that all of the conventional thinking about economics and monetary theory and investment theory was prejudicially biased and just wrong. And most conventional wisdom was based on arithmetic and it was leading people to a horrific outcome and shook me out of my lethargy. And that's why I started on this mad search for a store of value, for a way, to protect my company from the hyperinflation that we have, and we are going to keep having, and I discovered Bitcoin because my mind was opened.
JAG: So you have told a story that dramatically illustrates the insecurity of cash assets, and I suppose, other kinds of assets as well, to government confiscation. And that's something that happened to you in Argentina, which I found interesting in part because of The Atlas Society's large presence in Latin America, specifically in Argentina. You had a million dollars seized by the Argentine government. What happened?
MS: So this is a good story, and I think it's illustrative because it also explains what's going on everywhere else in the world right now. It just happened a month ago in Lebanon. And here's what happened. We have a company in Argentina where we’re the largest business intelligence software vendor in Argentina, very successful, and made a lot of money. We sell software to Argentine companies. We would generate pesos. There was a time, Jennifer, when the peso was one peso to the dollar. I remember the currencies were pegged. The Argentine currency was pegged to the dollar; that was strong money. If you run a country with a conservative monetary policy, you would peg your currency to the dollar. The dihrom in the Emirates is pegged to the dollar today. The Saudi currency is pegged to the dollar. Most strong countries have a currency, which is plus, or minus 10% off the dollar.
They try to keep it that way. So Argentina had that conservative policy. So we had swept our profits into the bank, and then the Argentines passed a law and the first law was capital controls. You have no freedom to repatriate your money. You can't leave the country with it. Okay. Well, that's your first loss of freedom. Yeah, you can, you can trickle it out, but we had a million dollars we couldn't bring back to the US. So what do you do? Well, put it in an American bank. So we put it in the Bank of America in Buenos Aires. Okay. But we don't want to keep it in pesos because the peso might devalue versus the dollar and we're an American company and we're publicly traded. So we'll convert it to US dollar accounts in the Bank of America in Argentina.
All good. Then we read about problems. The Argentine government's spending more than they're generating. They've an economic issue. Are they going to unpeg against the dollar? Maybe they're going to devalue the currency. Well, so we don't want pesos; they might devalue the currency. Currency is weakening. So what happened? Well, the government, the first day passed a law, making it illegal to keep foreign currency balances in banks in the country. So you had to convert all your dollars back into pesos. And the second day they devalued the peso 10 to one. And so by the third day with no due process, we had a hundred thousand dollars worth of pesos. Still locked up in Argentina, still losing five or 10% of its value a year. They just took the money. And they did it to 50 million people overnight.
So a lot of times people think, well, couldn't they just do that with Bitcoin or do that with anything else? And the answer is, well, no. The problem is if you have to store your property in currency, and if your local currency won't hold its value, you need to store your property in a foreign currency. But if the government makes it illegal, and you can't get access to a foreign currency, like I can't get a million dollars worth of dollars -- I couldn't take a million dollars out of the bank and put it into a safe. So I have to keep it in the foreign currency balances in the bank. There's only five banks. So one bureaucrat can simply send a memo or fax to the five banks saying convert everybody's balances to pesos, the pesos is now worth one 10th as much, all your money's gone.
That just happened in Lebanon. In Lebanon, they froze everybody's bank accounts. And they devalued the Lebanese pound from 1500 to the dollar, to 7,500 to the dollar. And then they froze the US dollar accounts. And then they devalued further. So if you were actually Lebanese, you woke up one day and you lost 80% of your life savings. And then if you were smart enough to convert your money into dollars, the government seizes them, they don't call it “seizing”. They call it, we “froze” your assets. And now they're negotiating with the IMF to decide whether they will give the people back $300 worth of their dollars or not. And so in essence, the government just steals all your money. Okay, so what could you have done about it? Like literally I had this con; I lost the money in Argentina and I only lost money in two places. I had it seized by the government in Argentina, and then I had another million dollars in Brazil and the CEO of the company stole all the money and I lost the million dollars in Brazil.
