No matter where you go, society all shares a need to move energy through space and time.
When it comes to the energy we produce from our work everyday, how do we preserve that energy through space and time in a way that withstands and outpaces the effects of our inflating currencies?
Investing is a natural result of fiat’s devaluation. A natural response to the gradual “leak” in monetary energy stored in faulty batteries.
Throughout history, we’ve devised countless investment strategies with different portfolio allocations, all in an effort to outpace the natural devaluation of the various forms of currency we’ve used to conduct trade with.
Given this context, what does bitcoin’s fixed supply of 21 million coins imply about the way we’ve traditionally invested? If we achieve hyperbitcoinization, and operate with hard money rather than inflating currencies, how do we need to “invest” in that world? Will it even be a necessity like it is today? Or can we just simply save in bitcoin?
Investing Vs. Saving
Zoom out for a moment and look at the fundamentals.
When you engage in “investments”, you are actively putting money into the market, buying into things with the expectation of profit in the future that you will have to sell in order to realize.
There are three parts involved:
- Putting money in
- Waiting on returns
- Taking money out
Each time you do this, you also incur a taxable event in which you’ll have to pay a percentage chunk of those returns to the government.
More than 60% of Americans invest in the stock market, but globally the vast majority of people are simply saving money, or barely breaking even, or failing to make ends meet. Most of the world does not have the luxury to invest, so they simply save instead.
When you engage in “saving”, you aren’t putting your money into any vehicle to grow over time. It’s staying put in an account to be kept safe, and somewhere that you won’t take from to spend too early.
When we had a more sound monetary policy, saving money didn’t require as much action other than the work required to receive payments, and over time you could put those savings towards a house or something else to move your life forward.
In today’s world, however, saving in our fiat currencies doesn’t cut it any longer.
If we want to maintain our purchasing power over the long term, we have to engage in investing in order to put that money to work and grow it. It’s commonplace for both parents to be working full-time to afford the life that a single income could fund a few decades ago.
“Savings” as we know it today just doesn’t work like it used to.
How We’ve Invested In The Past
Looking back at history, it’s funny to see what people used to store their wealth in:
- Cattle, in ancient times, served as “mobile banks” of sorts for humans with large collections of livestock. Cattle became convenient to store wealth in and transact with.
- Grains and other foodstuffs, in agrarian societies. Since they were critical to survival and you could store them for a long time, people found them valuable for storing and carrying their wealth.
- Tapestries, in the medieval era, required real proof of work to create, making them valuable among society. Beyond their beauty, they were easy to transport and exchange with, making them practical as a store of value too.
- Fine art, today and since long ago, has served as a unique hedge to inflation thanks to their scarcity and difficulty to produce, much like the characteristics of bitcoin.
- Companies, in the modern era, as we’ve digitized the storage process and fractionalized ownership of companies in a way that empowers individuals to participate and benefit from their growth.
And beyond equities, people from centuries ago could not comprehend how much investment opportunity there is in the world today. The friction to allocate capital is getting lower and lower, so you can make money from just about anything these days. Shoes, sports games, and even Magic the Gathering cards have all managed to accrue store of value properties, and we’ve built up near-frictionless ways for people to exchange these investments for other ones.
What “Investments” Look Like Today
Let’s take a step way back and try to observe the higher-level trends taking place in financial markets. What’s going on here, and what does bitcoin’s introduction tell us about what’s coming next?
As monetary expansion continues worldwide, the world is collectively getting more “drunk at the wheel”, so to speak.
What began as conservative, grounded investments in fundamentally sound trends has evolved into something closer to a casino than a space for seeding innovation.
Just look at survey data from Money Morning, which demonstrates how people are thinking about why they choose to invest:
Most people, regardless of their age, simply want to grow their net worth with investments and prepare for retirement. Only a bit more than 20% of people want to “be part of a new venture” when it comes to investing.
There’s nothing wrong with wanting to do what you can to outpace inflation, but it’s important to take note that inflation hedging is in fact the primary reason people invest – not necessarily to improve the world.
Speculation is also on the rise, as 2023 data from Statista suggests. Worldwide, we’re seeing a steady rise in online gambling users, with no projections of plateauing in the next few years.
Although the penetration rate remains relatively low at ~2%, that number has doubled since 2020, when governments all over the globe brazenly printed money to offset economic impacts of the pandemic.
The older an asset is, the more time it’s had to establish itself in its market, and the less potential volatility there is to the upside, unless that market unexpectedly hits a breakthrough to attract a wider audience. But in the ever-increasingly fast world we’re entering with the internet, artificial intelligence, and more, combined with the depreciating pressures of inflation on our purchasing power, we’re seeing the psychological desire for higher returns in the market skyrocket.
“Crypto”, to a large extent, represents the pinnacle of this trend that’s reaching breakneck speeds. It’s “peak financialization” in a fiat-driven world.
