6 ms·

I keep hearing this point, why can't you be a revenue generating business that wants to hold money that doesn't melt over time?

atian 6y ago
> Why the negative reaction? Because this time the Bitcoin would be bought with other people's money, instead of the cash reserves already on MicroStrategy's balance sheet.
romanoderoma 6y ago
Do dollars really melt over time?
rjknight 6y ago
Why not hold TIPS[1], or a diverse basket of securities, or invest the money in something productive? Is it a good thing if sitting on a large cash pile is rewarded? [1] https://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm https://www.treasurydirect.gov/indiv/products/prod_tips_glan...
- formalsystem 6y ago
  TIPS is measured via CPI not Asset inflation Sure they can invest in something more productive but the whole point of having reserves is to be more robust to negative changes e.g: COVID or jump on new opportunities (some company goes up for sale).
- diegocerdan 6y ago
  Value sitting on dollars or government bonds is being devaluated. Not all value can be invested in the present, thus people want to invest in the future (savings theory). If governments do not offer fiat money or bonds as savings vehicle, assets like Gold or Bitcoin will inevitable soar. MicroStrategy, and others, understand the situation and want to get in early to make multiply their actual savings.
  - bluedevil2k 6y ago
    You sound like you think Bitcoin will only go up. The last 4 years have shown that to be WILDLY incorrect. Bitcoin price history has shown 0 correlation to the market or macroeconomic conditions. Gold, as well, is not a safe haven either. The US Government keeps printing money, yet gold is nowhere near it's all-time high (adjusted for inflation). You shouldn't offer these statements as inevitabilities when history has shown them to be completely wrong.
    - diegocerdan 6y ago
      I'm just reasoning why it will happen. Macro markets do not always react fast to these kind of trends. I agree with your description of the present and close past, thus calling an imminent bull market. The more time this present situation holds, the bigger is the buying pressure. I'm guessing you have a computer tech background and still don't share my view: imagine all the macro-investors not having this knowledge. They can't predict magic-internet-money eating their lunch. Cool thing about free markets: they find out the correct solution out of the greed and collective inteligence of the group. <3
    - rjknight 6y ago
      "Zero correlation to the markets" is one of the things that makes Bitcoin desirable. Diversifying your portfolio is all about having things that do not move in the same direction at the same time.
      - joosters 6y ago
        And yet Bitcoin plummeted in value at the same time as everything else at the start of the pandemic, so it's hardly uncorrelated. Buying lottery tickets would be uncorrelated. And you've less chance of being scammed or hacked when you do that...
        christophilus 6y ago
        A lot of things were correlated then that aren’t always / normally. Bonds, stocks, gold... basically everything was sold to move into dollars. That doesn’t mean that those assets are all correlated over the long haul.
- vmception 6y ago
  As of 2020 Bitcoin can almost-instantly be used as an interest bearing and yield producing asset, which is what "productive" means in this context. There are both centralized custodial options as well as decentralized permissionless but custodial options, as well as decentralized permissionless noncustodial options. And yes, the yield is risk adjusted.
- wcoenen 6y ago
