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@ Jake Woodhouse
2024-01-17 19:43:05Wealth.
What is it?
People have different views.
All the stuff you own.
All the money you have.
All the time at your disposal.
A common strategy is for people to create what they call a statement of assets, which totals up everything they own, creating a number.
$1000
$10,000
$100,000
$1,000,000
Whatever it might be, in this instance I’ve chosen a Usd value, but it could be any metric.
Gbp.
Euro.
Yen.
Even the number of houses you own, perhaps it’s totalled in head of cattle, or maybe you’re a gold bug.
Bitcoin of course.
Really any metric can be used.
Once it was glass beads in certain parts of the world…
But what’s it all for?
At the end of the day, these assets are useful for what they can buy you, ie their purchasing power.
One’s wealth is a store-of-value.
A tool.
The more wealthy you are, the more you can buy in the future, and therefore the more confidence you can have against uncertainty.
Now let’s have a think about expenses.
For sake of argument, let’s say someone has net assets of $500k, and they spend $50k per annum.
Meaning after year 1, should their capital base not grow, they will have $450k remaining.
To highjack some startup terms, this person therefore has a burn rate of 10%, and a runway of 10 years from today.
Solid.
Without working for an income, and with costs remaining constant, this person has 10 years to opt between labour and leisure time.
One would assume a lot of leisure time inbound!
Whilst they have plenty of time to deliver value, should they choose to, growing their asset base again with income from labour.
There are other factors to consider of course.
Will their capital base grow in value?
Maybe they’ve made some good investments. Maybe they’ve made some bad investments…
Will their costs change over time?
Perhaps inflation is out of control in their local currency. Perhaps they decide to have a couple of kids.
As always in life, everyone is unique, and therefore we must all review ourselves through our own specific lens.
Which brings me to the specific point of today.
What happens if someone has “solved the wealth problem”?
Circling back to our friend with $500k and $50k costs per annum.
Traditionally, storing that wealth was hard.
If you chose your local currency, you have inflation risk.
If you chose gold, how do you carry it around with you without being stolen?
If you chose cattle, what if they catch a disease?
If you chose equities, will the company have performed well?
If you chose real estate, how do you know liquidity will be there when you need it?
In many cases, we have to farm out the management of our wealth to “experts”, who take a management fee for their services.
Not only separating us from our wealth to an extent, but maybe they have a bad year…
Point being, managing wealth is hard, and there are no guarantee’s the investments you’ve made or the money you saved will retain its purchasing power.
Then along comes Bitcoin.
Huge capital growth potential.
Easy to transport.
Zero operational costs.
Indeed, the best risk-reward opportunity, that many lifelong investors have ever seen.
Our friend, should they choose to put $500k into Bitcoin, and continue to spend $50k per annum, arguably has an endless runway.
Ie their purchasing power, now they own a deflationary money, continues to grow at a faster rate than their expenses.
“But Jake, everything is always getting so expensive!”
I hear you.
We live in an era dominated by inflationary monetary policy, driven by central banks printing money, and the fractional reserve banking system allowing levered debt creation on deposits.
So our friends $50k costs will increase over time no doubt.
Everything is getting more expensive in dollar terms.
But flip it around.
Actually this is a reflection on a denominator that is crumbling in value.
It can buy less stuff.
Should you choose Bitcoin, then your purchasing power is actually increasing over time, and you can buy more stuff.
All this goes to say: “what if you have solved the wealth problem?”
I for one, have spent the vast majority of my adult life, thinking about how to make money.
I was recently called “obsessed” about it.
Everything I see, in some way, gets spun into a business idea.
Boutique gym focused on personal training. Wholesaling a health product. Building software for Nostr. Just a handful of the latest…
But, having bought Bitcoin, I am very confident that my capital growth position is so strong, that our expenses will fall as a percentage of net assets.
I don’t need to micro-manage a lame real estate rental agent and an investment property.
I don’t need to hunt for exciting angel investments to buy equity in.
I don’t need to monetise a podcast that I create.
Will this be the case a year from now?
18 months?
5 years?
10 years?
There are no guarantee’s in life.
But I am very confident: YES.
Consider potential price action to the upside, the ability to self-custody, growing hashrate… It lays the foundation for extreme confidence in the probability of capital growth and continued ownership.
Of course there are things I dream of owning.
Beautiful houses.
Watches.
Clothes.
But this is just more stuff… What I really need is energy, food, family, health, and ultimately, happiness.
No doubt an exciting moment to have reached.
A higher level of consciousness some might say…
So, what does one do with their time?
Labour?
Or
Leisure?
Well, when one is so heavily conditioned to think about how to make money all the time, it’s going to be an interesting process to experience playing out.
Sometimes unlearning is harder than learning...
How do you feel?
Does Bitcoin “solve the wealth problem for you?”
I’d love to hear from you.
Best, Jake
Ps - 15 years ago my father died from a sudden heart attack, he was 48 years old, and was highly stressed. I inherited wealth from him in my 20’s and have spent the last decade figuring out what to do with it. I made a ton of mistakes, with terrible investments in some cases, but also learned of the opportunity that is Bitcoin. I don’t believe my father had solved the wealth problem hence his stress, but we’re fortunate to be able to use this new tool, which I genuinely believe will help people live healthier and happier lives. Let’s do it!