Conversation with Bitcoin veteran Jack Mallers: Dollar Crisis, Bitcoin Store of Value, and 21 Capital

*Source: *US Dollar Rapid Devaluation! Bitcoin Veteran Jack Mallers: Currency Crisis in Various Countries! 42,000 Bit Aircraft Carrier!

*Organized & Compiled by: *Daisy, ChainCatcher

Editor’s Note:

This article is compiled from the video interview with Jack Mallers and hosts David Lin and Bonnie Chang. Jack Mallers is the founder of the Bitcoin payment platform Strike and the co-founder and CEO of investment firm 21 Capital, and has been committed to promoting the practical application of Bitcoin in global payments and capital markets.

In the interview, Jack delved into the logical foundation of Bitcoin as a global store of value, analyzing new metrics such as "Bitcoin per Share (BPS)" and "Bitcoin Return Rate (BRR)", and pointed out the essential differences between 21 Capital and traditional ETFs. He also shared how Strike flexibly builds products based on local demands in different countries, as well as the political and macro background behind the institutionalization of Bitcoin.

The following content is the整理与编译 of the interview.

TL;DR:

1. The essence of currency is a tool for storing and exchanging labor, and Bitcoin is currently the optimal choice for value storage.
2. Under the pressure of debt and deficits, the value of Bitcoin as a scarce asset is increasingly highlighted.
3. The dollar export model is collapsing, and Bitcoin's status in the global value storage system is increasingly prominent.
4. Volatility is a prerequisite for obtaining returns.
5. Risk is not the same as volatility; true risk is systemic failure.
6. 21 Capital launched the "Bitcoin Per Share (BPS)" and "Bitcoin Return Rate (BRR)" indicators, reconstructing the evaluation system of the capital market.
7. Unlike ETFs, 21 Capital enhances investors' Bitcoin exposure through operations rather than static holding.
8. The rules of Bitcoin are determined by global node consensus and cannot be altered by governments or institutions.
9. Bitcoin is not a political bet, but a financial system built on mathematics and freedom.
10. The real risk is not volatility, but the systemic failure of centralized systems that rely on trusted counterparties.

The Value Logic of Bitcoin and the Global Currency Landscape

Bonnie: Do you think the continuous decline in the purchasing power of the dollar and the passive weakening of the currency in the United States will naturally drive the world towards Bitcoin, or will a major event like a financial crisis or war be needed to facilitate the shift?

Jack: Currency, like other goods, has its advantages and disadvantages in competitive free markets. However, unlike consumer goods, the role of money is to store and exchange people's time and labor. Even without a crisis, people will naturally choose the optimal store of value. Bitcoin has significant advantages in this regard.

Bonnie: You mentioned that Bitcoin has a growth potential of 400 to 500 times. What is the basis for this estimate?

Jack: I am not predicting prices, but analyzing the market size that Bitcoin is facing. The total value of global assets is about 900 trillion dollars, of which about half is used for storage of value. This means that humanity is looking for tools to store values worth 400 to 500 trillion dollars. Bitcoin is currently the most promising storage medium, being a product of technological advancement and an innovation in value storage methods. In comparison, the global stock market is only about 150 trillion dollars, and comparing Bitcoin to stocks or Ethereum severely underestimates its potential and positioning.

David: The price of Bitcoin has not risen since Trump took office, which has disappointed some investors. Were you surprised by this?

Jack: I am not surprised because the market expectations were wrong. They thought that Trump's presidency would bring liquidity expansion, but the reality is tightening. Understanding the current situation requires looking back to the post-World War II era, when the United States became the issuer of the global reserve currency by leveraging its gold reserves, establishing a system of "printing paper for real goods" through the export of dollars and import of goods, and gradually shifting from manufacturing to a finance-led economy. This structure has now become difficult to sustain. Trump's emphasis on manufacturing and fiscal balance is a response to the issues of debt and structural deficits. In this context, the value of Bitcoin as a scarce asset becomes increasingly prominent.

David: Some believe that Bitcoin is highly correlated with the stock market, while others think its movements are more influenced by the global M2 money supply. What do you think?