And the lesson that I learned was you can't trust companies, you can't trust CEOs and you can't trust governments with your property. By the way, there's something called the blue dollar. And if you google blue dollar, you'll find that's the black market rate of the dollar in Argentina. And when you watch it, it's going to be blood curdling. You're going see that the peso went from one peso to the dollar to three pesos to the dollar. I encourage everybody on this livecast right now: go to the web, google blue dollar, go look at it. The peso was three and a half pesos to the dollar 15 years ago. And then it just slid to 10 payos to the dollar, 20 pesos to the dollar, 40 pesos to the dollar, 80 pesos to the dollar. The rate right now is 155 pesos to the dollar. So if you were holding your money in Argentina for 20 years, you're going to lose 99.5% of your money. It's going away. Certainly.
So I saw that happening. And when the peso was like 20 pesos to dollars, we're still in Argentina. You know, my lawyers came and they said, you know, we think they're going to do this again. The pesos weakening, it's 20 pesos to the dollar. I know it's going to 100 pesos to the dollar. I said, can you get the money out of the country? This is 2018. Maybe they said, well, no, they won't let us repatriate the capital. I said, can we buy gold and bring the gold out of country? No, there's a law against carrying gold out of the country. I said, well, can we just buy something?
I literally said this, Jennifer. I said, can we buy a yacht in Argentina and sail the boat to the Caribbean and sell it? And I had literally my finance people and my lawyer sitting in my office and they looked at me like I lost my mind. And I was like, I haven't lost my mind. I'm serious. Buy a boat, sail it, because at least the boat is floating property or liquid capital. And so the boat is like the last best idea if you can't buy Bitcoin. But if I'd known about Bitcoin, I would've bought Bitcoin. And the way that works is you buy the Bitcoin, take personal custody of your keys. If 50 million people in Argentina had Bitcoin, the government would have to arrest all 50 million people, put them in a cell and sweat them for 90 days to get the keys out of them.
I mean, how, how hard is it to arrest 50 million people to seize their property? I mean, it's something like 10 billion times harder than sending an email and copying five bankers. And so Bitcoin is property rights. It's the apex property rights of the human race. There is no higher form of property. Maybe in the future we'll get to the point where we could graft it into your DNA, and you could think it telepathically from person to person, that would be better. But short of that, it's a million times better than the next best thing. And, the function of it is to allow human beings to take ownership of their life energy.
And I'll give you one more metaphor, because I think it's helpful. A type one diabetic cannot form fat because they do not have insulin. So if I strip you of insulin and you can't form fat, you cannot store organic energy on your frame -- another phrase for organic energy is fat. Fat is an organic battery. So when someone's a type one diabetic, they can eat all day long and they're going to starve to death. If I take your insulin away from you, it's a death sentence. So is removing someone's property rights. When I strip you of property rights it is a death sentence economically. I'm literally saying you cannot store economic energy. If you're forced to keep your life savings in the local currency of Zimbabwe, and they're stealing 90% of it a year -- and it could be worse than that -- what you've really got is a political system which has turned everybody into a type one diabetic. And it's just a question of how you're going to die in the two weeks after you lose your job: you're just going to start to starve to death or freeze to death.
That's why property rights are critical. Being able to store monetary energy over long periods of time is no different than being able to store fat. It's pretty much hopeless for the human race if you can't convey property rights to everybody on the planet. And it's no coincidence that in Africa and South America and other parts of the world where they have weak property rights and weak currencies, they have weak economies because there's no way for the economy to function when they don't have the system to backhaul the economic energy to make the civilization work properly.
JAG: So I'm going to get in trouble here with all of the people watching us, because we have like hundreds of questions that are coming in and
MS: Speed rounds. I'll go through 'em as fast as you want.
JAG: Okay. Got about 10 minutes left of your time. And again, thank you for being so generous with your time. Mark Goodkin: Can the government outlaw or at least control cryptocurrency?
MS: Can they outlaw cryptocurrency? They can't stop people from holding it. It's a question of property rights. As far as I know everyone in the world has the ability with just a few exceptions to own Bitcoin as property. Even in China, they can own Bitcoin as property, and places where they have capital controls -- like China has capital controls, they try to keep people from moving the property outside of the country or moving it into a different currency because they don't want billions of dollars of capital flow in a different currency. And so you will see some governments that will start to try to control your ability to move it around. But generally in countries where they have property rights, which is the US and Western Europe, if you can own gold and own equity and own bonds, you'll be able to own Bitcoin and own crypto.
