MicroStrategy has purchased an additional X bitcoins for Y amount of cash at an average price of Z per #bitcoin. As of 2/30/2021, we #hodl a lot of irreversibly KYC’d bitcoins acquired for BRRRR billion dollars at an average price of said BRRRR divided by the number of irreversibly KYC’d bitcoins per bitcoin. $MSTR
Sounds familiar? This is the tune that mesmerized the Bitcoin community and the price of bitcoin alike. And since August 2020, a new verse gets added to the already-familiar chorus almost every month.
This tune, along with a flawless apprehension of Bitcoin memes and culture, has made fellow bitcoiners write hymns and praises about Michael Saylor’s mightiness, leadership, and strong hands. Now he is everyone’s favorite Giga Chad, he gets quoted for telling Laura Shin that the price is going up forever, and almost everyone seems to be happy about his new leadership position among Bitcoin-investing CEOs.
Some say that Michael Saylor “gets it”, others already assume that he wants to be remembered as the greatest corporate CEO of all time and the man who accelerated hyperbitcoinization. There are even hive mind individuals (see the paradox there?) and cyber hornets who cheerfully propagate his message across all channels, while expressing hope that MicroStrategy would buy more bitcoins to pump the price beyond a certain resistance point.
People who otherwise would have never been interested in the work that MicroStrategy does are now buying stocks. And as of April 7th 2021, the price is five times higher than it was before Michael Saylor has announced the purchase of the first bitcoins. It looks like a win-win all across the board and it’s likely that more companies are noticing the rejuvenation in stock interest.
Yet I can’t help but feel skeptical. And I’m not only worried about the fungibility of bitcoin as a currency, but I also feel concerned about the damage that Michael Saylor can cause if he ever becomes evil (either through his own will or by virtue of a psy-op).
After all, we’re not dealing with a regular business man: Michael Saylor is the co-founder and CEO of MicroStrategy. And MicroStrategy is an intelligence company which operates within the legal boundaries of the United States of America, regularly works with the US Federal Government, and makes all of its money helping contractors gather data and process it. In a situation like this, assuming good faith and work in the best interests of Bitcoin is naive at best.
But now let’s break down the two entities and identify how and why they can become Bitcoin villains. I’m not only doing it for the sake of my own critical spirit, but to also help others understand the magnitude of this potential threat. I haven’t worked in intelligence, but in Hollywood films intel guys usually quote Sun Tzu’s hundred battles probability game before proceeding to tap their keyboards frantically. So please allow me to do the same.
How & Why MicroStrategy Can Become A Bitcoin Villain
Just so you don’t think that this whole piece is the mark of a vendetta against Michael Saylor the man, I’m going to talk about MicroStrategy first. After all, it’s the corporation that owns the nearly 100.000 BTC (I lost count, but I’m pretty sure they’re getting close) and the CEO can get replaced by the board of directors. You know, when the Pepsi guy shows up and steadily replaces the co-founder by virtue of his Cola Wars tactics. Oh wait, that wasn’t Micro… never mind.
I’m not going to say that MicroStrategy can sell the bitcoins to dump the price, because that’s the lowest hanging fruit and I’m usually dissatisfied with cheap attacks. It’s not the fact that MicroStrategy can sell the bitcoins that worries me, but how it’s going to HODL/sell them.
You see, bitcoin as a currency is not very fungible. Not only that you can use blockchain analysis to track the origins of BTC amounts, but you can also trace the origins of coins to the block when they were first minted. Yes, it’s true that CoinJoins can help add an extra layer of bamboozling and plausible deniability – and I’m a big fan of Wasabi Wallet’s research in privacy advocacy and mixing research. And yes, the coins get divided in subunits shortly after being sent as coinbase rewards, so tracing every UTXO to its origins can be a lot of work.
But let’s get back on track: every bitcoin that MicroStrategy acquires in its portfolio gets added to their balance sheet. It gets acquired via contracts and it can only be sold through legal means which involve contracts. As a publicly-traded company which operates under the laws of the United States of America, MicroStrategy must be absolutely transparent about the bitcoins that it owns. And it’s not like they can engage in blockchain-obfuscation and other privacy developments that may come along the way.
So the bitcoins that MicroStrategy (and every publicly-traded company, for that matter) owns are forever tainted. The more they buy, the less fungible bitcoin becomes as a currency. As the number of “wild” and “untainted” BTC lowers, it’s going to become a lot easier to track and identify the transactions that happen on what the US Federal Reserve calls “hosted wallets“. This way, bitcoin will truly become digital gold – in the sense that gold bars will get registered with a stamp which, unlike its metallic counterpart, cannot be physically-melted, obfuscated, or concealed.
MicroStrategy doesn’t have to sell to crash the price of bitcoin to become a villain. All the company has to do is keep on doing what it already does and irreversibly destroy the fungibility of BTC. It’s not like these coins will ever get in the hands of plebs, they will always get transacted via contracts and institutional settlements which clearly identify the public blockchain UTXOs.
If more publicly-traded companies follow the example of MicroStrategy and add lots of bitcoins to their portfolio, then they’re essentially fulfilling the regulatory desires of the US Government. I’ve previously written about it in this article and I’m going to say it for as long as I’m still allowed to express my opinions without third party constraints.
MicroStrategy can also work directly with the Federal Government and provide blockchain analysis tools. They won’t be as detailed as the ones that exchanges like Coinbase provide (they hired the former Hacking Team to track all the incoming and outgoing transactions, for Satoshi’s sake!), but their analysis tools might come in handy for some specific tasks. It’s not like MicroStrategy is a stranger to contracted work for the Department of State and the Department of the Army.
