Microstrategy Chairman Michael Saylor warned firms and whales against lending Bitcoin directly while recommending issuing securities backed by Bitcoin instead.
The Bitcoin Maxi stated this in an interview with Colin Wu, founder of leading crypto media outlet Wu Blockchain.
Michael Saylor made the statement reacting to a question on MicroStrategy’s Bitcoin lending and Staking Strategy.
The founder warned against direct Bitcoin lending, stating certain risks involved with the investment strategy.
“ I think the smartest thing to do is to issue Securities backed by Bitcoin. When you loan out your Bitcoin to someone else, you are taking risks.
Like they might not give it back, but when you are issuing securities to the market, you are holding the Bitcoin.
So, there is a right-way risk and a wrong-way risk. A much better idea is to issue a billion dollars worth of Security backed by $10 billion worth of Bitcoin.
Bitcoin has paid 60% for the last 6 to 8 years. If you can be paid 60% by lending your money to the Bitcoin Network, and if you can borrow money for 8% to 10%, why wouldn’t you do that? That is a much better idea. Saylor Explained.
On Bitcoin Lending
Bitcoin lending is a form of crypto lending that allows users to borrow or lend Bitcoin (BTC) through various platforms. It can be categorized based on the type of exchange that facilitates the lending process, which can be centralized or decentralized.
Microstrategy remains the largest corporate holder of Bitcoin, with approximately 402,100 BTC in its custody. The Business Intelligence firm pivoted into crypto during the COVID-19 lockdown and has amassed heavy BTC assets since then. Other heavy investors in Bitcoin include Marathon Digital’s Holdings and Riot Platforms.
At the current Bitcoin price of $96,219, the total value of MicroStrategy’s Bitcoin holdings is approximately $38.7 billion.
