Michael Saylor's latest theory: Bitcoin is not money, it's digital capital

Original title: Bitcoin, Digital Credit, and Digital Money
Original by Michael Saylor, founder of Strategy
Original language: Deep tide TechFlow

Deep tide guidesThe micro-strategy founder, Saylor, threw out a set of "digital asset stacks" to put bitcoin at the bottom of the digital capital, and went up into digital credit, digital currency, digital returns and digital equity five layers。

THE CORE PROPOSITION IS THAT BITCOIN ITSELF DOES NOT NEED COLLATERAL, DOES NOT NEED INFLATION, DOES NOT NEED TO CHANGE THE AGREEMENT, AND GAINS ARE CREATED BY THE UPPER CAPITAL STRUCTURE. IT'S THE THEORETICAL FRAMEWORK HE'S BEEN LOOKING FOR FOR FOR THE STRC, MSTR, AND IT'S ALSO A POSITIVE RESPONSE TO THE DEBATE ABOUT WHETHER "STABILIZED COINS SHOULD PAY OFF" AND "WHETHER BITCOIN SHOULD LEARN TO USE THE UTENSILS"。

Modern digital asset stacks

Bitcoin is digital capital。

This is the foundation of the entire modern digital economy。

Bitcoin is scarce, globally circulating, mobile, programmable, severable, auditable and accessible to anyone who can network. It is not issued by the Government, is not controlled by companies, has no tenants, no maintenance costs, no borders, no physical address, no board of directors and no central bank can dilute it。

It is the base of digital values。

But capital itself is only the starting point。

THE NEXT PHASE OF BITCOIN IS NOT JUST HOLDING BTC, BUT PUTTING TOGETHER A WHOLE SET OF DIGITAL CAPITAL OVER THE BTC: DIGITAL CAPITAL, DIGITAL CREDIT, DIGITAL CURRENCY, DIGITAL RETURNS, DIGITAL EQUITY。

That is how Bitcoin grew from a single asset to a global financial architecture。

Bitcoin orbitcoin. The world builds on it。

There are five layers of this stack

Modern digital assets are stacked in five layers。

THE FIRST LEVEL, DIGITAL CAPITAL, IS THE BTC, THE PURE, SCARCE, HIGH-ENERGY CAPITAL ASSET。

THE SECOND TIER, DIGITAL CREDIT, LIKE STRC, IS A PRODUCT-TYPE TOOL BACKED BY BITCOIN, DESIGNED TO CONTAIN FLUCTUATIONS AND GIVE RETURNS。

Third tier, digital currency, instruments to stabilize value and make a living. It anchors in United States dollars, which may be in the form of tokens, funds, priority securities, accounts or other seals, with a combination of digital credit plus French currency cash equivalents。

Fourth tier, digital gain, leverage or structured gain product. To investors willing to take on more risks, leverage, volatility or liquidity。

FIFTH FLOOR, DIGITAL EQUITY, RESIDUAL SHARES SIMILAR TO MSTR. IT IS A SUB-SOLDIER THAT ABSORBS FLUCTUATIONS, SUPPORTS THE ENTIRE CREDIT STRUCTURE AND REMOVES THE REMAINING UPSIDE GAINS。

This is not a change of protocol, it is not a pledge, it is not currency inflation, and it is not another new token that pretends to be bitcoin. This is the capital market built on bitcoin。

FIRST TIER DIGITAL CAPITAL: BTC

AT THE BOTTOM OF THE STACK IS THE BTC。

BTC, WHICH IS EQUIVALENT TO DIGITAL GOLD, LANDMARK PROPERTIES AND SOVEREIGN RESERVE ASSETS, IS MORE LIQUID, SEVERABLE, SCARCE AND GLOBAL SETTLEMENT CAPACITY. IT'S THE MOST ENERGYFUL ASSET IN THE SYSTEM。

