Thread by @EliBenSasson

I’ll explain @saylor's game and what it means for Crypto. Not investment advice, DYOR.
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@MicroStrategy @Strategy is borrowing money, offering investors a choice between (a) getting money back (+yield), or (b) getting Strategy stock at a certain price. So, at maturity if the market stock price is high enough, investors will want (b).

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The money borrowed buys Bitcoin and puts it on Strategy balance sheet. Bitcoin goes up and everyone is happy. What’s not to like?

Questions: (1) Why do investors prefer this to buying Bitcoin? (2) What if Bitcoin goes down? (3) How do we know they hold the Bitcoin?

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Why investors may prefer this? Stocks easier to buy and hold than Bitcoin.

Tech: holding Bitcoin self-custodially is scary.

Regulatory: certain investor types (Persion funds?) can’t buy/hold Bitcoin, but they sure can hold equity in public companies.

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Everyone wants to be @saylor , so a wave of Strategy-like companies are spinning up.

Long term, it’ll end in tears: some of these companies will either default/renegotiate the loans, or go bankrupt in which case the investors end up with… Bitcoin.

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(2) What if Bitcoin goes down? Then Saylors will offer investors two hard choices: Agree to a hair-cut, or demand the loans be paid back.

But all the money is in Bitcoin so this means bankruptcy, which means investors end up with Bitcoin Is this necessarily bad for Bitcoin?
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It’s inevitable. It’s bad because many investors will lose money, and will blame Bitcoin and the whole blockchain industry for this, instead of themselves for their unbased investment decisions (go buy Bitcoin!). No because it’ll place more Bitcoin in institutional hands.

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Are the Bitcoin holdings real? This is also inevitable, unfortunately. Some of these players will claim to hold Bitcoin, but that Bitcoin will either not really exist, or be already spoken for, under other companies. This is bad and wrong, and may be illegal, but it’s as inevitable as FTX was. While cryptography can help (read this) investors don’t care, not enough to push the Saylors to use it.

coincenter.org/how-can-crypto…
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The silver lining to builders of core technology like myself? For the story of “Bitcoin Growth” to continue to have steam, investors will want to see more utility for it, more stuff it can do other than being an asset, a “digital gold”. Because if it’s only “digital gold”, why hold more of it than you hold gold itself?

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Summarizing – a wild game going on. It'll end in tears. Investors will end holding Bitcoin, good!
There’ll be scammers, Bad!

Bright side: folks will want Bitcoin to me more than Digital Gold. And that’s what I’m working on when I don’t tweet.

Back to it, THE END

@saylor All this based on what ser @liujackc , one of the smartest Bitcoin (and crypto) product folks I know, explained to me over dinner. Thx!