JAG: Okay. Question from Mike, did you read Atlas Shrugged? If yes. When?
MS: I read it when I graduated from MIT while I was driving across California. It was a very gripping book, a very powerful experience. So I guess I was 21 or 22.
JAG: Time to have another question here from Germany. How do you deal with all of the stupidity of the mainstream? You do have kind of a calm demeanor.
MS: Because I've been the CEO of a company for 30 years,we have values and one of our values is to be cheerful. And what I learned is nothing will be accomplished with anybody unless you're cheerful. So I try to approach my interactions in a cheerful, constructive fashion. Don't say anything if it's not constructive, don't engage if you're not cheerful. If you run into toxic trolls on Twitter, don't return toxicity with toxicity, you're never going convince anybody. And even if someone is toxic and brutally mean, you're better to respond cheerfully and constructively, you may not convert them over, but you'll convert their followers or some portion of them over. If we arrived to the world with electricity and we told everybody on the planet that had not used electricity, that we thought electricity was a big deal in year one, I would imagine that most politicians and authority figures and writers would not understand it and think it's something of the devil or spirits or dangerous or crazy or witchcraft, you know, it might take years and years before they start to embrace it. And then they decide that electricity is a good thing for civilization. You’ve just got to be patient and you’ve just got to educate.
JAG: Right. Well, let's put the link in the chat from Michael's debate that he did on gold versus Bitcoin. And I thought it was a very informative debate, but also the person arguing for gold was getting very, very exercised and kind of the more exercised he got, the calmer you got. And I just thought that even though I was also intellectually convinced by your arguments, arguing from an exercised demeanor never, never helps. Okay. Andreas Hoffner: Hello, Mike. My question is, what is the bigger bet spending $100K on a college degree, and studying for a bachelor’s for four years or spending $100K on Bitcoin and waiting four years?
MS: I think it'd be smarter to buy Bitcoin for $100K because you've got all of humanity working to make it more valuable. I went to MIT and in the first three weeks, the cost of MIT impoverished my family and sucked our life savings. The sum total of everything we had accumulated in 250 years in America. And now you can go on Saylor.org and you can see the same lectures I saw at MIT for zero. So if what you're wanting to do is get an education, you can get a better education for free on the internet, on YouTube and spend not a nickel, right? If I had $100K or $200K, I would buy the Bitcoin, because it's been going up 115%, 120% a year for the last decade and every single intelligent person on earth that understands it is doing everything they can to make it more valuable.
So, yeah, it's a much better investment in general. But, it's twofold. One, if you don't have high quality assets that are going to appreciate faster than the rate at which the money is collapsing, then life is hopeless. Okay. That's one, you have to get your hands on assets. And it's like you're in the ocean. The asset is a sail. Put the sail up and let the wind blow you. You cannot row across the Atlantic in a row boat. You have to have technology helping you. So that's the number one issue. My number two point is just like libraries are obsolete and record collections are obsolete. You're a fool to spend a million on a library. You're a fool to spend a million dollars on records. You're a fool to spend a million dollars on an education if you don't have the million dollars. If your parents are rich, then have at it. But if you don't have the money, you know, we are dematerializing all that. You're a fool to buy a million dollars of maps. The point is get an iPad, download everything. You know, there's a hundred thousand people that can teach you calculus in a mediocre fashion and you can spend 25,000 a year for it. Or you can just go to the single best teacher or go listen to, you know, Richard Feynman, talk to you about physics. Why don't you just go to the best, smartest person in the world? It's free, it's all free. So if you're not getting an education it's because you have no ambition. It's not because you don't have the money. Money, property, should be used to secure your future and your family's future. If you have it, don't overpay for stuff.