High energy causes volatility. Bitcoin is highly volatile because it is purely digital capital: scarce, mobile, global, round-the-clock. This volatility is not a flaw, but a raw material for building digital capital markets。

BUT NOT EVERY INVESTOR CAN TAKE THE BTC DIRECTLY. FAMILY OFFICES WANT CAPITAL ADDED, BUSINESSES WANT TREASURY RESERVES, BANKS WANT COLLATERAL, INSURANCE COMPANIES WANT RETURNS, RETIREES WANT INTEREST, PAYING COMPANIES WANT STABLE SETTLEMENTS, ENCRYPTED TRADING PLATFORMS WANT A DOLLAR-LIKE ASSET THAT REALLY PAYS INTEREST TO USERS, AND EMERGING MARKET DEPOSITORS WANT DOLLARS, LIQUIDITY, AND RETURNS。

A volatile 40 per cent asset, perfect for some investors, totally inappropriate for others。

The answer is not to change bitcoin, but to build products above bitcoin, matching each type of funding requirement。

Second floor Digital credit: proceeds of bitcoin endorsement

Digital credit converts highly volatile digital capital into low-volatile returns。

STRC IS AN EXAMPLE OF AN ADVANCED, HIGH-YIELD, SHORT-TERM REVENUE INSTRUMENT ISSUED BY COMPANIES ENDORSED BY BITCOIN. BTC PROVIDES A LONG-TERM CAPITAL BASE, DIGITAL EQUITY ABSORBS THE REMAINING VOLATILITY, AND DIGITAL CREDIT SITS ABOVE EQUITY, GIVING INTEREST TO INVESTORS WHO WANT TO GAIN AND DO NOT WANT TO EAT BTC VOLATILITY DIRECTLY。

The point is not that digital credit always has only a fixed volatility. It didn't。

Credit instruments fluctuated low in normal markets and increased in pressure markets. The spreads will be wide, liquidity will change, interest rates will move, the market image of the issuer will change and the market structure will evolve。

More precisely, digital credit is designed to curb the volatility of digital capital。

IT RELIES ON CAPITAL STRUCTURES, PRIORITIES, RETURNS, FACE VALUE MECHANISMS, LIQUIDITY SUPPORT AND A SUB-EQUITY BUFFER. THE GOAL IS TO TURN THAT VOLATILE RAW CAPITAL ENERGY OF THE BTC INTO A MORE STABLE FLOW OF INCOME FOR CREDIT INVESTORS。

Financial practitioners have long understood this logic. Mortgages are not equal to houses, municipal debt is not equal to cities, corporate debt is not equal to ordinary shares, and preferential securities are not equal to the shares below. Assets can be volatile, but credit levels can be less volatile。

The purpose of digital credit is not to eliminate risks, but to allocate them wisely. Equity holders accept the remaining fluctuations and upwards, credit holders receive returns and higher claims, and digital currency holders receive another layer of stability and liquidity. Each investor selects a risk profile that matches his or her mandate。

Bitcoin does not itself need to generate revenue. No pledge, no inflation, no agreement, no Etherwood. Gains are created by capital structures above bitcoin, not by demeaning bitcoin。

That's a terrible distinction。

Third tier Digital currency: stable value currency built on digital credit

The digital currency is the next level。

It is a stable value, a daily redeemable tool, which uses it like money, while paying a considerable gain. Depending on the jurisdiction, distribution channels and type of investor, it can be made into a currency, fund, preferred securities, account or other regulated seal。

The concept is simple: a combination of digital credit and cash equivalents in French. Digital credit, as an engine of return, provides liquidity and stability in cash equivalents in French currency, and the structure itself manages long-term, foreclosure, credit opening, reserves and market risks, and holders are given a stable, viable asset。

For example, a product may hold a bitcoin endorsement of digital credit with a rate of return of about 10 to 12 per cent, plus treasury bills, money market funds, repurchases or bank reserves. With the exclusion of liquidity reserves, fees and risk buffers, the target returns on this currency instrument may fall in 6-8 per cent。

