The full video is even worse.
He correctly explains that proof of assets does not show proof of liabilities.
True, but so what?
We know you have debt, you have to to buy the Bitcoin and debt is a liability, you're not going to willingly lie about this.
You can, like FTX lie about holding Bitcoin.
Same argument as OP_RETURN, the answer is not perfect, so we're not going to give it.
Yes, give me an imperfect answer. I understand it's imperfect.
Well, if I am being kind to Mr Saylor, and I am inclined to as I have benefited from trading Strategy shares, I could see that publishing the Strategy Bitcoin wallet addresses might be disadvantageous in the short-term should the company wanted to hedge their positions and/or prevent any front running. That said, Metaplanet seems to be doing a pretty good job emulating Strategy and they don't have a problem publishing their wallet addresses.
Translation (the imperfect answer): "Strategy doesn't custody the coins. I deposited them with Coinbase (aka, I loaned them to Coinbase). So, there's no address or addresses to publish that represent only Strategy's coins. I just don't want to come out and acknowledge this explicitly."
Yes: Strategy could demand that Coinbase keep their coins separated into their own address(es); so that they may be published/verified. Though, Coinbase has been doing this a long time. They may not necessarily be inclined to restructure their operations to appease Strategy.
A while back, Blackrock proposed a change to their iBit contract with Coinbase so that they could make Coinbase prove reserves (I don't remember what/if there was a resolution to this proposal). Interestingly, instead of simply asking for proof via an address or addresses, what they asked for was essentially the ability to make a full withdrawal on demand (within like 24 hours, I think) - likely because Blackrock knew that Coinbase didn't necessarily keep the iBit account's coins separate from everyone else's. To me, this would provide little comfort at best to iBit holders - but at least Blackrock appears to want to keep Coinbase accountable to them, FWIW.
Think there is surely counterparty risk with all outsourced custody solutions, but I thought his full answer was good. You don’t know for sure whether he has them at CB, Fidelity or self-custody. He explained why he doesn’t want you to know and that he’s only the hook civilly and criminally if he’s lying.
If you don’t want counterparty risk, don’t buy MSTR. But if you buy MSTR, he’s saying you have to trust those incentives.
Yes, I watched the full seven minutes.
For me, Bitcoin proof of reserves is easy and a no brainer. Just because it doesn't answer lots of other questions that require trust and have liabilities with false disclosure doesn't prevent you doing the one 100% provable thing.
And yes, I know the coins are held in Coinbase, and not necessarily segregated from other clients coins, so Strategy can't actually do this anyway.
What if they have them in self-custody, and he doesn’t want people to know that?
Also, the liabiliities part was a bit of a different point, which was that even if you could somehow point to the addresses, you would STILL have to trust MSTR not to screw you. So if you don’t trust because no proof of reserves, then why trust even with proof of reserves without proof of liabiliites?
Basically, if you’re gonna invest in MSTR (which might or might not work out), you’re stuck trusting the incentives of the people running the company.
They self custody 😱 😂
We're using the word "trust" here an awful lot.
Not sure why anyone would store his coins in a publicly traded company and not think there would be trust involved. No one is forcing you to do so.
And IF they self-custodied (not saying they are, I have no idea), you would surely not want the public to know it.
I think we have different opinions, but I totally respect yours.
It would be respectable to offer shares buyback for BTC. A way to back up his claims by an action.
That could cause a bankrun on Strategy's BTC 😂
Yes! But that is the point. If he really owns the coins, the bank run cannot result in insolvency. Making the gesture would increase trust.
So people could eventually get self custody once they learn how to do it. HODL would get less centralized. Everyone benefits.
thinking out loud here:
do Berkshire Hathaway investors ask to see bank info for the 300 billion USD on their balance sheet?
Do Apple investors worry about TIm Cook not promising for share buybacks? how much of the value in the stock can't actually be redeemed by USD on the balance sheet.
so if Michael is refusing to do buybacks, the only thing he wants to do is invest in his own business similar to a growth tech company. I interpret that as he is not competing with ETP products.
Agreed, normies companies you trust and your trusted source are auditors and regulators.
But Bitcoin is different while self custody Bitcoin is verified, not trusted.
Bitcoin companies like Xapo bank or Strategy are hybrid models, most of their business is still based on trust, but the Bitcoin part is the bridge to a new paradigm.
Don't trust, verify.
