“It’s mostly paranoid crypto anarchists that say that.”

With these eight words, issued on the “Markets with Madison” podcast, Microstrategy CEO Michael Saylor evoked outrage from just about everyone in Bitcoin. 

Shinobi called him a “spook.” Carvalho was confused. Svetski claimed this will start the next Fork Wars.

Put simply, Saylor said a bad thing. He broke the taboo. He said you’re better off trusting your Bitcoin in state custody than holding your own private keys, then went further, calling out all of the businesses engaged in custody projects by calling them effectively bullshit salesmen.

It was, shall we say, a “big oof,” a “footgun,” the scene in the cartoon where the hero gets hit with an anvil. 

Here’s Adam Simecka’s clip from the full video:

Saylor thinks you are a paranoid crypto anarchist if you hold your own keys and don't trust the government. 😏 pic.twitter.com/6owj7LzrdM

— Adam Simecka (@AdamSimecka) October 20, 2024

Yet, paradoxically, I’ll admit, it’s probably the most interesting thing Saylor has ever said?

For years, Saylor and the Cyber Hornets have been “Grut and the Minions,” Saylor using his pulpit to spout whatever bullish nonsense was in vogue, without adding anything of his own.

Other people said things, and then Saylor said them again. He was the “people’s champion,” a “man of plebs,” a role that even his mundane AI generated tweets seemed to underscore in tagging the artists, invariably some random pseudonym.

So, anger aside, I have to say, at this time, I’m undecided. Sure, as someone who lived through the Fork Wars, I find Svetski’s position romantic (It’s nice to think we’re in the midst of some larger struggle), but it’s perhaps too early to cry wolf.

Instead, I find myself (for once) actually trying to understand what Saylor is saying.

As far as I can tell, there’s really three ideas at play here:

1. This is a new thesis for how to boost Bitcoin adoption using public markets – Saylor is framing the self-custody question as not an issue to solve with innovation, but an issue to ameliorate. His view: It doesn’t matter how people own Bitcoin, only that they do. His preferred vehicle for this is the stock market, and he seems to want to co-opt it as a massive vehicle for buying Bitcoin and selling the exposure.
2. This thesis actually might solve the problem of how to fight the crypto market – This is also one of the more compelling things about Bitcoin “Season 2,” the idea you could “co-opt the crypto apparatus” as a means of getting retail involved. Here, Saylor seems to want to marshal his army of Bitcoin stocks for the purpose, his view retail will begin purchasing Microstrategy and Metaplanet, in lieu of memecoins, chasing as they always do, beta on Bitcoin.
3. It’s a novel thesis on convincing government to adopt Bitcoin – A world where Bitcoin is the reserve asset for regulated entities seems like one in which draconian laws become less viable. After all, in this world, Bitcoin would have a direct link to the U.S. economy (at least the version most politicians care about). You have to admit: “You can’t ban Bitcoin, it will hurt the stock market,” has a nice ring.

Of course, maybe the commentators are right. Saylor’s incentives seem to be departing from the network. Maybe he is placing his company and its quest to amass Bitcoin above all else, and it’s worth questioning his motives at this moment.

Some argue self-custody, if nothing else, is the core of Bitcoin, the fact that you can trust no one but yourself to hold and safeguard your wealth.

Then again, in Saylor’s view, inflation is the true boogeyman, the debasement of purchasing power, the far bigger issue.

Is it possible this is a giant government psy-op, that Saylor flew too close to the sun, and there are an army of regulators who are twisting his arm to say this? 

Sure, Microstrategy does work with intelligence agencies, but even then, intelligence agencies and their pension funds need somewhere to invest. A hyperbitcoinized world is surely one where these funds will also buy Bitcoin.

But I have to say, as someone who has never found Saylor very interesting… for now, I’m at least paying attention. 

I’ll start there.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Last week, Ulrich Bindseil and Jürgen Schaaf of the European Central Bank (ECB) published a paper entitled “The distributional consequences of Bitcoin” in which they made a host of dubious claims about Bitcoin.

The notions that those who are late to investing in bitcoin are impoverished by those who were early to investing in it and that Bitcoin has failed as a payments technology are the authors’ central arguments.

Bitcoin analyst Tuur Demeester sounded the alarm about the report on X.

1/ This new paper is a true declaration of war: the ECB claims that early #bitcoin adopters steal economic value from latecomers. I strongly believe authorities will use this luddite argument to enact harsh taxes or bans. Check 🧵 for why: pic.twitter.com/qg31YenTSC

— Tuur Demeester (@TuurDemeester) October 19, 2024

As a former academic, I was appalled at how lazy the arguments in this paper were. Hence, I’ve taken the time to push back on some of them.