That's the breakthrough. Digital capital became digital credit, and digital credit, combined with French currency liquidity, became digital currency。

This is how a Bitcoin-endorsed instrument of stable value can pay off. It's not magic. It's structured finance。

BTC IS A CAPITAL ASSET, DIGITAL EQUITY IS THE HEADLINE AND UPPERMOST, DIGITAL CREDIT IS THE YIELD LAYER AND DIGITAL CURRENCY IS THE LIQUIDITY LAYER OF STABLE VALUE. THE STACKS CONVERT THE ORIGINAL FLUCTUATIONS OF BITCOIN INTO USEFUL FINANCIAL PRODUCTS WITHOUT TOUCHING THE BITCOIN ITSELF。

Stable value is not no risk

This distinction is important。

Digital currencies should not be described as risk-free and should not be sold as unconditional guarantees. It should be described as the maintenance of stable values through reserves, liquidity, credit structures, transparency and risk management。

A well-designed digital currency product that measures the same set of questions for any money market, stable currency or short-term credit product by financial operators: What are the bottom assets? How big is the credit opening? How much is the liquidity reserve? How long? How's the redemption mechanism? What's the priority? What's the collateral? How is transparency? Who bears the loss? How's it going in the stress scenario

This examination is healthy。

The digital currency does not eliminate risks, but rather packages, discloses, manages, price them as useful forms for depositors, businesses, payment networks, trading platforms and institutions。

Why does a digital currency anchor a French currency

Many bitcoin believers would ask: Why do digital currencies anchor United States dollars or other currencies

Because the world's debt is still denominated in French。

Wages are calculated in United States dollars, euros, Japanese yen, pesos and local currency, invoices in French currency, taxes in French currency, mortgages in French currency, credit cards in French currency and business accounting in French currency. Banking systems, insurance contracts, payroll systems and financial statements are all denominated in French。

Most people don't want their current accounts to fluctuate 5% a day. They want a stable account unit。

That is why a stable currency has found a match in the product market. The world wants a digital dollar because it remains the dominant account unit in global commerce。

But the current stable currency model is incomplete. Stable currencies provide digital liquidity and holders usually do not receive the full economic benefits of reserve earnings. Bank deposits are convenient, but often do not yield much. The money market funds have gains, but there is no primary round-the-clock transferability. The pledged asset has proceeds, but the user accepts the risks of encrypted price fluctuations and agreements。

Digital currency can bring together the best attributes: stable value, digital transferability, daily liquidity, transparent reserves, significant returns, capital structure endorsed by bitcoin。

The French anchor addresses the unit of account and the bitcoin addresses the preservation of capital. The dollar is a meter, bitcoin is an energy source。

Ideal currency experience

A good currency should have three functions: an exchange medium, value storage, and a unit of account。

BTC IS THE STRONGEST LONG-TERM VALUE RESERVE, BUT IT IS NOT A UNIT OF ACCOUNT FOR MUCH OF THE WORLD. THE DIGITAL CURRENCY SOLVES THIS BRIDGE。

A digital currency instrument with anchors, bitcoin endorsements, interest earnings because it is stable and transferable and can be used as an exchange medium; because of interest payments rather than idleness, it can be stored as a value for a person measured in a French currency; and because it can perform unit of account functions in a currency that is already being used to price wages, bills, taxes and debts。

This is not a denial of bitcoin, but a bridge from the world of French currency to the world of bitcoin。

That's a bitcoin hit

Bitcoin's killer-class example is not just paid。

The true killer-size example is the reconstruction of global monetary, credit and capital markets over digital capital。

