Meet Michael Saylor: The Man Who Bet His Company on Bitcoin
Hey everyone, John here! Welcome back to the blog where we make the exciting world of crypto and blockchain simple. Today, we’re going to talk about something really interesting that a big-name in the Bitcoin world, Michael Saylor, recently said.
Imagine you save up your pocket money to buy a little bit of Bitcoin. Maybe you buy $20 worth, or even $100. It feels like a big deal, right? Well, what if I told you some companies are buying billions of dollars worth? It sounds wild, but it’s happening! Michael Saylor and his company are famous for doing just that, and he just explained the simple, yet powerful, strategy they use. Let’s dive in and break it down together.
So, Who is Michael Saylor and What’s a “Bitcoin Treasury”?
First things first, let’s talk about the man himself. Michael Saylor is the co-founder of a company called MicroStrategy. For a long time, it was just a regular, successful software company. But a few years ago, Saylor made a huge decision. He decided that instead of keeping his company’s extra cash sitting in a bank account, he would use it to buy Bitcoin. A lot of it.
This turned MicroStrategy into what people now call a “Bitcoin Treasury Company.”
Lila: “Hang on, John. A ‘treasury’? That sounds like something from a pirate movie with a chest full of gold coins. Is that what it is?”
That’s a great way to think about it, Lila! In the world of business, a company’s treasury is basically its savings account or its pot of extra money. It’s the cash they’re not using for day-to-day operations. So, a “Bitcoin Treasury Company” is simply a company that has decided to hold its savings in Bitcoin instead of traditional money like U.S. dollars. They believe Bitcoin is a better way to store their wealth for the long term, just like ancient kings might have stored their wealth in gold.
The Secret Sauce: How Companies Buy Bitcoin So Fast
At a recent conference called BTC Prague, Michael Saylor revealed the core of his strategy. He said that companies like his can grow and buy Bitcoin as fast as they can “issue credit and equity.” Now, that sounds like a bunch of complicated business jargon, but the idea behind it is surprisingly simple. Let’s break down those two key parts.
Part 1: Using “Credit” to Buy Bitcoin
When Saylor says “issue credit,” he’s really just using a fancy term for borrowing money. It’s the same thing you do when you get a loan from a bank to buy a car or a house.
Think of it like this: Imagine you want to buy a huge, expensive LEGO castle that costs $500. You could save $20 from your allowance every week, but it would take you 25 weeks to get it! That’s a long time to wait.
But what if your parents offered you a deal? They could lend you the $500 right now so you can buy the LEGO castle today. In return, you agree to pay them back the $20 every week from your allowance. You get the castle immediately! Companies do this on a massive scale. They borrow millions or even billions of dollars, and then use that giant pile of cash to buy a huge amount of Bitcoin all at once.
Part 2: Using “Equity” to Get Cash
This next part, “issuing equity,” is a little different, but it’s another powerful tool big companies have.
Lila: “Okay, I get the borrowing part. But what on earth is ‘issuing equity’? Does it have anything to do with equality?”
Great question, Lila! While the words sound similar, they mean different things here. “Issuing equity” means selling tiny little slices of the company to investors. These slices are called shares or stock. In return for buying a slice, investors give the company cash.
Let’s go back to your business ambitions. Imagine you start a lemonade stand. It’s doing okay, but you want to expand. You need money for a bigger sign, more lemons, and a better blender. So, you go to your friends and say, “My lemonade stand is a business. If you give me $10 right now, I’ll give you a small piece of ownership in my stand. From now on, you’ll get a tiny bit of the profit from every cup I sell.”
Your friends who agree are now investors. You get the cash you need immediately to grow your stand, and they get to own a piece of it. MicroStrategy does the exact same thing, just on a much bigger scale. They sell new shares of their company to big investors, raise hundreds of millions of dollars, and then—you guessed it—use that money to buy more Bitcoin.
The “Borrow, Buy, and Grow” Cycle
When you put these two ideas together, you get a powerful cycle that allows a company to accumulate Bitcoin very, very quickly. It works something like this:
- Step 1: The Decision. A company like MicroStrategy decides that Bitcoin is a great asset and wants to hold it as its primary savings.
- Step 2: Raise a Ton of Cash. The company borrows money (issues credit) and/or sells small pieces of itself to investors (issues equity). Suddenly, it has a huge pile of cash ready to go.
- Step 3: Buy Bitcoin. The company uses all that cash to buy a massive amount of Bitcoin. This instantly increases the size of its Bitcoin treasury.
- Step 4: The Value Potentially Grows. This is the key part of the bet. The company believes that over time, the price of Bitcoin will go up. If it does, the value of all the Bitcoin they’re holding increases, which makes the company itself more valuable.
- Step 5: Repeat the Cycle. Because the company is now more valuable and has a proven track record, it’s often easier for it to borrow even more money or sell more shares at a better price. This gives them the power to go back to Step 2 and repeat the whole process, buying even more Bitcoin.
Lila: “Wow, that sounds like a super-powered money loop! But it feels a little… risky? What happens if the price of Bitcoin goes down instead of up?”
You’ve hit on the most important point, Lila. This is absolutely a high-risk, high-reward strategy. If the price of Bitcoin falls significantly, the company’s investment shrinks, but they still have to pay back all the money they borrowed. It’s a massive bet on the future success of Bitcoin. Michael Saylor is very public about his belief that Bitcoin will be worth much more in the future, which is why he’s comfortable taking on this risk.
What Does This Mean for the Rest of Us?
It’s easy to hear this and think, “Okay, cool for big companies, but what does this have to do with me?” Well, it actually has a few interesting implications for everyone.
On one hand, when huge, publicly traded companies like MicroStrategy invest billions in Bitcoin, it sends a powerful message. It tells the rest of the financial world that Bitcoin is being taken seriously as a legitimate asset. This can build trust and could potentially lead to more stability and growth in Bitcoin’s value over the long run.
On the other hand, it highlights the immense power that corporations have to accumulate assets compared to regular individuals. It’s a reminder that the world of high finance operates on a completely different level. While they are playing with billions, most of us are just trying to stack a few satoshis (the smallest unit of a Bitcoin) at a time.
A Few Thoughts from John and Lila
John’s Perspective: I find this strategy absolutely fascinating. It’s a perfect example of the old world of corporate finance—borrowing money and selling shares—colliding with the new, disruptive world of Bitcoin. It’s a bold, aggressive move, and it really forces everyone to pay attention. Only time will tell if this bet pays off for them, but it’s certainly changing the game.
Lila’s Perspective: I finally get it now! It’s like these companies found a cheat code in a video game that lets them get way more coins than other players. Hearing you explain “credit” and “equity” makes it so much less intimidating. It’s a bit mind-boggling to think about borrowing money to buy crypto, but it makes sense why they’re able to grow their stash so quickly!
This article is based on the following original source, summarized from the author’s perspective:
Saylor says BTC Treasury companies can grow as fast as they
can issue credit and buy Bitcoin