Conversation with Bitcoin veteran Jack Mallers: US dollar crisis, Bitcoin reserve value and 21 Capital

Source: The US dollar depreciates rapidly! Bitcoin veteran Jack Mallers: Currency crises in various countries! 42,000 Bitcoin aircraft carriers!

Organize & compile: Daisy, ChainCatcher

Editor 's note:

This article is compiled from a video interview between Jack Mallers and hosts David Lin and Bonnie Chang. Jack Mallers is the founder of Bitcoin payment platform Strike and co-founder and CEO of investment company 21 Capital, and has long been committed to promoting the practical application of Bitcoin in the global payment and capital markets.

In the interview, Jack deeply explored the logical basis of Bitcoin as a global storage value tool, analyzed new indicators such as "Bitcoin Per Share (BPS)" and "Bitcoin Return (BRR)" and pointed out the essential difference between 21 Capital and traditional ETFs. He also shared how Strike flexibly builds products in different countries based on local needs, as well as the political and macro context behind Bitcoin institutionalization.

The following content is the compilation and compilation of the interview.

TL;DR:

1. The essence of money is a tool for storing and exchanging labor, and Bitcoin is the current optimal storage value choice.
2. Under the pressure of debt and deficit, the value of Bitcoin as a scarce asset is becoming increasingly prominent.
3. The US dollar output model is collapsed, and Bitcoin’s position in the global storage value system is becoming increasingly prominent.
4. Volatility is the prerequisite for obtaining returns.
5. Risk does not equal fluctuation, the real risk is systemic failure.
6. 21 Capital launches the "Bitcoin Per Share (BPS)" and "Bitcoin Return (BRR)" indicators to reconstruct the capital market evaluation system.
7. Unlike ETFs, 21 Capital increases investors' Bitcoin exposure through operations rather than static holdings.
8. Bitcoin rules are determined by global node consensus and cannot be tampered with by governments or institutions.
9. Bitcoin is not a political bet, but a financial system built on mathematics and freedom.
10. The real risk is not fluctuation, but a systematic failure of centralization and trusting the opponent.

Bitcoin’s value logic and global currency landscape

Bonnie: You think the purchasing power of the US dollar continues to decline and the United States passively weakens its currency. Will this trend naturally drive the global shift to Bitcoin, or will it require major events such as financial crises or wars to facilitate the transformation?

Jack: Like other commodities, there are advantages and disadvantages in the competition in the free market. But unlike consumer goods, the function of money is to store and exchange people's time and labor. Even without a crisis, people will naturally choose the optimal value storage tool. Bitcoin has significant advantages in this regard.

Bonnie: You mentioned that Bitcoin has 400 to 500 times growth potential. What is the basis for this estimate?

Jack: I am not predicting prices, but analyzing the market size that Bitcoin faces. The total global assets are worth approximately US$900 trillion, about half of which are used for storage value. That is, humans are looking for tools to store $400 to $500 trillion worth of value. Bitcoin is the most promising carrier of stored value at present, which is not only the product of technological progress, but also the innovation of the storage of value. By comparison, global stock markets are only about $150 trillion, comparing Bitcoin with stocks or Ethereum seriously underestimating its potential and positioning.

David: The price of Bitcoin has not risen since Trump took office, which disappointed some investors. Are you surprised by this?

Jack: I was not surprised because the market expectations were wrong. They thought Trump's appointment would lead to liquidity expansion, but the actual situation was tightening. To understand the current situation, we need to look back at World War II, the United States became a global reserve currency issuer with its gold reserves, established a system of "printing paper for physical goods" by exporting US dollars and imported goods, and gradually shifted from manufacturing to financial dominance. This structure is now unsustainable. Trump’s re-emphasis on manufacturing and fiscal balance is in response to debt and structural deficit issues. Against this background, the value of Bitcoin as a scarce asset is becoming increasingly prominent.

David: Some people believe that Bitcoin is highly correlated with the stock market, while others believe that its trend is more affected by the global M2 currency supply. What do you think?