BITCOIN IS A BETTER ASSET, BUT THE WORLD IS NOT JUST ONE INVESTOR. SOME WANT RAW BTC, SOME WANT REVENUE, SOME WANT STABLE VALUE, SOME WANT COLLATERAL, SOME WANT LEVERAGE, SOME WANT TO PAY, SOME WANT TO GROW EQUITY, SOME WANT BANK RESERVES, AND SOME WANT A DOLLAR BALANCE THAT CAN BE TRANSFERRED AND REPAID IMMEDIATELY。

DIGITAL ASSET STACKS ALLOW BITCOIN TO SERVE ALL THESE PEOPLE. BTC SERVICES CAPITAL CONFIGURERS, DIGITAL CREDIT SERVICES GAIN INVESTORS, DIGITAL MONEY SERVICES DEPOSITORS AND PAYERS, DIGITAL GAIN SERVICES RETURNING INVESTORS, DIGITAL EQUITY SERVICES GROWTH INVESTORS. SAME BITCOIN BASE, UP EVERY FLOOR。

Bitcoin thus expanded from a trillion-class asset to a global financial system。

Bitcoin doesn't have to replace all of it tomorrow. It can endorse the tools that the world is using today: dollars, credits, accounts, funds, securities, payment assets, treasury products. This is the bridge。

What's this about financial practitioners

This framework should be familiar to financial practitioners。

Innovation lies not in the disappearance of risks, but in the fact that Bitcoin has become the basic collateral and capital asset of a modern stratification financial system。

Traditional finance has long been at a level of risk: general, priority, advanced debt, secured credit, money market instruments, leverage funds, structured products, bank deposits, and payment balances. Digital asset stacks apply the same logic to bitcoin。

Key variables are conventional: priorities, mortgage rates, liquidity, longevity, returns, credit spreads, foreclosures, market depth, disclosure, regulatory treatment, accounting treatment, tax treatment, countervailing。

Bitcoin introduced a better base asset, which capital markets converted to different authorized products。

It's not anti-finance, it's better finance。

Why is this bitcoin investor set up

Forbitcoin investors, the most important principle is simple: bitcoin or bitcoin。

There is no need to change the agreement, no need for base revenues, no need for collateral, no need for inflation, no need to move the 21 million-dollar supply cap, and no one is forced to give up self-custody。

PEOPLE WHO WANT PURE BTC CAN TAKE PURE BTC, PEOPLE WHO WANT TO RUN NODE CAN RUN NODE, PEOPLE WHO WANT TO TAKE CARE OF THEMSELVES。

Digital asset stacks do not weaken the core principles of bitcoin, but simply extend its reach. This is a disciplinary expansion. The base level should remain sacred and most of the innovation should take place above it: trusteeship, application, securities, credit instruments, payment systems, wallets, trading platforms, funds, capital markets。

Bitcoin serves billions of people in this way, without pushing everyone into a narrow pattern of adoption. It can be a personal currency of trust, a company's digital capital, a bank's collateral, a national reserve, a family's property, a market infrastructure and the hope of any person in economic distress。

The world is building buildings in bitcoin because bitcoin is worth building。

THAT'S RIGHT

FOR MSTR INVESTORS, DIGITAL ASSET STACKS EXPLAIN THE ROLE OF DIGITAL EQUITY。

DIGITAL EQUITY IS A SUB-SLOTTING. IT ABSORBS VOLATILITY, SUPPORTS CREDIT STRUCTURES, ENJOYS BTC VALUE ADDITION, TAKES THE REST OF THE DEBT AFTER IT IS SATISFIED AND PROVIDES A CAPITAL STRUCTURE THAT ALLOWS DIGITAL CREDIT AND CURRENCY TO EXIST。

THIS EQUITY DOES NOT EQUAL BTC, DOES NOT EQUAL STRC, DOES NOT EQUAL DIGITAL CURRENCY. EACH ROLE IS DIFFERENT。

BTC IS DIGITAL CAPITAL, STRC SECURITIES IS DIGITAL CREDIT, DIGITAL CURRENCY IS A STABLE VALUE GAIN, DIGITAL GAINS ARE AMPLIFIED, AND MSTR SHARES ARE DIGITAL EQUITY。