Jack: I believe that Bitcoin is closely related to the global M2. Against the backdrop of the depreciation of the US dollar, most asset prices have risen, and the apparent correlation is actually driven by common monetary policy. Bitcoin is a sensitive indicator for monitoring fiat currency liquidity, combining technical attributes with the ability to counteract excessive currency issuance. For example, China's trade surplus funds flowing into US stocks and real estate have driven up asset prices, exacerbating bubbles and wealth disparities. Once this type of capital stops flowing into US stocks, Bitcoin will decouple from stock market trends and demonstrate its independent value. It does not rely on profits or valuations but returns to real demand and scarcity.

Bonnie: How would the mainstream adoption of Bitcoin as a store of value affect the valuation of human capital, stocks, and real estate?

Jack: The proof-of-work mechanism of Bitcoin makes it an "energy currency" that must be created through time and energy, possessing scarcity and anti-inflation capabilities. When people are able to save and plan for the future, society becomes more stable. The harder it is to create money, the more society can withstand uncertainty.

Bonnie: How do you manage to hold almost no US dollars?

Jack: I do not hold assets that depreciate over the long term, only the best performers. I receive my salary, take out loans, and pay bills in Bitcoin through Strike, thus preserving my assets while meeting liquidity needs. Such services are making Bitcoin more practical.

David: Peter Schiff believes that Bitcoin has no intrinsic value and its volatility poses high risks. How do you respond to this viewpoint?

Jack: Volatility is a prerequisite for obtaining returns. The Sharpe ratio measures the gains brought by volatility; if high volatility accompanies high returns, then it is worth it. Risk is not equal to volatility; the real risk is systemic failure. Bitcoin operates based on mathematics and does not rely on counterparties, which essentially makes it lower risk.

Bonnie: For ordinary people, managing Bitcoin is more difficult than managing a bank account. How can we address concerns about losing private keys or getting hacked?

Jack: The uniqueness of Bitcoin lies in the use of freedom. You can hold your private keys yourself or choose to have them hosted.

While I encourage users to enhance their sovereignty awareness, the key lies in the choice it provides. This complete control over assets is not available in other financial systems.

David: Over the past decade, the Sharpe ratio of Bitcoin has outperformed most assets. Why is institutional allocation still relatively low?

Jack: The process of institutional allocation of Bitcoin is slow, but the trend is upward.

People often overestimate short-term changes and underestimate long-term impacts. Although the institutional structure is complex, I have seen a continuous increase in the demand for Bitcoin in the capital markets, and the allocation ratio will keep rising.

Bonnie: You are developing products related to Bitcoin, right?

Jack: Yes. There is a lack of institutional-strength Bitcoin representatives in the current market, and we hope to enter with blue-chip qualifications and scale. We not only hold billions of dollars in Bitcoin, but also have strong capital and Wall Street resources. More importantly, we focus on building products rather than simply hoarding coins. As participants in the Bitcoin protocol, we understand the technology and growth opportunities, aiming to build a bridge between technology and capital markets to promote the growth of "per share Bitcoin."

21 Capital: Building a Growth Model for 'Per Share Bit'

Bonnie: Are there any schedule or plans you can share next?

Jack: We are advancing the SPAC merger with Cantor Equity Partners, which is still under approval. XXI stock is our first product, and my focus is on advancing the listing process and communicating our business philosophy and the value of Bitcoin to the public.

David: Do you think that large institutions holding a significant amount of Bitcoin poses a threat to its decentralized spirit?

Jack: The design of Bitcoin determines that the amount held does not affect control, which is different from the proof of stake mechanism. It is a permissionless system, where anyone can participate freely and specific holders cannot be excluded. In front of the rules, everyone is equal, and this is the essence of Bitcoin.

David: Are you planning to go public and list the company on the exchange?

Jack: Yes, we have applied to merge with Cantor Equity Partners for a public listing, with the stock code XXI, which is currently still under review.

David: As a company centered around Bitcoin, will you consider hedging against price volatility?

