Michael Saylor doesn’t believe BTC is digital money

He’s said it on stage, in podcasts, on X, and repeated it for months. Strategy (formerly MicroStratgy) founder Michael Saylor doesn’t believe bitcoin (BTC) is digital money.

Digital money, a new phrase that joins his dozens of other invented terms, doesn’t seem to exist yet to any meaningful degree, in Saylor’s opinion.

Despite millennia of gold money, centuries of paper money, decades of fiat money, and years of digital fiat money — not to mention BTC’s 17 year history– humanity is still waiting for digital money.

BTC isn’t digital money but merely “the basis of digital money,” Saylor explained recently.

Unlike BTC, which Saylor defines as digital capital, digital money will apparently derive from BTC-collateralized digital credit. 

Digital credit, in turn, is apparently Strategy’s Stretch (STRC) and similar products.

Yes, in case you’re following his train of thought, his explanation of digital money is also an elaborate sales pitch for STRC.

Strategy tries to keep STRC trading at a $100 price peg while paying a generous dividend of double or triple the average money market rate. He wants investment banks to buy a lot of it.

According to Saylor, BTC is capital, not money. BTC capitalizes Strategy’s credit creation which can then mix with fiat and other bank reserves to collateralize digital money.

Saylor has repeatedly cited this idea as not his own, but rather coming from the early Bitcoin community. Namely, that reference is almost certainly Hal Finney.

Saylor hearkens back to Hal Finney’s BTC banks

Indeed, Finney believed as early as 2009, “I see BTC as ultimately becoming a reserve currency for banks, playing much the same role as gold did in the early days of banking. Banks could issue digital cash with greater anonymity and lighter weight, more efficient transactions.”

Saylor agrees. “Strategy transforms digital capital (BTC) into digital credit,” Saylor emblazoned on a slide at his latest conference speech in Abu Dhabi. 

“Digital money can be constructed with digital credit (STRC),” he continued.

Back in 2009, Finney repeated his belief that BTC would collateralize bank-issued digital cash. “Actually there is a very good reason for BTC-backed banks to exist, issuing their own digital cash currency, redeemable for BTC.

“BTC itself cannot scale to have every single financial transaction in the world be broadcast to everyone… Btc backed banks will solve these problems.”

According to Finney’s prediction, banks around the world would issue a variety of cash backed by BTC. “Some would be fractional reserve while others may be 100% BTC backed. Interest rates may vary.” 

Finney also forecasted currency fluctuations from BTC-backed cash. “Cash from some banks may trade at a discount to that from others.”

Read more: Why Saylor’s STRC isn’t really a money market or bank account

BTC yield to pay for digital money

In Saylor’s view, BTC is uniquely suited to collateralize money, because he believes it will rally at a 30% compounded annual growth rate (CAGR) for at least the next decade, and continue to appreciate forever.

Indeed, Saylor published a calculator on his website that wouldn’t even allow the price of BTC to decrease.

As a result, in Saylor’s firmly reiterated opinion, the price appreciation of BTC will easily allow him to pay dividends in excess of 10% annually to STRC shareholders and maintain STRC’s $100 price peg.

If BTC keeps rallying, it will pay for everything.

Banks, not BTC, create money

As a result, STRC is his company’s “greatest feat of financial engineering to date,” and his management team is laser focused on STRC’s addressable marke. He believes Strategy could somehow sell $10 trillion worth of STRC and similar products.

By holding assets like STRC, or similar products in foreign markets like STRE or SATA, state-registered commercial banks can mix in fiat and other reserves to issue loans, which are money.

Although thousands of banks already create money every day as a regular course of their lending operations, BTC-collateralized reserves held by those same banks will allegedly transform this money creation act into digital money creation.

Again, this magic occurs within the dictionary of Saylor’s mind.

Although banks may already hold any number of assets linked to the price of BTC in their reserves today, including spot ETFs or common shares of BTC miner MARA, Strategy’s invention of a quasi-pegged preferred share with a variable dividend is somehow a critical step in empowering banks to create digital money.

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