Jack: I agree more that Bitcoin is closely related to global M2. Against the backdrop of the depreciation of the US dollar, most asset prices have risen, and the surface correlation is actually driven by monetary policy. Bitcoin is a sensitive indicator for monitoring fiat currency liquidity, and it combines technical attributes with the ability to fight against currency over-issuance. For example, China's trade surplus flows into U.S. stocks and real estate, pushing up asset prices and exacerbating bubbles and gaps between the rich and the poor. Once this type of capital no longer flows into US stocks, Bitcoin will deviate from the stock market trend and show its independent value. It does not rely on profit or valuation, but returns to real demand and scarcity.

Bonnie: If Bitcoin becomes a mainstream stored value tool, how will it affect the valuation of human capital, stocks and real estate?

Jack: Bitcoin’s proof of work mechanism makes it an “energy currency” and must be created through time and energy, with scarcity and anti-inflation ability. When people can save and plan for the future, society will be more stable. The more difficult the currency is to be made, the more uncertain the society can withstand.

Bonnie: You barely hold USD, how does this happen?

Jack: I don’t hold long-term depreciation assets, I only keep the best performers. I collect salary, loans and bills in Bitcoin via Strike, both retaining assets and meeting liquidity needs. Such services are making Bitcoin more practical.

David: Peter Schiff believes that Bitcoin has no intrinsic value and that large fluctuations are high risks. How do you respond to this view?

Jack: Volatility is the prerequisite for obtaining returns. The Sharpe ratio measures the benefits of volatility, and if high volatility is accompanied by high returns, it is worth it. Risk does not equal fluctuation, the real risk is systemic failure. Bitcoin is based on mathematical operation and does not rely on its opponent, which is essentially lower in risk.

Bonnie: For ordinary people, Bitcoin is more difficult to manage than bank accounts. How to solve the concerns about losing or being hacked in private keys?

Jack: What makes Bitcoin unique is freedom of use. You can keep your private key yourself or choose to host it.

While I encourage users to increase their sovereignty awareness, the key is that it provides the right to choose. This ability to completely control assets is not available in other financial systems.

David: Bitcoin has better Sharpe ratios than most assets in the past decade. Why is the institutional configuration still low?

Jack: The process of institutions configuring Bitcoin is slow, but the trend is upward.

People often overestimate short-term changes and underestimate long-term effects. Despite the complex institutional structure, I have seen the demand for Bitcoin in the capital market continue to rise, and the allocation ratio will continue to increase.

Bonnie: You are developing Bitcoin-related products, right?

Jack: Yes. There is a lack of Bitcoin representatives with institutional strength in the current market, and we hope to enter with blue chip qualifications and scale. Not only do we hold billions of dollars in Bitcoin, but we also have strong capital and Wall Street resources. More importantly, we focus on building products rather than simply hoarding coins. As participants in the Bitcoin protocol, we understand technology and growth opportunities, with the goal of building a bridge between technology and capital markets to drive growth of “bitcoin per share”.

21 Capital: Create a growth model for "Bitcoin per share"

Bonnie: What are the next schedules or plans to share?

Jack: We are promoting the merger and listing of SPAC with Cantor Equity Partners, and it is still under approval. XXI Stock is our first product, and my focus is on advancing the listing process and communicating to the public our business philosophy and the value of Bitcoin.

David: Will large institutions holding a large amount of Bitcoin threaten their decentralized spirit? What do you think?

Jack: The design of Bitcoin determines how much it holds does not affect control, which is different from the proof of stake mechanism. It is a system that requires no permission and is free to participate in anyone and cannot exclude specific holders. Everyone is equal before the rules, which is exactly the essence of Bitcoin.

David: Do you plan to list the company publicly and list it on the exchange?

Jack: Yes, we have applied for a merger with Cantor Equity Partners, with the stock code XXI, and are still under approval.

David: As a company with Bitcoin as its core, will you consider hedging price volatility?

Jack: We won't hedge against Bitcoin assets. The company has introduced "Bitcoin Per Share (BPS)" and "Bitcoin Return (BRR)" as new measurement criteria, focusing on increasing the number of Bitcoins represented by unit stocks. We hold and do not sell coins for a long time, and our goal is to build a growth capital market tool with Bitcoin as the core.

