The Bullish Case For Bitcoin Summary, Notes, Lessons & Quotes

Michael Saylor, the CEO of the public company MicroStrategy explains his rationale for his company buying 500 million dollars worth of bitcoin as a response to the Federal Reserve’s COVID-19 money expansion. Effectively it was the best asset to preserve purchasing power that he could find on the market.

The blog post, which has now been converted to this book; The Bullish Case for Bitcoin was instrumental in helping Michael understand the bitcoins value proposition.

The mysterious origins of bitcoin seem too improbable to be real. TL;dr the attempt at creating a sovereign, peer-to-peer digital money has been going on for decades. It was eventually cracked by a pseudonymous computer programmer in 2008 when Satoshi Nakamoto first published their whitepaper on an obscure cryptography list.

Money was first adopted to transcend the barter system, at first collectibles like shells and animal teeth were used. The adoption of a common universal store of value that is transactable across tribes, communities, and even nations allows for greater specialization to occur, and trade & civilization blossom because of it.

A store of value has immutable characteristics. It must be:

• Durable
• Portable
• Fungible (interchangeable units)
• Verifiable
• Divisible
• Scare
• Established history
• Censorship resistant

Bitcoin excels in every one of these areas except established history. Give it more time and bitcoin will be the best form of a store of value this world has ever seen.

Most, if not all, commonly accepted forms of money throughout time have gone through a similar adoption phase: collectible, then story of value, then medium of exchange, then unit of account.

Good/sound money must fulfill the last three functions to become widely adopted. Today we think that a medium of exchange is money’s only function. This however is not how the history of money tends to play out, it almost always starts as a store of value.

Many people have been confusing bitcoin’s price volatility as a bubble instead of following the Gartner hype cycle. The adoption of a new asset or network follows a fairly predictable shape; the S-curve.

It happened with the radio, the internet, the car, and so on. Bitcoin is on pace to mirror this shape of adoption.

In the early adoption phase price swings are more possible due to the network’s small size. Private parties can have a greater impact on a network that is still young, but when it’s mature, even the largest parties like nation-states have limited power over a network that is so large.

Bitcoin possesses all the major characteristics to become:

1. A store of value
2. A medium of exchange
3. A unit of account

It does face some real risks though like a nation-state attack via mining, viruses being built on hardware devices, miner centralization, custodial risk, and the risk of hypothecation.

Only time will tell if the market will adopt this open-sourced software as the globally accepted form of money. It’s not up to a single nation-state to decide that, it’s not up to one corporation, it will be played out based on how well it serves the free market.