The Big Whale: You often say that Bitcoin’s great strength lies in being both a payment method and a store of value. But is that really possible?
Adam Back: What gives Bitcoin its value is, of course, its ability to preserve wealth. But its role as a means of payment and access to financial services is equally fundamental.
Today, according to the OECD, nearly 50% of the global workforce has no access to the financial system: no bank account, no employment contract, often paid in cash. These individuals are essentially excluded from the economy. Bitcoin offers them an entry point, which is a huge economic advantage.
In emerging countries, Bitcoin is primarily adopted for payments, particularly through the Lightning Network. In developed countries like France, where banking access is easy, Bitcoin is more seen as an investment.
Even if we don't use Bitcoin daily, it still makes sense to invest in it, much like it made sense to invest in Internet stocks in the early days of their adoption.
That said, it’s primarily Bitcoin as an investment — not as a payment tool — that drives its price, because payment velocity is very high: merchants often convert received bitcoins into local currency almost instantly.
In contrast, investments are long-term: you buy and hold. This behavior has a much greater impact on Bitcoin’s price dynamics.
Bitcoin is now seen as an investment not only by individuals but also by companies and even states. How do you view this shift? And did you foresee it 15 years ago?
It was hard to predict exactly how things would unfold. Within our community, we always believed Bitcoin was a brilliant idea: a rare, valuable asset. But from the perspective of traditional institutions — sovereign funds, pension funds, large banks — Bitcoin seemed extremely risky.
What’s changing today is the perception of risk, thanks to strong signals like the recent approval of spot Bitcoin ETFs in the U.S. Each regulatory step forward, each product launched by a major institution, further legitimizes Bitcoin.
We’re seeing acceleration: every week, a major institution announces a new Bitcoin project or recommends Bitcoin exposure to clients. This same dynamic is also visible among companies integrating Bitcoin into their treasury strategies.
In the medium to long term, this wave of institutional adoption is extremely positive for Bitcoin and should mechanically support its price.
Speaking of companies: in 2020, Michael Saylor surprised everyone by announcing that Strategy (formerly MicroStrategy) would adopt Bitcoin as a treasury strategy. You supported that decision right from the start. Why do you see it as the best way to manage treasury today?
The ability to save without watching your purchasing power constantly erode is a fundamental need. If you can't protect your savings, what's the point of working hard or planning for the future?
According to Maslow’s hierarchy of needs, water is at the bottom of the physiological needs — maybe we should add Bitcoin a bit higher up under security needs. Bitcoin is crucial because it allows value to be secured over time.
This issue affects individuals, but also businesses. In fact, with Blockstream (which I co-founded), we succeeded as early as 2023 in convincing some of our investors to allocate part of their investment capital directly into Bitcoin. We were among the first to have Bitcoin on our balance sheet.
Trace Mayer deserves a mention too — he was investing in Bitcoin startups back in 2012–2013. He insisted on investing directly in Bitcoin instead of fiat, and he encouraged startups to keep those bitcoins without selling, even offering a free put option: if the price dropped, he’d compensate them with more Bitcoin. He was way ahead of his time.
And what was the tipping point for businesses?
The real catalyst was central banks' monetary policies during COVID: the massive money printing led to significant asset inflation, especially real estate prices rising 10–15% per year.
Traditionally, companies park their cash in government bonds, but with low or even negative interest rates — as in Switzerland, France, Germany — they were actually losing money. For companies with large cash reserves, this was disastrous.
Do you have a concrete example?
One company I know had about $500 million in cash. It had been around for 20 years, but wasn't experiencing rapid growth.
Its CEO saw the reserves shrinking by about 10% a year. He considered buying real estate or other assets. Then a friend, Eric Weiss, suggested looking into Bitcoin. During COVID, he took the time to study it, started buying personally, and then, after internal approval, moved to buying Bitcoin through the company.
Did this shift transform the company's strategy?
Completely. What started as a simple treasury protection strategy evolved into an active Bitcoin strategy, using smart leverage while maintaining a small economic intelligence business.
They also discovered that, as a company, they had access to leveraged borrowing without the forced liquidation risks that individuals face.
Meaning?
A company can borrow based on its credit rating, for example by issuing bonds, using the company's overall value as collateral — avoiding liquidations during price fluctuations.
Moreover, their stock market valuation ended up exceeding the value of their Bitcoin holdings, thanks to expectations of future growth.
Isn't it counterintuitive that a company’s valuation exceeds its Bitcoin holdings?
It may seem surprising, but it’s actually logical: investors project what the company could accumulate over the next 10 years. Strategy, for instance, increased its bitcoins per share by 73% in 2023, and The Blockchain Group achieved even greater gains. Markets price in this expected growth.
But isn’t there a risk, particularly if a bear market occurs?
Of course, but I believe the four-year cycle with the Halving remains highly relevant. Even if the reward reduction appears smaller percentage-wise today, the amount of Bitcoin held off exchanges is rising. So, the Halving still matters.
And how do companies manage risk?
Take MicroStrategy: they issued convertible bonds with a 50% conversion premium, effectively getting Bitcoin at a 33% discount when accounting for dilution. Even if Bitcoin drops, they can refinance through stock issuance. Statistically, it’s unlikely that Bitcoin will be lower five years from now. So it’s an almost perfect way to manage treasury.
And what about the shareholders of a Bitcoin Treasury Company?
There’s one clear metric: the increase in bitcoins per share. As long as this number rises, it’s positive. Individual investors don’t have access to the same leverage companies do, so investing via a company offers a much more powerful growth strategy.
You also mentioned The Blockchain Group. How is their model different?
The Blockchain Group innovated by using Bitcoin itself as the base for their convertible debt. Even if Bitcoin stays under $120,000 for five years, they can repay using Bitcoin they already hold. This removes the extreme risk of having to sell at a loss.
And in terms of the sustainability of the model, compared to the company’s operational activities?
Many people confuse operational activity with treasury management. Acquiring large amounts of Bitcoin doesn't prevent a company from pursuing its core business. On the contrary, it provides global visibility, more resources, and greater flexibility to launch new products. It’s a highly sustainable model.
Ultimately, Bitcoin Treasury Companies are recapitalizing their operations. And by doing so, they will be the best positioned five to ten years from now to adapt to the evolving world.
Even if Bitcoin’s growth slowed — say from a 60% compound annual growth rate (CAGR) to 20% or even 10% — and Bitcoin became the global standard for value storage, the companies that accumulated the most Bitcoin would be the best positioned to dominate financial or operational activities.
It’s important to remember that for decades, companies focused almost solely on operations while neglecting balance sheets. Now that companies are strengthening their balance sheets, some critics say, "It’s unsustainable," but they overlook that a stronger balance sheet greatly enhances long-term operational capacity.
When Strategy reaches a $1 trillion — or even $10 trillion — market capitalization, they will have unlimited strategic options.
Today, miners’ revenues mainly come from newly minted coins. How do you see this evolving over the decades? Will Bitcoin remain viable relying only on transaction fees?
I’m not too worried about that. Historically, Bitcoin has more than doubled every four years, and that trend will probably continue for another one or two decades. There have already been periods when transaction fees were quite high.
Ultimately, Bitcoin holders want the network to survive. Even if mining became unprofitable, the holders...
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