• The main premise of the paper is that if bitcoin’s price continues to rise, early bitcoin investors — the “early birds” (the authors’ term) — will gain wealth at the expense of the “latecomers.” While this is true if the early birds hold all of their coins to no end, the dynamic is no different with any other publicly-traded asset. The bigger point that the researchers miss, though, is that some of us are both “early birds” and “latecomers.” I first bought bitcoin in January 2018, and I also bought some last week. Did I impoverish myself in this scenario? No, I didn’t. Nor has anyone who has dollar-cost averaged into bitcoin over any period of time. Also, I bought some gold earlier this year. After doing so, I didn’t shake my fist at the sky yelling “Damn all of you who have front run me to gold over the last 5,000 years!” I simply made the purchase in efforts to preserve my wealth in a highly inflationary environment — one that the ECB itself is partially responsible for causing — and went about my day.

• One of the other primary arguments in the paper is that Bitcoin has failed as a payment technology. In making this claim, the authors fail to even mention the Lightning Network, a layer built on top of Bitcoin that enables fast, cheap bitcoin payments. In recent years, the Lightning Network has grown exponentially. From August 2021 to August 2023, the network grew by 1212% — which occurred mostly during a bitcoin bear market. Major players from the world of traditional payments are building on Lightning, as well. A prominent example of this is David Marcus, former President of PayPal, who is the current CEO of Lightspark, which is building enterprise-ready payments infrastructure via the Lightning Network. Beyond Lightning, Bitcoin is still quite young and will likely need to be more fully monetized (less volatile in fiat money terms) before people begin using it more frequently using it as money.

• Throughout the piece, the authors bring up how bitcoin and other cryptocurrencies are the preferred currencies of criminals and bad actors worldwide. While there’s little evidence that proves this to be the case, as methodology of Chainanalysis — the blockchain analysis firm often employed to look into crypto and criminal activity — is questionable at best. Terrorist organizations like Hamas have stopped relying on crypto donations because of their traceability. With that said, TD Bank was just fined $3 billion for enabling money laundering, while Wells Fargo is currently in the crosshairs of regulators for doing the same. And data shows that criminals prefer cash above all else when committing crimes. Lastly, I made two purchases last week with bitcoin and I can assure you that neither were illegal. And I’m not the only one who recently made perfectly legal purchases with bitcoin.

$900 million in non-crypto (fiat currency) money laundering vs $900,000 in crypto money laundering.

Crypto is clearly not the problem. Criminals and bad actors are.

It would be a historic mistake to crush an entire emerging industry based on incorrect data. https://t.co/TEFEdvGG0o

— Senator Cynthia Lummis (@SenLummis) January 23, 2024

• The authors also make the claim Bitcoin is a threat to democracy because crypto PACs now donate to politicians. The presupposes that every other lobbying group out there isn’t a threat to democracy, which is laughable. What the authors also missed is that bitcoin is often a money of last resort for pro-democracy activists who’ve been debanked by authoritarian regimes. One of the first moves in the modern dictator’s playbook is to cut dissidents off from the traditional financial system. In these cases, pro-democracy activists have to rely on bitcoin and other cryptocurrencies. Alexei Navalny, Vladimir Putin’s former opposition, popularized using cryptocurrencies for donations when the Putin regime limited its access to traditional financial rails.

• The authors also suggest that central banks can just tighten monetary policy to counteract the “bubble” forming in bitcoin’s price. The last two years have proven that this isn’t true, as rates are just about the highest they’ve been in over a decade and a half, yet bitcoin’s price is still on the verge of approaching an all-time high in US dollar terms. Plus, tightening from the US Federal Reserve, the central bank of the US, led to the collapse of Silicon Valley Bank (SVB) as well as other banks in 2023, highlighting the fact that tightening makes the traditional financial system more fragile. This only makes a stronger case for people to store their wealth outside of the traditional system in an asset like bitcoin.

Beyond these points, the tone of this paper from the ECB is paternalistic in that it suggests that all retail investors are incapable of learning more about how markets work and why Bitcoin is important.

Toward the end of the report, Bindseil and Schaaf cite a source that claims that “unsophisticated investors are drawn into the market” as the bitcoin bubble grows, seemingly suggesting that everyone one of these retail investors only buys at the top and sells toward the bottom of a drawdown.

I was once one of those unsophisticated retail investors, and while I first bought bitcoin near its 2017 top, I also bought it on dozens of other occasions, including when its price dipped to local lows in 2018 and 2020. I did so because in studying Bitcoin and learning what problems it solves I came to place more faith in it than I did in the traditional monetary and financial systems.

There are many others like me, and I’d imagine that they too take offense to the ECB’s diminishing their intellectual capabilities and writing deeply biased reports that misrepresent what Bitcoin is and the reasons why people invest in and adopt it.