Jack: We will not hedge Bitcoin assets. The company introduces "Bitcoin Per Share (BPS)" and "Bitcoin Rate of Return (BRR)" as new metrics, focusing on increasing the number of Bitcoins represented by each share. We hold long-term and do not sell coins, aiming to create a growth-oriented capital market tool centered around Bitcoin.

Note:

• Bitcoin per Share (BPS): Refers to the number of Bitcoins represented by each share of a company, used to measure the actual Bitcoin exposure of shareholders, similar to Earnings Per Share (EPS) in traditional finance, but measured in Bitcoins.
• Bitcoin Return Rate (BRR): Refers to the growth rate denominated in Bitcoin, used to measure a company's ability to enhance Bitcoin assets through operations without selling Bitcoin.

David: You mentioned the concept of BRR, how is it different from the Bitcoin ETF?

Jack: Investing in 21 is investing in an actively operated company, aiming to enhance the per-share Bit. In contrast, ETFs like IBIT are static exposures, and the number of Bit held does not change. 21 continuously expands its Bit exposure through financing and business growth. We combine blue-chip qualifications with startup potential, dedicated to enabling shareholders to grow alongside Bit.

David: Are you also the CEO of Strike? Will there be any intersection between these two companies in the future?

Jack: There is no overlap; Strike and 21 are completely independent. Strike focuses on consumers, providing services such as loans, trading, and custody; 21 is aimed at capital markets, concentrating on Bitcoin investment tools, with different positioning and goals.

Strike's product strategy and global implementation practices

Bonnie: How does Strike operate in countries with unstable currencies or weak banks?

Jack: We customize products based on regions. In areas like the US and Europe, we support local fiat currencies and Bit; in Latin America and Africa, due to the instability of fiat currencies, users prefer a combination of USDT + Bit. We are user demand-oriented, doing whatever they ask for, and this is the key to our success.

David: Will you adjust your strategy in the face of a more friendly crypto regulatory environment?

Jack: A friendly regulatory environment is conducive to entrepreneurship, and I am also glad to develop in the United States. However, Bitcoin does not rely on any political figures; it is a decentralized technology that transcends parties and political situations. What is truly valuable does not depend on who endorses it.

David: After regulatory easing, if banks offer crypto services, would you be worried about being replaced?

Jack: I'm not worried. Traditional banks lack understanding and product capability for Bit, while we have it. The key is to focus on ourselves and do our best. I was also questioned five years ago, but we persevered. Even if one day Jamie Dimon (Chairman and CEO of JPMorgan Chase) becomes a Bit banker, I would be happy to discuss again.

Immutable Protocol: How Bitcoin Self-Defends

Bonnie: Is it possible for the government or institutions to jointly modify the Bitcoin cap of 21 million coins if they hold a large amount of coins?

Jack: Impossible. The rules of Bitcoin are jointly determined by global operating nodes, and no one can unilaterally change them. Historically, those who attempted to modify them ended up forking, resulting in a significant drop in value. The neutrality and immutability of Bitcoin are at its core. Once the rules change, it loses value. The incentive mechanism also encourages participants to maintain the system rather than destroy it, and the total supply cap is nearly impossible to modify.

Bonnie: What changes have you experienced in your understanding of Bitcoin?

Jack: Initially, I viewed Bitcoin as a competitor to PayPal, but later I realized it is a core technology for storing time and energy. It made me rethink the meaning of money and the value of hard currency for social cooperation and long-term development, which profoundly influenced my financial perspective and decision-making.

David: Do you still buy pizza with Bit?

Jack: No. I spend with a credit card and then repay by collateralizing Bit through Strike, which allows me to keep my Bit while meeting my daily expenses. Bit is a savings tool, while the US dollar is for spending.

David: If I buy you pizza with Bitcoin, would you accept it?

Jack: No, I won't exchange quality currency for depreciated assets. Data shows that holding Bitcoin long-term can reduce living costs. In 2011, buying a house required 1.8 million coins, but now it only takes 4.7 coins. The more Bitcoin you hold, the more valuable it becomes, while the more you spend dollars, the more they shrink, so I save Bitcoin and spend dollars.

Source: ChainCatcher