  Note that TIPS currently have a negative yield for all durations. So even though they protect you against potential inflation as measured by CPI, there's still a cost. https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield https://www.treasury.gov/resource-center/data-chart-center/i...
- xiphias2 6y ago
  Because the inflation definition is changing all the time (look at shadowstats). The CEO likes yachts and houses on the beach, and how he describes it: inflation baskets contain what you don't care about, and miss the scarce assets that you really want.
- ur-whale 6y ago
  Because TIPS is denominated in USD. Even if there is an actual yield, you're still a net value loser.
- csomar 6y ago
  I'm not sure if you are being sarcastic. If you have been investing for a while, you'll know that the official numbers are a scam. TIPS pay less than 0.1% yearly. If you have been paying your bills, shopping for a house, or buying new stuff; you should know that real inflation is probably in the 5-25% range depending where you live. Heck, even in this crisis house prices can't get down. The world economy is inflating like crazy.
UK-Al05 6y ago
Business should either invest the money for growth, or release the money to investors to do as they please. Now you have invest in the business and invest in bitcoin by default.
- xur17 6y ago
  A lot of companies have very large cash reserves (ex: Apple). Should these companies distribute this cash to investors?
  - nemo44x 6y ago
    Doesn’t Apple pay a dividend? They also use it to buyback shares, which is essentially the same.
    - Scoundreller 6y ago
      Token foreigner here: I prefer buybacks. Dividends have all kinds of messy tax implications. Cap gains don’t! e.g.: Most countries tax foreign dividends at full income tax rates. 15-30% IRS withholding taxes on dividends.
- xiphias2 6y ago
  Not really. I have personal savings that helped me a lot this year. If you want to see what happens when the treasury is empty, just look at how hard it was for Tesla to survive the Model 3 launch: they were heavily shorted, and oil companies attacked Tesla on every front they could to destroy it. Now that Tesla has enough treasury to survive a stock crash (and a little bit profitable), shorts went away. Btw MicroStrategy was attacked the same way and its stock crashed by 95% in the past. Also just look at 2020 how many businesses that didn't have treasury went bankrupt.
- ur-whale 6y ago
  >Business should either invest the money for growth, or release the money to investors to do as they please. Businesses should increase shareholder value. How they get there is up to them. You opinion on how that should be achieved is one of many possible strategies and very much your own opinion.
segmondy 6y ago
... and what evidence do you have that bitcoin will retain it's value over time?
- ur-whale 6y ago
  11 years worth of evidence so far. That's a fairly decent sized prior in my book. But then, for some people, that's very little. YMMV.
ineedasername 6y ago
I think it's not uncommon for large corps to keep assets in other currencies for a variety of reasons. In the case of BTC though, the "melt over time" I'm not sure quite applies yet. It's still be fairly volatile, and if you're leveraged to make those purchases then there could be a risk of the loans getting called in if the asset plummets. I'm not anti BTC, but I think it needs a few years of stability before it represents safe asset in that respect. Secondary is that in order for me to really consider it "money" rather than an asset, I think the ability to spend it as such needs to improve. Until then it strikes me as little different than any other security that you need to sell to convert into negotiable currency. Though I don't know, maybe that's a distinction without (much of) a difference.

