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Author Topic: MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’  (Read 15162 times)
JayJuanGee
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August 11, 2024, 03:11:04 PM
Merited by fillippone (3), bitebits (1)
 #1061

It could be said that this opportunity was available to everyone, but for some reason only MicroStrategy were able to take advantage of it.
I think part of Saylor's big scheme is to convince other companies to follow in his footsteps.
Some have already started, in small steps, following the same playbook as the “Bitcoin Magazine owned" firm Metaplanet in Japan, while others have made vague announcements.
As we often say: “Slowly at Start, then suddenly”

Ultimately, Saylor's/MSTR's approach has been quite genius in terms of making sure to be out there and really selling their strategy right from the start. So in that regard, everyone and anyone had chances to follow some similar version of the Saylor/MSTR playbook - even though surely hardly no public company would have had the ability to carry out the strategy in such a seemingly psycho way as Saylor/MSTR, partially based on the way that public companies tend to be set up with a bit more scattered control...

There have also been several areas in which some folks had considered that Saylor/MSTR had gotten overly leveraged in bitcoin, yet they had never gotten into places in which they did not have enough cashflow to service various debts that they had, so the kinds of leverage that they had tended to be fairly easy to service - with no real harsh terms.. but maybe there was a bit of luck too in terms of chosen custodians of bitcoin and chosen debt servicing relationships, since so many custodians and banks had issues in the 2022 collapses - and we did see some relatively BIG entities suffer extreme losses based on their chosen custodians and bank relations... 

I would be nervous if I were Saylor/MSTR if I were to have more than 50% of my holdings with ONLY 1 custodian, such as Coinbase, and so I continue to wonder how solid are whatever custodian arrangements that Saylor/MSTR has.. Oh yeah and by the way, Saylor has more liberty in regards to how to hold his personal stash, which seems to be at least more than 17k bitcoin that he announced publicly, and would imagine that he personally has more than 25k bitcoin since he had sold so many personal shares of MSTR last year-ish, and he's gotta put that value somewhere.

1) Self-Custody is a right.  There is no such thing as "non-custodial" or "un-hosted."  2) ESG, KYC & AML are attack-vectors on Bitcoin to be avoided or minimized.  3) How much alt (shit)coin diversification is necessary? if you are into Bitcoin, then 0%......if you cannot control your gambling, then perhaps limit your alt(shit)coin exposure to less than 10% of your bitcoin size...Put BTC here: bc1q49wt0ddnj07wzzp6z7affw9ven7fztyhevqu9k
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August 11, 2024, 11:50:22 PM
Merited by JayJuanGee (1)
 #1062

<…>
If I remember correctly MicroStrategy uses Coinbase for order execution,yet custody I guess they do self custody.
No wallet has been tied to MicroStrategy, this leads me also to the self custody solution: they have more sofisticate way of assessing their balances rather than resorting to a single address to be monitored onchain.

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The Sceptical Chymist
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August 12, 2024, 05:27:15 AM
Merited by JayJuanGee (1)
 #1063

I'm surprised MSTR stock got split 10:1, just seeing as how so many other stocks don't seem to be splitting these days.  I know it's absolutely neutral as far as any statistics are concerned, but 20 years ago you wouldn't usually see a bunch of NASDAQ listings getting anywhere near $1k, which is what I'm observing not only with tech stocks but many others as well.

Didn't see any mention of the split in this thread, so I thought I'd bring it up. 

If I remember correctly MicroStrategy uses Coinbase for order execution,yet custody I guess they do self custody.

If it's true they keep their private keys off of Coinbase or wherever they trade, I'm curious as to how they keep them secure--not that I expect that to be revealed, of course; I'm just curious.  They've got a lot of bitcoin to keep an eye on.

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August 12, 2024, 06:18:20 AM
Merited by The Sceptical Chymist (5), JayJuanGee (1)
 #1064

I'm surprised MSTR stock got split 10:1, just seeing as how so many other stocks don't seem to be splitting these days.  I know it's absolutely neutral as far as any statistics are concerned, but 20 years ago you wouldn't usually see a bunch of NASDAQ listings getting anywhere near $1k, which is what I'm observing not only with tech stocks but many others as well.

Well, as you may know, they do it because there are many more people who can afford to buy a couple of $130 shares than $1,300, apart from the psychological effect that makes them look "cheaper" even though they are not.

I would be nervous if I were Saylor/MSTR if I were to have more than 50% of my holdings with ONLY 1 custodian, such as Coinbase, and so I continue to wonder how solid are whatever custodian arrangements that Saylor/MSTR has...

If I remember correctly MicroStrategy uses Coinbase for order execution,yet custody I guess they do self custody.
No wallet has been tied to MicroStrategy, this leads me also to the self custody solution: they have more sofisticate way of assessing their balances rather than resorting to a single address to be monitored onchain.

If it's true they keep their private keys off of Coinbase or wherever they trade, I'm curious as to how they keep them secure--not that I expect that to be revealed, of course; I'm just curious.  They've got a lot of bitcoin to keep an eye on.

Arkham Intelligence identifies MicroStrategy Bitcoin holdings pooled with Fidelity

Quote
Roughly 107,000 BTC of MicoStrategy’s holdings appeared pooled with Fidelity Custody, while 79,000 BTC was “held in segregated custody including Coinbase Prime.”

