I think I'm starting to understand the plan for microstrategy. It wants to be largest shareholder in the third bank of the United States (BOUSA3) — the spiritual successor to https://en.m.wikipedia.org/wiki/Second_Bank_of_the_United_States.

So, the fog is beginning to clear a bit.

Personally I still prefer self custody than trust that this attempt even if initially successful, will not derail with antitrust or straight nationalization. But that's me. Lots of people will prefer to hold MSTR/BOUSA3, and expect "supercharged returns even higher than the Bitcoin hurdle rate" while avoiding the hassles and responsibilities of self custody.

Doesn't really matter if mstr achieves their stated objective of of actually acquring 1mm bitcoin or not btw, numbers aren't that important. It's the ratios that matter. If MSTR is the biggest custodian, they will be in a position to negotiate with the united states to capitalize a new banking system, like JP Morgan did in 1907: https://en.wikipedia.org/wiki/Panic_of_1907.

First the happy path, option A:

Big US banks / wirehouses will transition to Bitcoin lending by buying Bitcoin from mstr (not Coinbase), ie "wells fargo making a dollars to bitcoin deposit with BOUSA3 (formerly mstr)". Coins will continue to be custodied at Coinbase, or wherever. As side note, unless it gets its act together and starts actually owning Bitcoin coinbase will transition to being a marginal player such as custodial service provider (everything multisig, lots of competition, crowded space), or a gaming platform like betplay or something.

Retail will then buy Bitcoin from the regular banks, aka "regular dude making a dollars to Bitcoin deposit at wells fargo." There will be pressure to do this during the hyperbitcoinization years for 2 reasons

We will be used to transacting with Bitcoin via rails provided by BofA, jpm and Wells Fargo by then. Over time most lending will becone secured, no more handshake with the bank manager loans, sorry.

Bitcoin owners that prefer interest to self custody will routinely earn 3 or 4% as they did under the gold standard, banks will lend out at 5 or 6% to earn a bit of profit and that will be that.

Although 99% of lending is collateralized now, it will still be possible for banks to fail. This includes BOUSA3 (formerly mstr). But if BOUSA3 fails, and then BOUSA4 also fails and BOUSA5, eventually people will figure out how to make failures less frequent or do more self custody. Probably interest rates will also be higher, and there will be less overall lending. It all depends on how much trust there is overall in society. Higher trust: lower rates, more lending. Most of the stock market is a deregulated pyramid scheme defi rug pull spac: lower trust, higher rates, less lending. So it's all up to individuals to be shitty or not in the end.

The happy path is gradual with a bit of turbulence at the end, but most people have time to onboard, there are not too many traumatizing shocks where people are forced into poverty overnight due to pieces of financial infrastructure failing.

Option b, less happy path: more sudden, traumatizing shocks, followed by government intervention. There is antitrust or nationalization order against mstr and they are forced to part with % of their capital to get a charter that allows them to operate as a full banking insititution alongside the existing BofA jpm Wells wirehouses system, as a sort of superbank. Still BOUSA3, but with less happier shareholders as they have been partially force divested.

There are many other options of course, right down to least preferable option Z: north korea style stalinist gulag world with barely functional totally locked down internet and the only ISP is the government, which also has 99% of the bitcoin, forcing the rest of us to transact in insect based protein food stamp tokens while we are forced to mentally click on a pornographic AI enhanced advertisement stream that is nanowired to our retinas or pick cotton by hand or whatever. Still running on bitcoin on layer zero though!