7 Takeaways From Our Webinar “Bitcoin Treasury: Hedging Against the Future”

On May 13th, we held our second crypto webinar with experts Jeff Rampson (Founder & CEO of PCG Advisory, Inc.) and American HODL, co-hosted by crypto evangelist Jay Gould and BIGtoken CEO Lou Kerner. We covered several key topics including the early trend of publicly traded companies holding bitcoin as a treasury asset, Tesla owning bitcoin, and the importance of education for the further adoption of bitcoin as a currency to hold.

You can view a replay of the webinar below:

Or you can read our seven highlights below.

1. Bitcoin Should Be A Company’s Primary Treasury Reserve Asset

The webinar began with the panelists giving major props to Michael Saylor and his business intelligence MicroStrategy company for advocating that companies begin using bitcoin as its primary treasury reserve asset. Last August, MicroStrategy announced that it had made bitcoin its primary treasury reserve asset and purchased $250 million of bitcoin to hold in its treasury, instead of cash. Michael Saylor has had a great influence on many people in the cryptocurrency space including our panelists. In fact, all of the panelists agreed that Michael Saylor is a brilliant “evangelist” providing cutting-edge educational tools to help companies learn how to transform portions of their treasury reserve assets of cash and cash equivalents into bitcoin. Although the number of companies holding bitcoin as a reserve asset and the amount are still quite small, the trend has started thanks to the efforts of Michael Saylor.

2. Elon Musk Still Strongly Believes in Bitcoin Despite Tesla’s Shift in Strategy

It should come as no surprise that shortly after a February 2021 8,000-person conference held by MicroStrategy titled “Bitcoin for Corporations,” a number of companies started to explore the use of bitcoin as a reserve currency including Tesla’s purchase of $1.5 billion of bitcoin. However, last week, Elon Musk announced that Tesla would no longer be accepting bitcoin as payment for its cars. Musk went on to state that “cryptocurrency is a good idea on many levels, and we believe it has a promising future, but this cannot come at great cost to the environment” likely bowing to shareholders’ various environmental concerns.

3. Believers in Bitcoin Would Not Use A Valuable Growing Currency To Purchase A Car Rather Than A Depreciating Currency Such As The Dollar

The reality is that bitcoin holders have purchased bitcoin because of the belief that it has more upside value than the traditional U.S. currency. Panelist American HODL described Tesla’s reversal of accepting bitcoin as payment, saying “nobody was actually going to buy a Tesla using their bitcoin because if you’re the type of person who holds bitcoin and believes in bitcoin, you believe that bitcoin is going to a million plus dollars. So why would you want to buy a depreciating asset with that.”

All of the panelists agreed that Musk continues to be a major supporter of bitcoin, particularly since Tesla still holds a significant amount of bitcoin. Jeff concluded “he didn’t divest any of the holding. He just said he wasn’t going to take prepayments. It’s not a big sacrifice.” As a major market mover, all of the panelists remain fascinated about each move Musk makes with his digital currency actions.

4. As The Threat Of Inflation Rises, Bitcoin Should Be Viewed As A Reserve Currency

As the economy continues to get stronger, there is a growing concern about rising inflation. In general, a result of increased inflation is a depreciation of the value of currencies. The panelists all agreed that holding too much cash is the equivalent of, as Michael Saylor states, “holding a melting ice cube.” American HODL then emphatically added that “cash is trash.” These inflation concerns are exacerbated as the Federal Reserve continues to print money, putting pressure on the dollar. On the flip side, bitcoin is not vulnerable to the whims of economic policies of printing money to stimulate the economy. Furthermore, bitcoin with its limited and fixed supply, has become a more stable and valuable currency. American HODL asserts “[Bitcoin] is not a fad…it was the best performing asset class of the last decade.”

5. It Is Still Difficult For Companies To Hold Bitcoin In Their Treasury

Despite the compelling reasons for companies holding bitcoin in their treasury, the panelists all agreed that there are still concerns, risks, and hurdles for this trend to take a firmer hold in corporate policies for a number of reasons. As Jeff Ramson stated, “most public companies are afraid of taking risks and… if you’re not a crypto related company, it would take a lot to get a board to approve something like that.” In addition, there are accounting issues companies face by holding digital currencies as well as a lack of familiarity of how to buy, trade, and hold these assets.

On the other hand, a corporate CFO’s job could be vulnerable if they do not invest in bitcoin as the bitcoin market increases and cash is further devalued. American HOLD opines “it’s actually irresponsible to not have a small allocation [of bitcoin] in your corporate treasury just as a hedge.”

6. Warren Buffet and Charlie Munger Still Despise Bitcoin

Warren Buffet and Charlie Mungers’ Berkshire Hathaway is one of the most successful companies of all times managed by what many consider to be two of the greatest investors ever. Buffett and Munger, disciples of the legendary Benjamin Graham, author of “Intelligent Investor” have produced an average 20% return since 1965 compared to the S&P average of 10.2%.

Still, Buffett and Munger are clearly not believers in bitcoin and other digital currencies. Most of the panelists agree that, despite Berkshire Hathaway’s stellar track record, they are irrelevant to the bitcoin conversation. As Jeff points out about Buffet “he’s not an early adopter of things … it is a generational change that you have to be really open-minded to.” Further, American HODL believes that value investing is “kind of dead” for now, stating “the transition to the digital age is really much more about understanding network effects, exponential growth, etc.” Jay Gould agreed adding “I don’t think they understand the exponential component. That’s the biggest issue.” For these reasons, while investing in bitcoin does not fit the Berkshire Hathaway model, there are certainly fundamental reasons why digital currency investing can be very profitable.

7. People Don’t Turn On A Dime: Education Is Essential to Helping People See The Crypto Light

With any new investment strategy, education is critical to one’s success. Fortunately, there are no shortage of ways for an investor, including executives managing a company’s corporate treasury, to learn more about the digital currency marketplace. One place to start would be reading Michael Saylor’s “The Mobile Wave” in addition to other MicroStrategy resources. Moreover, it certainly helps the credibility of the digital marketplace when one sees that firms such as Fidelity, BlackRock, Bank of New York, and Goldman Sachs have become bigger players in the space. Simply reading the paper and your favorite crypto medium writers everyday are easy ways to learn more about the new world of bitcoin and cryptocurrencies.

With each passing day, digital currencies are becoming more woven into the world’s economies and financial marketplaces. As investors and corporate executives become more educated and comfortable with these assets, the more these assets will become integrated into traditional parts of the financial system. Early adopters of this trend include companies who are beginning to hold digital currencies on their balance sheet treasury reserves. A year ago, people would laugh at this possibility. Today, many realize it is an inevitability.