• Michael Saylor proposes Bitcoin-backed loans, allowing BTC holders to borrow USD without selling their assets.
  • Saylor suggests major banks like JPMorgan and Bank of America could offer Bitcoin-backed loans for liquidity and yield.
  • Economist Saifedean Ammous warns that Bitcoin-backed loan models may be risky, comparing them to past failures like Celsius and BlockFi.

Michael Saylor has suggested loans backed by Bitcoin in a recent podcast. He believes this could revolutionize traditional banking. The discussion featured Saylor alongside economist Saifedean Ammous, who expressed skepticism about the idea.

Saylor’s Plan for Bitcoin Loans

Saylor argued that major banks like JPMorgan and Bank of America could offer USD loans against Bitcoin holdings. This would allow Bitcoin holders to borrow cash while keeping their assets. 

Saif correctly exposes that the MSTR model is dependent upon the dollar not failing. But Saylor is right that its not going away in short run. Mid term? We’ll see.

— Bill Barhydt (@billbarX) September 24, 2024

According to Saylor, such loans would let BTC holders generate yield without selling their Bitcoin. Besides, they could also benefit from future price increases.

MicroStrategy is well-positioned to pursue this plan due to its large BTC holdings. Recently, the company acquired $1.11 billion in a debt offering which has boosted its Bitcoin holdings. 

Saylor sees a system in which Bitcoin serves as collateral, generating liquidity and yield for its holders. As a result, BTC holders may be able to pursue new financial opportunities without having to sell their holdings.

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Ammous Raises Concerns Over Bitcoin Loans

However, Saifedean Ammous warned about the risks involved in such a model. He noted that leveraging Bitcoin without a safety net could lead to failures, similar to Celsius and BlockFi . Ammous highlighted the danger of relying on large institutions without a lender of last resort. He cautioned that without proper safeguards, such lending models could collapse.

Additionally, Ammous questioned the long-term stability of the US dollar. With the growing trend toward de-dollarization and the emergence of systems like BRICS , relying on USD for Bitcoin loans might be risky. He argued that such an approach assumes the dollar’s dominance will continue indefinitely.

The podcast highlights a sharp divide between Saylor’s optimism and Ammous’ caution. Saylor sees Bitcoin-backed loans as a way to unlock financial flexibility for BTC holders. Meanwhile, Ammous stresses the risks of such strategies, especially in an uncertain global financial system. Both views reflect the ongoing debate about Bitcoin’s future in traditional banking.

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