Michael Saylor says bitcoin's identity will not change and financial system must adapt

Michael Saylor said bitcoin's identity would not change even if bitcoin-based financial products increase.

On Aug. 25, Cryptopolitan reported that Saylor said even if banks, companies, insurers and governments introduce bitcoin-linked financial products, what changes is the structure of capital markets, while bitcoin itself remains the same.

He said the key is that institutional demand can be absorbed in a financial layer outside the bitcoin protocol. In an essay titled "Bitcoin, Digital Credit, and Digital Currency" in June, Saylor set bitcoin at the bottom of a five-stage financial structure, with digital credit, digital money, digital yield and digital capital stacked above it. He defined bitcoin as a "pure, scarce, high-energy capital asset."

Saylor said this structure does not require staking, protocol changes or new currencies that mimic bitcoin. He said it operates in ways already used in existing capital markets, such as mortgages, municipal bonds and preferred stock. He said bitcoin-collateralised yield products could be less volatile than spot bitcoin, citing a structure in which a "lower tranche" such as common stock absorbs greater risk.

The idea did not remain theoretical. Strategy said its board approved a "digital credit capital framework" on June 29 and later fleshed it out through filings with the U.S. Securities and Exchange Commission. The company’s dollar reserves as of June 28 were about $2.55 billion, equivalent to about 17.4 months of expected payments for preferred dividends and related interest costs. The company said the reserves are sufficient to cover those payments and can later be replenished through proceeds from bitcoin sales or other capital market transactions.