JAG: We've got about four minutes left, a lot of good questions. We didn't get to them, including some about differences you see between Bitcoin, Ethereum, different kinds of currency…
MS: Let me give you a quick market segment very quickly. There are three types of digital assets, digital property. Bitcoin is the apex property. If you wanted to own 16 blocks of cyber Manhattan for the next thousand years buy 16 Bitcoin. Digital currency. Tether, and Dail and DM and CBDC, they're all currencies. They're a medium exchange, not a good investment. Don't hold them for a hundred years. You'll lose 99% of your money, buy coffee with them. They're going to be regulated like currencies. The third is digital applications, Ethereum, all the smart contracts platforms. They're trying to dematerialize either the buildings in cyber Manhattan or the companies in the buildings. They want to dematerialize stock exchanges, banks and insurance companies. So if you're an investor and you like the idea of owning a block south of Central Park for the next 300 years and keeping it in your family, buy a Bitcoin, if you're an investor and you like the idea of building a building on central park, then get into DeFi because they're all about platforms.
And just keep in mind, the building's probably good for 50 years, not 500 years. And if you want, if you really want to launch a bar or a restaurant or a fast food chain or a fashion magazine, then you're like some kind of app, right? Maybe you'll only last five years. You'll be very famous. It's very cool. Maybe it'll work, but they're all different risk profiles. You know, if you just want to own something for a thousand years, it's property, you know, the other things they're more complicated, maybe you'll have higher upside or downside. Maybe you'll lose everything. It's venture capital like launching an Instagram competitor, maybe you'll be Bumble, and maybe you won't. Have at it -- do what you want to do.
JAG: Could you give us just a minute, Michael, on Saylor Academy, the nonprofit initiative that you launched in 2008?
MS: Yeah. The idea is just to give everybody a free college education. And so we uploaded college courses. We give you certificates, we've got cross accreditations with 25 universities now. We're about to become a university in the next few years. Then we'll give our own degrees. Isaac Newton said everything there was to be said about math. 99.99% of humanity doesn't know more. Why is there a copyright on a math textbook? And why should you have to pay money to learn math? You don't need bricks and mortar and you don't need to spend a quarter million dollars in order to get a math degree. You just need to learn math. So watch the videos on YouTube, read the books, take the test, and then you know it, so that's what we're trying to do there. And it's been growing. I mean the lockdowns and COVID was a big accelerator for us.
If we're going to advance the human race, there's two things to be done. One, give 8 billion people property rights, and you're not going to do it with gold because it's not technology. If you're gonna give 8 billion people music or books or education, you're gonna have to do it with software that runs on computers. And so the second big idea is to give 8 billion people a PhD. You know, if we want to advance civilization, you need a billion people with a PhD and a PhD costs $2 million. And I know for a fact that someone making $382 a year in Africa is not going to pay for that PhD, not conventionally. So dematerialize those things, give them away freely, and then you should be able to catalyze human flourishing and raise the civilization.
Just like electricity, right? People take it for granted. But think about having 250 horsepower on an appliance in your kitchen, and then try to imagine how many people in civilization had 250 horses a thousand years ago. And then you realize the difference, right? The average lower-class person has more power than the most powerful person on earth did a thousand years ago. That's technology. So that's my belief, make the world better with technology. That's the whole method to the madness here. That's why Bitcoin makes sense because it's hope and all the anti-Bitcoin rhetoric, it's people in the 20th century and their message is just, I don't understand it. I'm afraid of it. I don't like it, but let's keep doing things the old fashioned way and the old fashioned way is mules and oxcarts, and there's no way we're going to create a great civilization with mules and oxcarts and wooden ships and an Abacus. So we just have to move forward, even if it is new and scary and different.
JAG: And sometimes it is new and scary and different. We need a leader to go out in front and also break it down for us in ways that we can understand, rich with metaphors based on historical examples and from somebody who's spent 30 years of his career in the digital technology space. So for that, Michael, we are very grateful. We're very grateful for the generosity of what you've done, not just with Saylor Academy, but with the time that you are giving to help open people's eyes and give them a greater understanding of property rights and earning, and finding a way to store value. So we're very grateful. Thank you so much.
MS: Thanks for having me, Jennifer. If anybody wants to follow me, you can just find me on Twitter, @saylor. And if you want to know more about Bitcoin, go to hope.com. And you will find all things Bitcoin on hope.com and I wish you all the best.
JAG: Thank you.
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