From our point of view as individual holders it is probably hard for us to see it, but for companies it makes more sense to have the Bitcoins in the custody of a company with a specialized custody service that they can sue if they lose them or something. Those services, apart from a lot of security measures, will have an insurance for those issues.

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JayJuanGee
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August 12, 2024, 06:49:32 PM
 #1065

From our point of view as individual holders it is probably hard for us to see it, but for companies it makes more sense to have the Bitcoins in the custody of a company with a specialized custody service that they can sue if they lose them or something. Those services, apart from a lot of security measures, will have an insurance for those issues.

I have a certain level of doubt that whatever insurance that the various custodians supposedly have in place is anywhere close to adequate in terms of really covering the BTC that they hold, yet surely we likely appreciate that the insuring of bitcoin and the custodying of bitcoin and other kinds of digital assets (maybe including shitcoins) remains an evolving kind of a service that could end up playing out quite painfully if there really ended up being large scale disappearances of bitcoin holdings (or other ways that custodians might end up losing access to the coins that they are supposed to be holding). 

1) Self-Custody is a right.  There is no such thing as "non-custodial" or "un-hosted."  2) ESG, KYC & AML are attack-vectors on Bitcoin to be avoided or minimized.  3) How much alt (shit)coin diversification is necessary? if you are into Bitcoin, then 0%......if you cannot control your gambling, then perhaps limit your alt(shit)coin exposure to less than 10% of your bitcoin size...Put BTC here: bc1q49wt0ddnj07wzzp6z7affw9ven7fztyhevqu9k
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August 13, 2024, 02:45:39 AM
 #1066

I have a certain level of doubt that whatever insurance that the various custodians supposedly have in place is anywhere close to adequate in terms of really covering the BTC that they hold, yet surely we likely appreciate that the insuring of bitcoin and the custodying of bitcoin and other kinds of digital assets (maybe including shitcoins) remains an evolving kind of a service that could end up playing out quite painfully if there really ended up being large scale disappearances of bitcoin holdings (or other ways that custodians might end up losing access to the coins that they are supposed to be holding). 

I don't know exactly how it is, but in the fund industry, both indexed and mutual, and this includes pension funds, they have a separate custody part and I don't remember there being any major problems with it. We are talking about quite a few trillions.

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JayJuanGee
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August 13, 2024, 03:51:41 AM
 #1067

I have a certain level of doubt that whatever insurance that the various custodians supposedly have in place is anywhere close to adequate in terms of really covering the BTC that they hold, yet surely we likely appreciate that the insuring of bitcoin and the custodying of bitcoin and other kinds of digital assets (maybe including shitcoins) remains an evolving kind of a service that could end up playing out quite painfully if there really ended up being large scale disappearances of bitcoin holdings (or other ways that custodians might end up losing access to the coins that they are supposed to be holding). 
I don't know exactly how it is, but in the fund industry, both indexed and mutual, and this includes pension funds, they have a separate custody part and I don't remember there being any major problems with it. We are talking about quite a few trillions.

You might be correct in terms of an implication that there could be responsible ways of custodying bitcoin (and perhaps shitcoins too, to the extent that any of the "crypto assets" matter outside of bitcoin).    It seems that there are quite a few tools that are still being developed, and surely it could be the case that some custodians create their own tools and checks/balances to lessen the likelihood of losses (I would think that the risks could not be completely eliminated, and I think that there should be reasons to be worried.. and surely I am not claiming to be any kind of expert beyond being a bit scared on behalf of others - not that some of the losses through various 3rd party custodians would necessarily be reflected of the safeguards that might be taken with some of the current custodians... and yeah, I hear about all kinds of potential solutions that include multi-sig and multi-jurisdictional protections, yet I can hardly imagine if there might not be some potentially BIG incidents that might end up happening - and yeah sometimes there might be cover-up involved too, so we might not hear about "incidents" as they are happening.

1) Self-Custody is a right.  There is no such thing as "non-custodial" or "un-hosted."  2) ESG, KYC & AML are attack-vectors on Bitcoin to be avoided or minimized.  3) How much alt (shit)coin diversification is necessary? if you are into Bitcoin, then 0%......if you cannot control your gambling, then perhaps limit your alt(shit)coin exposure to less than 10% of your bitcoin size...Put BTC here: bc1q49wt0ddnj07wzzp6z7affw9ven7fztyhevqu9k
fillippone (OP)
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August 14, 2024, 10:12:51 PM
 #1068

I have a certain level of doubt that whatever insurance that the various custodians supposedly have in place is anywhere close to adequate in terms of really covering the BTC that they hold, yet surely we likely appreciate that the insuring of bitcoin and the custodying of bitcoin and other kinds of digital assets (maybe including shitcoins) remains an evolving kind of a service that could end up playing out quite painfully if there really ended up being large scale disappearances of bitcoin holdings (or other ways that custodians might end up losing access to the coins that they are supposed to be holding). 

I don't know exactly how it is, but in the fund industry, both indexed and mutual, and this includes pension funds, they have a separate custody part and I don't remember there being any major problems with it. We are talking about quite a few trillions.

In the TradFi world, asset managers usually have a custodian agent, which is a third party in the agreement between the investor and the asset manager. Custody is a legacy, ol style. boring business, where scale economy does count. It's then so common for the market to have only a few custodians.

I think in the Bitcoin world we are going in the same direction, with custodian subjects separated from holders or asset managers.

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