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Bitcoin is a scarce asset with little to no execution risk. A tuna fleet is a business subject to the whims of the market with execution risk. Since equities

Bitcoin is a scarce asset with little to no execution risk. A tuna fleet is a business subject to the whims of the market with execution risk. Since equities have been the primary investment medium fir years, people think of Bitcoin like a stock — it even has a ticker. But it is a genuinely new thing. Like gold it is a scarce asset. Unlike gold its scarcity is deterministic, and it can be transacted over the internet.

zucker42 6y ago
If a company is investing in non-synergistic assets with excess cash, why not just instead convert that cash to shareholder profits?
- gxon 6y ago
  Tax advantage? If you pay out a dividend, you force your shareholders to pay income tax rates. But, if you can use company profits in a way that pumps the stock valuation, your shareholders can effectively take the same profits with long term cap gains tax. My understanding is that a stock buyback is basically this strategy, and MicroStrategy's CEO has said that he also considered that. MSTR is up ~100% since they first bought bitcoin. This is at least, my amateur understanding that could be wrong.
microtherion 6y ago
> Bitcoin is a scarce asset Bitcoins themselves are available in limited quantity, but new cryptocurrencies are created all the time. > with little to no execution risk. You've got to be kidding me! Cryptocurrencies are notoriously difficult to even store safely.
- DavidSJ 6y ago
  Bitcoins themselves are available in limited quantity, but new cryptocurrencies are created all the time. Yes, but it's much easier to create a new cryptocurrency than it is to create a social convention that a new cryptocurrency has value.
  - microtherion 6y ago
    The proliferation of successful DeFi exit scams would suggest it's not THAT hard.
- oillio 6y ago
  Microstrategy is not storing their own bitcoin. There are well respected custody solutions available these days. Execution is outsourced and insured, Microstrategy is bearing very little of that risk.
  - microtherion 6y ago
    Can you define "well respected" in a bit more detail? It seems that by definition, everybody in the cryptocurrency space is still fairly new at this, reputations can be built quickly, and identities are less transparent than elsewhere. There is a lot of shady business going on in traditional banking, but I can be reasonably sure that e.g. Deutsche Bank is not just one guy keeping all assets on his personal laptop who may or may not have died in India last week. As for "outsourced", I thought that was supposed to be BAD? "Not your keys, not your coins", wasn't it? "Insured" by whom?
    - oillio 6y ago
      Whatever well respected means to you, there is probably someone that meets it. If you like old guard financial entities, Fidelity has a custody service. If you want an entity that has been in the space almost as long as Bitcoin and has never been hacked, Coinbase has a service. If you want star power, Gemini from the Winklevii is your bag. If you don't want to be asked a lot of questions and don't want to know a lot about your counterparty, I bet Bitfinex will be happy to help. All of these (except the last) are insured and bonded by respected old guard insurers. I assume the insurance contracts are all written on fiat terms, so take them at whatever value you will. MtGox proves the usefulness of contracts imposed on crypto but adjudicated in fiat. Of course, if you are an old school cyberpunk, you custody your own coins using a layered security approach designed and implemented by yourself. That sort of cowboy behavior is frowned upon by the SEC, so not really applicable to a public company. I would be surprised if Michael Saylor (the CEO) didn't self-custody at least some of his personal stash. Good luck getting him to talk about it though. Bitcoin is growing up. It is being integrated into the existing financial infrastructure. The beauty of Bitcoin is that you get to choose how much you interact with these new on-ramps. If you want to stick to the anarco-capitalist foundational philosophies, more power to you. Literally, you retain more power in Bitcoin than fiat. Don't expect the existing financial world to bend though. It will slot Bitcoin into the existing architecture and keep on keeping on.

zucker42 6y ago

If a company is investing in non-synergistic assets with excess cash, why not just instead convert that cash to shareholder profits?

gxon 6y ago
Tax advantage? If you pay out a dividend, you force your shareholders to pay income tax rates. But, if you can use company profits in a way that pumps the stock valuation, your shareholders can effectively take the same profits with long term cap gains tax. My understanding is that a stock buyback is basically this strategy, and MicroStrategy's CEO has said that he also considered that. MSTR is up ~100% since they first bought bitcoin. This is at least, my amateur understanding that could be wrong.

microtherion 6y ago

> Bitcoin is a scarce asset Bitcoins themselves are available in limited quantity, but new cryptocurrencies are created all the time. > with little to no execution risk. You've got to be kidding me! Cryptocurrencies are notoriously difficult to even store safely.

DavidSJ 6y ago
Bitcoins themselves are available in limited quantity, but new cryptocurrencies are created all the time. Yes, but it's much easier to create a new cryptocurrency than it is to create a social convention that a new cryptocurrency has value.
- microtherion 6y ago
  The proliferation of successful DeFi exit scams would suggest it's not THAT hard.
oillio 6y ago
Microstrategy is not storing their own bitcoin. There are well respected custody solutions available these days. Execution is outsourced and insured, Microstrategy is bearing very little of that risk.
- microtherion 6y ago
  Can you define "well respected" in a bit more detail? It seems that by definition, everybody in the cryptocurrency space is still fairly new at this, reputations can be built quickly, and identities are less transparent than elsewhere. There is a lot of shady business going on in traditional banking, but I can be reasonably sure that e.g. Deutsche Bank is not just one guy keeping all assets on his personal laptop who may or may not have died in India last week. As for "outsourced", I thought that was supposed to be BAD? "Not your keys, not your coins", wasn't it? "Insured" by whom?
  - oillio 6y ago
    Whatever well respected means to you, there is probably someone that meets it. If you like old guard financial entities, Fidelity has a custody service. If you want an entity that has been in the space almost as long as Bitcoin and has never been hacked, Coinbase has a service. If you want star power, Gemini from the Winklevii is your bag. If you don't want to be asked a lot of questions and don't want to know a lot about your counterparty, I bet Bitfinex will be happy to help. All of these (except the last) are insured and bonded by respected old guard insurers. I assume the insurance contracts are all written on fiat terms, so take them at whatever value you will. MtGox proves the usefulness of contracts imposed on crypto but adjudicated in fiat. Of course, if you are an old school cyberpunk, you custody your own coins using a layered security approach designed and implemented by yourself. That sort of cowboy behavior is frowned upon by the SEC, so not really applicable to a public company. I would be surprised if Michael Saylor (the CEO) didn't self-custody at least some of his personal stash. Good luck getting him to talk about it though. Bitcoin is growing up. It is being integrated into the existing financial infrastructure. The beauty of Bitcoin is that you get to choose how much you interact with these new on-ramps. If you want to stick to the anarco-capitalist foundational philosophies, more power to you. Literally, you retain more power in Bitcoin than fiat. Don't expect the existing financial world to bend though. It will slot Bitcoin into the existing architecture and keep on keeping on.