TLDR: MicroStrategy is helping the US Government regulate bitcoin as a currency. And it’s not that I have something against the US Government (I’m an avid reader of James Madison’s and Thomas Jefferson’s works, I love capitalism and free markets, I come from a country which used to be communist until 1989 and I dislike the rise of Russia and China). But I want my currency of choice to be as fungible as cash (I’m also an avid reader of George Orwell’s books).
Michael Saylor would probably disagree here and say that bitcoin is not a currency. So let’s see how he can also become a villain.
But before that, here’s a word from our sponsor: FUNGIBILITY SAYS DON’T SELL YOUR BITCOINS TO BIG EXCHANGES THAT WILL AFTERWARDS SELL TO MICROSTRATEGY. DON’T KEEP THEM ON LENDING SERVICES EITHER, AS YOU’RE HELPING SHORT SELLERS SUPRESS THE PRICE FOR A MEASLY RETURN. BE SOVEREIGN FFS.
How & Why Michael Saylor Can Become A Bitcoin Villain
For a moment, let’s forget that we’re talking about Michael Saylor and bitcoin. Let’s say that you’re in high school, sophomore year. You’ve spent many years training to join the basketball team and become the shooting guard which leads it to state championship. Then a new kid arrives to your school, pays for gym renovations, buys the entire team some new cool jerseys, and never misses a chance to show off how cool he is.
He effectively bought his seat at the table and he’s going to be in the team – and it’s not like he’s terrible or isn’t talented enough to have earned it in time. Heck, this guy has even learned your friends’ jargon and uses the exact same memes to express teenage angst. It’s very hard to hate him, as he’s objectively helped everyone, he brings more visibility to the highlights of your high school basketball team, and makes the state championship goal seem a lot more tangible.
On one hand, it’s like you’ve been waiting for him all along. On the other hand, you feel skeptical due to the means through which he has earned his spot in the team and you know that his influence far exceeds yours and he can easily manipulate other people’s opinions and attitudes.
This is a metaphor about how I feel about Michael Saylor – while I appreciate his efforts, I’m not convinced about his genuine intentions. He’s gained a huge social media following over the months, he has definitely learned how to use the community’s language and memes to effectively appeal to both mainstream and hardcore Bitcoin audiences, and I’m afraid that this can all be used to launch social attacks.
There are two scenarios through which Michael Saylor can become evil: one which he influences the “hive mind” directly, and one which is a lot more sophisticated and only requires his participation via proxies. For a man of his intellect, I reckon that the first scenario is highly unlikely – unless he, as a US citizen and CEO of an American publicly-traded company, gets coerced to act in bad faith.
Michael Saylor doesn’t have to try to launch a 51% attack on the Bitcoin network or try to change the consensus rules to become a villain. All he must do is launch social attacks against certain developments and make use of his influence to convince both community members who run sovereign nodes and developers to boycott various proposals.
So what he can do is advocate for the preservation of the current state of Bitcoin, discourage people from using privacy tools, and buy himself and his corporate friends enough time to load up on BTC until privacy efforts become more or less futile. After all, these companies need bitcoins to escape inflation and taxation for multiple years – while the average pleb only wants a nicer house and the kind of car which turns heads.
Bitcoin has a long story of “slaying” heroes and it includes A-listers like Gavin Andresen, Mike Hearn, Jeff Garzik, Roger Ver, and Trace Mayer. It’s likely that Michael Saylor has learned from their mistakes and won’t conduct himself in a way which raises similar suspicions. Which I why I suspect that he may use proxies (other CEOs who buy large amounts of bitcoin and don’t care about their reputation within the community, sockpuppet accounts, and/or developers who act in bad faith).
My reading of Saylor is that he doesn’t like privacy – but then again, as the CEO of a publicly-traded American corporation, he can’t directly express his love for Wasabi, JoinMarket, and Pay to End-Point. Still, as the CEO of the same publicly-traded American corporation, he will pursue the best interests of his investment plan, project his understanding of bitcoin, and conduct himself according to the will of his shareholders. So acting against BTC privacy is not far-fetched, since more fungibility is not necessarily compatible with the views that Saylor expresses during interviews.
The ultimate test of character and conviction for a bitcoiner is the bear market. That’s when we can truly tell the LARPers and selfish marketers apart from the ones who truly care about the project. In the case of Mr. Saylor, I’d love to see the way he acts when the winds are blowing hard in the opposite direction and his ship is no longer reaching the planned destination on time.
Part of me wishes that the “hive mind” was more concerned with the qualities of bitcoin as a currency than with the opinions of a CEO who speaks in popular memes. But then again, who am I to judge? I chucked during the “it’s going up forever, Laura” moments and had some of my own moments when I thought he was one of us. Yet I remain vigilant and skeptical – I didn’t join this space because I enjoy feeling the warm comfort of conformity and like-mindedness, but because I’m a critical person who likes to ask questions.
So I’ll keep an eye out and use this article as a reference point which tracks Michael Saylor’s and MicroStrategy’s evolution over time. And yes, I’ve avoided the other low-hanging fruit about price manipulation (as in, Michael Saylor posts tweet about buying more BTC, and the price pumps with incredible precision). I’m more concerned about bitcoin as a currency than about the price. And part of me was feeling happier when we were trying hard to break $9k with Vegeta memes.
But to quote another meme, “this is gentlemen” – we’ve wanted more bitcoin adoption and we’re getting it in ways that we wished would happen last. Sadly, it wasn’t the regular people who got in first. After being scared by mainstream media, they have waited for the legitimation of “trusted” institutions. MicroStrategy is just the beginning or the institutionalization of bitcoin, whether we like it or not.
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