This is also a big reason why we’re seeing traditional financial giants start to get involved with the space and offer Bitcoin Spot ETFs. They know that the new money is flooding to this space, and they want a piece of the action. Simply providing fee-gated vehicles for legacy investors to gain exposure to bitcoin is a nearly risk-free money stream for them that they’d be crazy to deny themselves.
Vanguard’s CEO stepped out into the public eye when the SEC approved the spot ETF, explaining why the company is denying themselves that revenue stream and clients’ access to Bitcoin ETFS. After bitcoin ran straight to all-time highs following the approval, he resigned from his CEO position.
Everyone is buying into the idea that the world is getting wealthier, when in reality the money printer is stripping value of all its substance. Our growth has been stagnant for decades, economically speaking. It may not feel that way since technology is making our lives more and more comfortable, but in terms of global prosperity to enjoy these advances, we are lagging behind due to our debasing currencies.
What will the fallout be from all of this, and what comes out the other side?
A Crash Upwards
There is an unavoidable cost being incurred for every dollar that governments add to our collective debt. There simply aren’t enough spare dollars to pay off this debt, so the government must print more dollars to compensate. They’d rather eternally kick the can down the road and make their citizens pay via hyperinflation rather than cutting back on their own spending.
Counterintuitively to what you might think, this doesn’t mean everything collapses. In fact, every asset that people are “invested in” shoots up and to the right as the dollar’s value craters.
Sounds great, right?
Well not in the case that it’s the currency itself that’s collapsing. In this case, “cashing out” your profits is futile, since no one wants a hyperinflating currency.
There’s only one asset on the market that’s designed to let you secure and spend your wealth, no matter the state of any particular fiat currency.
Stop Investing
We’re in the midst of a “Bitcoin Gold Rush”, which is playing out much like the mid 1800s.
While investing will always stick around, in the current macro market, the greatest risk to anyone’s portfolio is not having bitcoin in it.
Investing is a complicated game. Which segments of the market are offering the best returns? Which stock should I pick? How do I allocate and diversify effectively?
Many people simply don’t have the time to figure all of this out, and they end up diverting to a financial professional to develop strategic portfolios that may (or may not) outrun inflation. That of course also costs money that could be better spent in order to preserve their purchasing power.
This isn’t what the world should have to rely on in order to do something as simple as preserving their wealth.
And during a period where institutions are flooding in to acquire as much bitcoin as possible over the next decade, the opportunity cost of missing bitcoin is too high if it’s to reach full hyperbitcoinization.
Save In Bitcoin
Investment portfolios merely represent society’s best attempts to create vehicles that move wealth, or energy, through space and time. And while many strategies have worked relative to fiat’s devaluation, nothing we’ve had prior to bitcoin is free of counterparty risk. Because of this, all investment strategies are more unpredictable than bitcoin, and thus more, and thus more risky too.
That doesn’t mean there aren’t chances to outperform bitcoin through investing. It’s inherently more risky to veer from bitcoin’s perfectly predictable monetary policy, so there should be an expected outsized return.
But instead of clinging to the traditional investment tactics of the past financial world, embrace the new possibilities that bitcoin introduced to us. Don’t think of bitcoin as an investment. Save in bitcoin. Think of it as your bank account, except that you hold the keys.
That’s how you’ll see the greatest benefits from bitcoin over time.
Anyone is able to save in bitcoin, but more than 1.8 billion people around the world are cut off from the mainstream financial system. Many more people can’t enjoy the “integrity” of the US financial markets, and are subject to much more harsh economic conditions as their currencies inflate more rapidly.
These are the people who especially don’t have the money or time to learn what an index fund is or talk with professionals to take care of it for them.
What they do have, however, are mobile devices and internet connections.
That’s all you need to start saving in bitcoin, and even without the internet, there are still ways you can use bitcoin. Because of how easy and accessible bitcoin is, it’s safer to assume global adoption of this technology for savings rather than the latest IPO to come out of Silicon Valley.
Why You Should Save In Bitcoin
Saving in bitcoin over the long term ensure that you grow:
- Your wealth over time, as its purchasing power grows rather than falls
- Your time to spend more on what you care about, as economic prosperity from bitcoin creates a more efficient world
- Your energy as you’re able to more properly conserve what you’ve spent at work with bitcoin than fiat
By contrast, saving in fiat over the long term guarantees that you:
- Lose your wealth as inflation drains its purchasing power
- Lose your time as you spend more of it trying to grow your savings balance to keep up with inflation
- Lose your energy as more of it gets spent trying to maintain your purchasing power, rather than embracing new technology that can do it for you
Even if your bank account is offering “high-yield savings accounts”, you’re still not outpacing real inflation over the long run. And sure, spending the mental energy to come up with a portfolio that outperforms both bitcoin and fiat is a possible, but futile effort for most. Why not lean into the future and make your life easier?