atian 6y ago

> Why the negative reaction? Because this time the Bitcoin would be bought with other people's money, instead of the cash reserves already on MicroStrategy's balance sheet.

romanoderoma 6y ago

Do dollars really melt over time?

rjknight 6y ago

Why not hold TIPS[1], or a diverse basket of securities, or invest the money in something productive? Is it a good thing if sitting on a large cash pile is rewarded? [1] https://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm https://www.treasurydirect.gov/indiv/products/prod_tips_glan...

formalsystem 6y ago
TIPS is measured via CPI not Asset inflation Sure they can invest in something more productive but the whole point of having reserves is to be more robust to negative changes e.g: COVID or jump on new opportunities (some company goes up for sale).
diegocerdan 6y ago
Value sitting on dollars or government bonds is being devaluated. Not all value can be invested in the present, thus people want to invest in the future (savings theory). If governments do not offer fiat money or bonds as savings vehicle, assets like Gold or Bitcoin will inevitable soar. MicroStrategy, and others, understand the situation and want to get in early to make multiply their actual savings.
- bluedevil2k 6y ago
  You sound like you think Bitcoin will only go up. The last 4 years have shown that to be WILDLY incorrect. Bitcoin price history has shown 0 correlation to the market or macroeconomic conditions. Gold, as well, is not a safe haven either. The US Government keeps printing money, yet gold is nowhere near it's all-time high (adjusted for inflation). You shouldn't offer these statements as inevitabilities when history has shown them to be completely wrong.
  - diegocerdan 6y ago
    I'm just reasoning why it will happen. Macro markets do not always react fast to these kind of trends. I agree with your description of the present and close past, thus calling an imminent bull market. The more time this present situation holds, the bigger is the buying pressure. I'm guessing you have a computer tech background and still don't share my view: imagine all the macro-investors not having this knowledge. They can't predict magic-internet-money eating their lunch. Cool thing about free markets: they find out the correct solution out of the greed and collective inteligence of the group. <3
  - rjknight 6y ago
    "Zero correlation to the markets" is one of the things that makes Bitcoin desirable. Diversifying your portfolio is all about having things that do not move in the same direction at the same time.
    - joosters 6y ago
      And yet Bitcoin plummeted in value at the same time as everything else at the start of the pandemic, so it's hardly uncorrelated. Buying lottery tickets would be uncorrelated. And you've less chance of being scammed or hacked when you do that...
      - christophilus 6y ago
        A lot of things were correlated then that aren’t always / normally. Bonds, stocks, gold... basically everything was sold to move into dollars. That doesn’t mean that those assets are all correlated over the long haul.
vmception 6y ago
As of 2020 Bitcoin can almost-instantly be used as an interest bearing and yield producing asset, which is what "productive" means in this context. There are both centralized custodial options as well as decentralized permissionless but custodial options, as well as decentralized permissionless noncustodial options. And yes, the yield is risk adjusted.
wcoenen 6y ago
Note that TIPS currently have a negative yield for all durations. So even though they protect you against potential inflation as measured by CPI, there's still a cost. https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield https://www.treasury.gov/resource-center/data-chart-center/i...
xiphias2 6y ago
Because the inflation definition is changing all the time (look at shadowstats). The CEO likes yachts and houses on the beach, and how he describes it: inflation baskets contain what you don't care about, and miss the scarce assets that you really want.
ur-whale 6y ago
Because TIPS is denominated in USD. Even if there is an actual yield, you're still a net value loser.
csomar 6y ago
I'm not sure if you are being sarcastic. If you have been investing for a while, you'll know that the official numbers are a scam. TIPS pay less than 0.1% yearly. If you have been paying your bills, shopping for a house, or buying new stuff; you should know that real inflation is probably in the 5-25% range depending where you live. Heck, even in this crisis house prices can't get down. The world economy is inflating like crazy.

UK-Al05 6y ago

Business should either invest the money for growth, or release the money to investors to do as they please. Now you have invest in the business and invest in bitcoin by default.

xur17 6y ago
A lot of companies have very large cash reserves (ex: Apple). Should these companies distribute this cash to investors?
- nemo44x 6y ago
  Doesn’t Apple pay a dividend? They also use it to buyback shares, which is essentially the same.
  - Scoundreller 6y ago
    Token foreigner here: I prefer buybacks. Dividends have all kinds of messy tax implications. Cap gains don’t! e.g.: Most countries tax foreign dividends at full income tax rates. 15-30% IRS withholding taxes on dividends.
xiphias2 6y ago
Not really. I have personal savings that helped me a lot this year. If you want to see what happens when the treasury is empty, just look at how hard it was for Tesla to survive the Model 3 launch: they were heavily shorted, and oil companies attacked Tesla on every front they could to destroy it. Now that Tesla has enough treasury to survive a stock crash (and a little bit profitable), shorts went away. Btw MicroStrategy was attacked the same way and its stock crashed by 95% in the past. Also just look at 2020 how many businesses that didn't have treasury went bankrupt.
ur-whale 6y ago
>Business should either invest the money for growth, or release the money to investors to do as they please. Businesses should increase shareholder value. How they get there is up to them. You opinion on how that should be achieved is one of many possible strategies and very much your own opinion.

segmondy 6y ago

... and what evidence do you have that bitcoin will retain it's value over time?

ur-whale 6y ago
11 years worth of evidence so far. That's a fairly decent sized prior in my book. But then, for some people, that's very little. YMMV.

ineedasername 6y ago

I think it's not uncommon for large corps to keep assets in other currencies for a variety of reasons. In the case of BTC though, the "melt over time" I'm not sure quite applies yet. It's still be fairly volatile, and if you're leveraged to make those purchases then there could be a risk of the loans getting called in if the asset plummets. I'm not anti BTC, but I think it needs a few years of stability before it represents safe asset in that respect. Secondary is that in order for me to really consider it "money" rather than an asset, I think the ability to spend it as such needs to improve. Until then it strikes me as little different than any other security that you need to sell to convert into negotiable currency. Though I don't know, maybe that's a distinction without (much of) a difference.