Note:

• Bitcoin per share (BPS): refers to the amount of Bitcoin represented by each share of a company. It is used to measure the actual Bitcoin exposure of shareholders. It is similar to the earnings per share (EPS) in traditional finance, but measured in Bitcoin.
• Bitcoin rate of return (BRR): refers to the growth rate denominated in Bitcoin, which is used to measure the company's ability to improve Bitcoin assets through operations without selling Bitcoin.

David: When you mentioned the concept of BRR, how is that different from Bitcoin ETFs?

Jack: Investing 21 is investing in an actively operating company with the goal of increasing Bitcoin per share. In contrast, ETFs such as IBIT are static exposures and the amount of Bitcoins you buy and hold will not change. And 21 continues to expand Bitcoin exposure through financing and business growth. We combine blue-chip qualifications and startup potential and are committed to allowing shareholders to grow together with Bitcoin.

David: You are also the CEO of Strike. Will these two companies have intersections in the future?

Jack: There is no intersection, Strike and 21 are completely independent. Strike is aimed at consumers and provides services such as loans, transactions, custody and other services; 21 is aimed at the capital market, focusing on Bitcoin investment tools, with different positioning and goals.

Strike 's product strategy and global implementation practice

Bonnie: How does Strike do business in countries where currency is unstable or banks are weak?

Jack: We customize products by region. In the United States, Europe and other places, local fiat currency and Bitcoin are supported; in Latin America and Africa, due to the instability of fiat currency, users prefer the USDT + Bitcoin combination. We are oriented towards user needs and do whatever they want. This is the key to our success.

David: In the face of a more friendly crypto-regulatory environment, will you adjust your strategy?

Jack: A friendly regulatory environment is conducive to entrepreneurship, and I am also very happy to develop in the United States. But Bitcoin does not rely on any politicians, it is a decentralized technology that transcends partisans and politics. No one can stand for truly valuable things.

David: After the regulation is relaxed, if banks provide crypto services, will you worry about being replaced?

Jack: I'm not worried. Traditional banks lack the understanding and product capabilities of Bitcoin, and we have it. The key is to focus on yourself and do your best. I was also questioned five years ago, but we persevered. Even if Jamie Dimon (Chairman and CEO of JPMorgan Chase) becomes a Bitcoin banker one day, I'm happy to discuss it again.

Unchangeable Protocol: How Bitcoin protects itself

Bonnie: If the government or institution holds a large amount of coins, is it possible to jointly modify the upper limit of 21 million Bitcoins?

Jack: Impossible. Bitcoin rules are jointly determined by global operating nodes and no one can change them unilaterally. The people who tried to modify in history could only end up being forked, and the value was greatly reduced. Bitcoin’s neutrality and immutability are at its core. Once the rules are changed, it loses its value. The incentive mechanism also prompts participants to maintain the system rather than destroy it, and the total upper limit is almost impossible to be modified.

Bonnie: What changes have you changed in your perception of Bitcoin?

Jack: At first I regarded Bitcoin as a competitor to PayPal, and later I realized it was a core technology used to store time and energy. It made me re-understand the significance of currency, as well as the value of tough currency for social collaboration and long-term development, and also profoundly influenced my financial outlook and decision-making methods.

David: Do you still buy pizza with Bitcoin now?

Jack: No. I use a credit card to spend, and then mortgage Bitcoin to repay through Strike, which not only retains Bitcoin but also meets daily expenses. Bitcoin is a savings tool, and the US dollar is used to spend it.

David: If I treat you to pizza with Bitcoin, would you accept it?

Jack: No, I won’t trade quality currency for depreciating assets. Data shows that long-term holding of Bitcoin can reduce the cost of living. In 2011, it took 1.8 million yuan to buy a house, but now it only costs 4.7 yuan. The more I deposit Bitcoin, the more valuable it is, the more I spend the US dollar, the more I shrink, so I deposit Bitcoin, and spend the US dollar.