Saving in bitcoin is so simple, yet so many overthink it because we’ve been trained to believe finance is much more complicated than it needs to be. It’s only been complicated because the “baseline” measure of value is constantly changing and depreciating over time.
I like to refer to this thought from The Bitcoin Standard author Saifedean Ammous:
“Life is not supposed to have such easy shortcuts. But [bitcoin] only seems spectacularly easy because we’ve spent a century using money that’s optimized for government criminals to rob you & getting gaslit into believing life just has to get more expensive & saving is futile. You must keep working harder forever AND become a part-time hedge fund manager just to keep the wealth you’ve already earned from work. If it wasn’t for fiat larceny, everything would be always getting cheaper & saving would be an effective way to provide for your future. It isn’t that bitcoin is too good to be true, it’s just that it kills fiat parasitism and that is the world’s biggest problem.
If you & everyone you knew spent your entire lives sick from parasites, an antiparasitic pill will seem like a magic pill. If parasites could write your textbooks & newspapers, they’d call the anti-parasitic pill an unworkable utopian fantasy.”
We’re in need of a new bedrock. A new baseline measure of value to work with. One that can’t be manipulated to control markets. For too long, fiat has controlled the incentives and spending behaviors of countless people. But bitcoin represents the chance to take back control of your financial life, rather than being forced into a speculation game that places unnecessary risk on you and your family’s lives.
So start saving in bitcoin. Your future will thank you, and your present will appreciate being free from that financial stress.
How You Can Save In Bitcoin
If you have yet to begin stacking sats of your own, you have all different kinds of options available:
- Set up a dollar-cost average (DCA) schedule on KYC exchanges like Swan (affiliate) for the simplest user experience, but not the most private one.
- Buy from peer-to-peer non-KYC exchanges to maximize your privacy.
- Mine bitcoin yourself or join a mining pool.
- Run a Bitcoin node and collect sats from fees for routing payments.
- Interact with Bitcoin social media platforms like Nostr or Stacker News, and listen to podcasts on Fountain to develop small passive sat streams from your mobile device.
- Integrate bitcoin into your business and accept it as payment.
There are plenty of other methods you can use to save in bitcoin, but understand that you can achieve multiple of these at once and start saving in bitcoin through multiple different sources. Though the amounts may not be large from passive streams, or you may not be able to purchase a lot of bitcoin all at once, the long-term benefits will be clear when you see the dollar’s valuation continue to bleed against bitcoin.
Investing Is Here To Stay, But The Market Is Changing
Nothing about the fundamentals of investing changes on a Bitcoin standard. Just as gold was once the backbone of how we measured value, and then the dollar, bitcoin is simply replacing our old monetary instruments as the new measure of value.
The only difference will be that people won’t be forced into investing thanks to a depreciating currency. Thanks to the positive incentives that bitcoin fosters, investing will return to being grounded in supporting new ventures rather than feeding into greed with speculation, relying on the inflation of a dwindling currency to keep poor investments from going under.
The end result as to how this all looks is anyone’s guess, but one thing’s for sure: Investing will never look the same again on a Bitcoin standard. Companies and our interactions with them are entirely flipped on their heads with a currency that appreciates. It actually forces companies to keep up, streamline processes, and adapt to falling prices, in line with a natural, competitive landscape, rather than having rising prices put stress on both companies and consumers to cut corners wherever they can to retain more money.
On a Bitcoin standard, choosing to store our wealth in equities, commodities, or anything that’s not bitcoin inherently requires taking on more risk than simply holding the baseline value asset. The difference now is that we aren’t forced into that risk. You can choose to opt out of investing and simply save in bitcoin, and you’ll have a better financial future ahead of you than you would with fiat, and a potentially better present too as you spend less time worrying about your portfolio.
With the extra economic abundance created worldwide, perhaps the positive incentives of bitcoin will mean that more of that excess capital can be diverted to organizations and efforts that people truly care about. It enables a world for people to raise their voice and vote with their money on their own accord, rather than asking permission from those currently siphoning all the money to the top to spend it how we want them to.
Final Thoughts
Investing is here to stay, but its relevance to the everyday person will change as bitcoin uplifts savers and fosters economic growth around the world.
Life on a Bitcoin standard becomes cheaper over time, so rather than relying on speculation and greed to outpace inflation, you can simply save in bitcoin and leave investments to true supporters looking to start new ventures.
Humanity once stored wealth in cattle, and in 100 years from today, people may look back on storing life savings in a basket of companies as something just as ludicrous as using cows.
The earlier you are to bitcoin, the more advantage there is to using this strategy. Start today. Save in bitcoin and free up the mental space that you’d normally spend setting up an ideal portfolio to tend to the parts of your life that you want to!
Work hard. Save in bitcoin. Live harmoniously.
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