Two leading figures in the Bitcoin community are in disagreement over whether banks can—or should—provide sustainable yields on Bitcoin deposits.
Michael Saylor, executive chairman of MicroStrategy, which holds the most Bitcoin among corporations, recently expressed in a podcast that Bitcoin could evolve into “perfected capital,” offering returns through digital banking services.
On the other hand, Saifedean Ammous, the author of The Bitcoin Standard, argues that sustainable yield isn’t feasible with Bitcoin, given its fixed supply.
Saylor referenced companies like BlockFi and Celsius as examples of the first wave of “digital banks” offering Bitcoin yield through lending and rehypothecation strategies. However, both firms collapsed due to mismanagement and insolvency after liquidating their crypto-backed loans. Saylor believes, however, that if such services were managed by traditional banks with strong oversight, a sustainable yield could be possible.
Saylor suggested that mainstream banks like JPMorgan, backed by the U.S. government, could offer a “risk-free” 5% yield on Bitcoin without customers needing to sell their holdings. He argued that institutions with large balance sheets could provide sustainable Bitcoin yield, especially with government backing.
Ammous, however, remained unconvinced. He contended that this model could not work without a “lender of last resort,” referring to central banks that can print money to bail out failing commercial banks. In his view, this contradicts Bitcoin’s principles, especially given the inflationary risks of central bank interventions. He also noted that it is impossible to generate yield on Bitcoin without eventually exceeding its supply, as the total Bitcoin is capped at 21 million.
Saylor countered that large banks are supported by the government, and as long as the U.S. government remains solvent, such banks would not fail. He further argued that without yield, Bitcoin would become a “non-performing” asset, similar to government bonds with 0% yield. According to him, a functioning banking system is necessary to ensure the movement of capital and returns on Bitcoin holdings.