Is MicroStrategy the bitcoin bank Hal Finney dreamed of?
When bitcoin (BTC) was at $0.30, Hal Finney wrote in December 2010, “there is a very good reason for bitcoin-backed banks to exist.”
Fast-forward 14 years, and Michael Saylor announced that his MicroStrategy (MSTR) “endgame is to be the leading bitcoin bank.”
Outranked only by Satoshi Nakamoto, Blackrock’s IBIT ETF, and vanishingly few other holders of bitcoin (BTC), Saylor’s company holds 3% of the circulating supply in its $65 billion treasury.
Given the size of his asset base, Saylor has a market-leading ability to fractionalize its reserve for a substantial population of prospective banking customers.
For context, MicroStrategy’s treasury is roughly equal to the deposit base of banks like Comerica or Santander — and it plans to continue increasing its size.
‘Very good reason for bitcoin-backed banks to exist’
In 2010, Finney was working on co-creating the Bitcoin network with a small number of cypherpunks, including months of personal discussions with Satoshi Nakamoto.
As the price started to exceed a $1 million market capitalization for the first time, Finney started to write predictions about its potential to disrupt the entire financial system.
In Finney’s view, posted to the BitcoinTalk forum, BTC-backed banks are not only inevitable but will issue “their own digital cash currency, redeemable for bitcoins.”
Moreover, service as a bank reserve will be “the ultimate fate of bitcoin,” Finney wrote. BTC will serve “as a reserve currency for banks that issue their own digital cash” in Finney’s multi-cryptocurrency vision.
Far from a supplement to on-chain transactions, Finney concluded that interbank settlement will become the primary purpose of BTC. “Most bitcoin transactions will occur between banks, to settle net transfers.”
This is exactly what Saylor is planning to build. Specifically, MicroStrategy plans to become a merchant bank holding over $100 billion worth of BTC, backing a variety of financial products.
Non-cyberspace banking for the cyberspace bank
Complementing BTC itself, which Saylor describes as “a bank in cyberspace, run by incorruptible software,” MicroStrategy could offer non-cyberspace products like brick-and-mortar locations, cards, checks, tellers, brokers, and loan documents.
Read more: We made a dictionary of MicroStrategy’s invented terminology
To date, there are no US banks that hold BTC as a primary reserve asset, and regulation is partly to blame.
New legislation, such as the advanced-stage GENIUS Act bill, could ease the ability of banks to leverage BTC as a reserve asset for an initial class of digital cash offerings like USD-pegged stablecoins.
Critically, the US Federal Reserve will also need to ease the ability of banking master account holders to qualify and quantify BTC values for overnight reserves.
Despite these obstacles, Saylor thinks that he’ll eventually be able to turn his company — or one of its divisions — into a proper bank. If he’s able to accomplish this vision, it could complete one of the earliest predictions of BTC visionary Hal Finney.
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