Equity volatility is greater because it is a residual claim; credit volatility is smaller because it is high; and currency design is more stable because it combines credit and liquidity reserves. That's the logic of a capital stack。

Digital equity has made it possible for the upper tiers, as someone has to take the residual risk and earn the residual return。

Why is this for encrypted innovators

Digital money is a big opportunity for encrypted innovators。

The stabilization currency proves that the world wants a digital currency. DeFi proves that users want to get paid. The trading platform attests to the global market ' s desire for round-the-clock liquidity. The wallet proves that value can move at Internet speed. Bitcoin proves that the scarcity of numbers can be secure, decentrized and globalized。

The next step is to combine these breakthroughs into better products。

A bitcoin-backed, interest-bearing, stable dollar tool that can be a birth asset for wallets, trading platforms, payment networks, financial technology applications, DeFi agreements, treasury platforms and global commerce。

It competes with stable currencies that barely pay the user’s interest rate, with bank deposits that put their spreads in their pockets, with money market funds that are profitable but have no primary value for transfer, and with pledged assets that require the user to accept currency fluctuations to earn。

This is constructive competition. Encryption does not require more speculation. It requires financial products that are useful, durable, transparent, cost-effective and that address real user problems. Digital currency is one of them。

Digital returns: not money, but useful

The digital currency is above the digital gain。

Digital returns are not money, but investment products。

It can be built on leveraged digital credit, leveraged digital currency, structured funds, private vehicles or other instruments for investors who seek higher returns and are willing to accept higher risks, leverage, volatility or poor liquidity。

A leveraged digital currency strategy may result in much higher targeted returns than unleveled products. But that is not a current account, not a stable currency, not a savings product for all. That's digital gain。

This distinction is important. Digital currency is used for stability, liquidity, disbursement, savings and operating capital. Digital gains are used by mature investors seeking to scale up gains. Digital equity is used to pursue surplus top investors. The power of stacks is that each product has a clear role。

Third floor breach

The key innovation is these three layers of transformation。

DIGITAL CAPITAL: HIGH VOLATILITY, HIGH ENERGY BTC。

DIGITAL CREDIT: BITCOIN-ENDORSED GAINS, DESIGNED TO CONTAIN A SIGNIFICANT PROPORTION OF BTC FLUCTUATIONS THROUGH PRIORITY, STRUCTURE, RETURNS AND EQUITY SUPPORT。

Digital currency: a combination of digital credit and cash equivalents in French currency and liquidity reserves that provide stable value and cost-effective tools。

That's the breakthrough. Bitcoin gave us the largest digital capital asset in the world, capital markets converted it into credit, and credit plus liquidity reserves converted the proceeds into currency。

the world doesn't need everyone to price coffee smartly tomorrow. the world today needs a better currency: money that moves at the speed of the internet, remains stable in user units of account, pays significant returns, and ultimately is driven by the strongest digital capital asset ever。

That's digital currency。

THAT'S GOOD FOR BTC

DIGITAL CURRENCY INCREASES BTC EFFECTIVENESS。

EACH DOLLAR BUILT ON A BITCOIN CREDIT ENDORSEMENT DIGITAL CURRENCY CREATES AN INCREMENTAL DEMAND FOR BITCOIN-ENDORSED CAPITAL STRUCTURES, CREATING NEW REASONS FOR HOLDING BTC, FINANCING BTC, HOSTING BTC, AUDITING BTC, TAKING INSURANCE FOR BTC AND BUILDING SERVICES AROUND BTC。

