Would your spending and investment habits change if you knew that time was running out in the race to acquire a meaningful stake of the best money the world has ever seen? Would you forgo late nights at the club or a new gadget or toy, in order to set yourself up for a future where your wealth was protected?
By analyzing our time preference and how it affects our investments we may gain insight into what our true goals are and how we may achieve them. Every decision we make can be seen as an investment. Getting consistent exercise, good sleep and nutrient-rich meals can be seen as low time preference (long term) investments in oneself. These habits are an investment in our current and future health, with a payoff that tends to compound as we set ourselves up for success in all areas of our lives. Conversely, when we treat our bodies poorly and over-indulge, seeking high time preference (short term) gratification, these actions tend to compound too, leading to all sorts of undesirable effects over time.
For as long as most of us have lived, we have used inflationary fiat currencies. This has caused the prices of things around us to go up. When money loses value everyday due to inflation - we feel the need to spend it. We are subconsciously and often overtly incentivized to use the cash we have on hand, lest we miss out on a good deal, further inducing high time preference decisions. The prices of big items such as cars, houses and university education have grown astronomically in the past five decades, therefore we often must go into debt to attain these things. Living in debt can be taxing on the mind, body and spirit, and leads to a vicious cycle where we are indebted in the act of acquiring what we desire, but not necessarily what we need.
Flying in the face of this is a fascinating knock-on effect that can happen when you begin to learn about, and invest in Bitcoin. As a good tool for practicing low time preference, Bitcoin introduces sound money and sustainable wealth preservation into our lives.
While beginning to invest in Bitcoin, you may decide that accumulating a few thousand more SATs, (a SAT, or satoshi, is the smallest unit of a Bitcoin, 100,000,000 SATs = 1 Bitcoin) has become more important to you than buying an expensive coffee. A $6 coffee, purchased three days a week for one year, equates to $936. At five days a week, that is $1,560 in one year! You may start making coffee at home most mornings when you consider how much money you could instead be saving and investing in Bitcoin.
The implications of saving with Bitcoin and lowering one’s time preference are endless. It could mean less wasteful consumerism and pollution, less empty and instant gratification, and certainly less predatory credit and lending practices which could free individuals and the collective from debt. Less debt could mean more time allocated to doing what you love.
When looking at Bitcoin’s history, time has told us that consistent accumulation through Dollar Cost Averaging has been the safest and most stress free way to grow one’s stack. Bitcoin’s price is volatile. The broader cryptocurrency market and the global capital markets in general are full of noise, hype, FOMO (fear of missing out) and FUD (fear, uncertainty and doubt).
Drastic price swings can happen at any time in Bitcoin’s highly liquid and 24/7 market. Bitcoin is still in its monetization period and the global economy is still figuring out what it is worth. You can mitigate risks of over-exposure by setting up a conservative purchase amount, at a predetermined cadence, completely automated and barely noticeable as small amounts of money flow out of your bank account and are converted into Bitcoin.
Getting off zero is a great first step on the journey towards learning about and investing in Bitcoin. Making your first investment and implementing an investment strategy is a great way to incentivize learning more.
It is important to note that there are downsides to having a buy/sell option so readily available at your fingertips. In the highly competitive world of full-time investing/trading, relatively few individuals make a living from trying to pick specific entry and exit points in the stock market, Bitcoin market or any capital market. The old adage, “time in the market beats trying to time the market”, is a cliche for a reason. Many of Bitcoin’s historic gains in price have come during relatively few days during the year. If you happen to have sold right before a big run up, then you miss out. Sometimes you buy and then the price goes down. Patience and a long-term perspective, coupled with steady buying with recurring purchases are helpful tools while riding these waves.
Our time is the only thing more scarce than Bitcoin. Lowering your time preference by investing in Bitcoin while changing some of your spending habits to help facilitate this, may prove to give you more time.
If past performance can help us project what future results may hold, a Bitcoin DCA plan is undeniably a good strategy to deploy. Over a long enough time horizon, Bitcoin’s price will continue to rise as it obtains dominance as a worldwide preferred store of value. Betting on Bitcoin today is believing that there will continue to be an appetite for a secure, uncensorable, un-inflatable, non-political, digital and global money.
Sounds like a good bet!