At least the Bitcoin holdings should follow the Bitcoin philosophy.
i also don't hear Tesla investors talking about this, but they do have a lot more data about new cars in parking lots, millions of drivers proving out FSD, etc.
so if Balance sheet is what Strategy does, it does seem logical to have some way for investors to measure it
maybe it's ENron! i'm cooked just like my grandparents were in that case
You must be new to bitcoin. "Trust me, bro" is not how we do it. And I couldn't care less how tradfi does it.
not new to bitcoin per se, but i'm new to diversifying into GameStop & Metaplanet, or Enron 2 & 3.
idk, maybe there's a genetic propensity to trusting in founder-led ponzi schemes. if my grandparents tried to increase their share of people's time on this earth by buying the original Enron (futures on future energy production), then there's nothing i can do but surrender to the fate of future scorn of bitcoiner snowbirds in their Naples mansions as i settle into a Sarasota mobile home.
i definitely think the highest IQ way to do bitcoin is everything in cold storage.
but maybe i can get even more than my fair share (and give away 10% of course). isn't this more helpful than if i just converted my saved time into bitcoin?
Insurance is still a valid business. so i'm investing in the future of insurance. maybe after hyperbitcoinization we won't need insurance as abundance mean that medical care costs go to almost zero and engineering stuff will get better so fewer accidents.
i see Strategy as an insurance play (biggest stack of collateral)
GME as a hedgefund with a horde of retail investors (as opposed to wealthy interests)
MetaPlanet is geographical diversification with incredibly intelligent leadership
I also think these will become new power brokers in a multi-polar, decentralized world. giving them bitcoin is like voting for the leader of my pack.
maybe that's why establishing podcasts nowadays is so popular, because getting one's brand out there is how to amass power and influence. it used to be priests/politics.
nuns don't appear to get the respect that priests do. i want the ego of a nun
MSTR is different in the sense that it is a kind of club with explicit purpose to hold BTC and short fiat. Isn't its whole half of the balance sheet BTC? If I was part of that club, I would want to see the coins are there. It is not like other companies where the purpose is to have a profitable economic activity.
Yeah, it does make sense. this could be low hanging fruit for the new MSTR competitors to establish public addresses.
"Like MSTR but with proof-of-reserves"
this is what has my wheels spinning more than the proof of reserves:
what is this ATM thing he is talking about?
so the idea used to be:
short fiat long bitcoin --> borrow convertible debt at lower interest rates than what individual investors can
it was understandable for someone who wanted to short the fiat system and didn't mind the volatility
however now they have made a sort of Rube Goldberg machine with STRF and STRK preferred shares. the 10 and 8 % dividends of the preferred shares are always paid out by selling shares of MSTR into the market.
it should be no problem since the price of the underlying bitcoin collateral should grow much faster than the 10% and 8% fiat dividends. and they are well over-collateralized (5 to 1).
the MSTR shareholders are betting that the price of bitcoin will rise much quicker than the 10 and 8% dividends, plus the Bitcoin bought by the STRF and STRK shareholders grows faster than the dividends and increases MSTR shareholders Bitcoin per share.
the worry is that sentiment drives MNAV right now and not any underlying business model.
interesting
Aren't there better ways to prove things, using stuff like zkp's, without revealing addresses? Yes there are. Michael should ask chatGPT about those
💯 😂
This is how worlds collide. In normal suit world, proof means an independent audit with legally enforceable representations and very expensive consquences for lying. He's doing these things. Now that he could use cryptography to better prove it doesnt matter. Really the only people that seem to give a shit about Saylor's answer are people that either dont have MSTR or lie about having MSTR and their hotheaded feelings about it don't matter to him, at least not to him. The gold ETF's don't let people into their cages to look at the gold or melt it down and assay it themselves, owners rely on the rule of law; that we can do otherwise with this new asset is a new thing the world is calibrating around. This rant is going no where but it's such a waste of time and I've now wasted mine. I just think if you dont trust the product you don't buy it and if MSTR has to change to get market share they will.
This is not the same story for retail purchasers through strike or river. Strike should be getting a lot more heat for not having proof of reserves yet then MSTR should.
Good summary John. Agree 💯
Also, you mentioning gold ETFs reminded me!
What happened to Elon and Trump's visit to Fort Knox?
Now, stop wasting your precious cruise time and get back in that hot tub and make sure you're not late for the theatre tonight.
My son is running the show there is no vacation only son. He is the master and captain of this ship.
As it should be 🫡