IT ALSO CONVERTIBLE BITCOIN TO INVESTORS WHO COULD NOT STAND THE INITIAL BITCOIN FLUCTUATIONS. RETIREES MAY NOT WANT RAW BTC FLUCTUATIONS, FIRMS MAY NOT, BANKS MAY NOT, PAYING COMPANIES MAY NOT. BUT THEY MIGHT WANT A 6-8 PERCENT RETURN, A STABLE DOLLAR ASSET BACKED BY BITCOIN ENDORSEMENT OF DIGITAL CREDIT。

This brings new capital into the Bitcoin ecology. More capital means more adoption, more mobility, more liquidity means more resilience and more resilience means stronger bitcoin。

Why is this good for encryption

The encryption industry needs a better monetary base。

Many encryption users want dollars, many encryption investors want returns, many encryption builders want programmable assets, many encryption platforms want mobile collateral, many encryption applications require stable accounting units。

The digital currency built on Bitcoin's credit endorsement gave industry a better commodity: a bitcoin-driven, stable value, interest-bearing dollar。

It can live on a trading platform, on a wallet, on a fund, on an account, on a payment network, and eventually on any digital value flow. It does not require users to choose between zero-resistence and volatile pledge tokens, but rather gives them an alternative: a digital currency built on bitcoin-endorsed capital, stable value, with returns. It's good for encryption。

Why is this good for investors

Investors should not be forced into a single risk slot。

DIGITAL ASSET STACKS GIVE EACH INVESTOR A CHOICE. IF YOU WANT DIGITAL CAPITAL, YOU TAKE BTC, YOU WANT DIGITAL CREDIT, YOU TAKE THE STRC, YOU WANT THE DIGITAL CURRENCY, YOU GET THE STABLE VALUE-GENERATING TOOL, YOU GET LEVERAGE OR STRUCTURED PRODUCTS, YOU GET THE MMTR, YOU WANT DIGITAL EQUITY。

THIS IS A COMPLETE MENU. DEPOSITORS CAN TAKE DIGITAL CURRENCY, INCOME INVESTORS CAN TAKE DIGITAL CREDIT, GROWTH INVESTORS CAN TAKE DIGITAL EQUITY, LONG-TERM BELIEVERS CAN TAKE BTC, AND MATURE INVESTORS CAN TAKE DIGITAL RETURNS. THE SAME BITCOIN BASE HOLDS EVERYONE UP. THAT'S HOW BITCOIN BECAME ACCESSIBLE TO EVERY MANDATE。

Why is this good for the world

The world needs a better currency。

Billions of people want the dollar because it flows, is familiar and is widely accepted. But they also want gains, transparency, liquidity and protection from devaluation。

Many people today are forced to choose between unstable local currency, low-income bank deposits, zero-yield stable currency, volatile encrypted assets, or financial products that they cannot reach。

DIGITAL CURRENCY CAN IMPROVE THIS. IT PROVIDES STABLE VALUE, DIGITAL MOBILITY, DAILY REDEMPTION AND SIGNIFICANT RETURNS. IT CAN HELP DEPOSITORS, BUSINESSES, PAYMENT COMPANIES, EMERGING MARKETS, TRADING PLATFORMS, INSTITUTIONS, AND ANYONE WHO WANTS BETTER MONEY AND DOESN'T WANT TO EAT RAW BTC FLUCTUATIONS。

THE MODEL WORLD BUILT ITS ECONOMY ON GOLD, REAL ESTATE, BANKS, DEPOSITS, CREDIT, EQUITY, FUNDS AND PAYMENT NETWORKS. THE DIGITAL WORLD WILL BE BUILT ON BTC, DIGITAL CREDIT, DIGITAL CURRENCY, DIGITAL RETURNS AND DIGITAL EQUITY。

Bitcoin is digital capital. Digital credit converts it into revenue. The digital currency converts it into daily utility. Digital gain magnifies it. Digital equity finances it。

The base level remains sacred and the capital stacks remain open。

This is modern digital asset stacks. This is how Bitcoin becomes a better financial systemic base。

Original Link