The executive chairman at MicroStrategy, Michael Saylor, said last week that bitcoin is the best way to protect one’s wealth from risks associated with inflation and political uncertainties.
The MicroStrategy chief advocated for bitcoin during an interview with Stephen Gardner, a “Safe Money Specialist” in the United States. He discussed why it’s crucial for people to explore and consider incorporating bitcoin into their investment portfolios.
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He defined bitcoin as a decentralized digital asset that presents an alternative way to protect value. Saylor also compared bitcoin and traditional assets, emphasizing the former’s potential for wealth preservation.
Michael Saylor Explains Inflation
MicroStrategy executive chairman broke down the concept of monetary inflation. He explained that while inflation is a vector, consumer inflation is a measure that tells us how prices are changing for products that are getting worse in quality over time.
Saylor is popular for his extensive expertise and involvement in the bitcoin space.
He divides inflation into two categories. First, he considers consumer inflation, which represents the amount of money necessary for a person to maintain a modest, lower middle-class lifestyle. Second, he defines asset inflation as the rate of wealth generation required to either maintain one’s wealth or surpass it, if the goal is to become wealthier.
Saylor pointed out that in the United States, asset inflation has historically hovered at around 7-8% for about a century, whereas consumer inflation has remained relatively stable at around 2% during the same period. However, he highlighted a recent surge in asset inflation, which he found interesting.
Saylor also observed that outside the U.S., particularly in economically weaker nations, asset inflation rates often double and reach around 14% annually. He attributed this surge to the aftermath of the COVID-19 pandemic, as these countries frequently run large deficits and resort to printing money to service debt they can’t pay back.
Consequently, the prices of many scarce and resalable assets have risen at a faster rate than the 2% consumer inflation, and the money supply has expanded by 40% or more within just a couple of years.
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Bitcoin in Financial and Political Instability
Saylor compared how fiat currencies steadily lose value due to inflation. He highlighted the risk of wealth erosion when holding traditional currencies, claiming that wealth stored in the U.S dollar over the past century would have lost roughly 99% of its value. He cautioned about similar risks in cases of political instability in weaker governments.
Saylor believes bitcoin mitigates these risks with its built-in attributes. He sees bitcoin as revolutionary invention/discovery. Being capped at 21 million supply makes it a scarce, stable, non-inflationary, and therefore, sustainable monetary network. According to him, bitcoin is a means to preserve one’s economic energy from dissipating over time.
