Author: Bitcoin New Dad

While at the neighborhood park last weekend, Jackson saw another boy playing with a toy rocket. And for context, rockets are one of his favorite things right now.

So of course, as soon as he saw it, he ran over to investigate.

Shortly after, Jackson told me, “I want it…”

Followed by, “I need it!”

And predictably, “can we buy it?”

In my attempt to teach Jackson that money makes the world go around (lesson 1), I remind him that if he wants a toy, we’ll first need to find it for sale at a store. Then, we will need to pay for it…which requires money.

And on cue, Jackson will then reach into his pockets (even if his pants don’t have pockets…) to give me some “money”.

Right now, in Jackson’s toddler brain, “money” can be anything – twigs, leaves, or whatever he is holding in his hand at the moment. Of course, he doesn’t yet understand why some things, like leaves, will NEVER be money.

And that’s what I want to talk about today.

Intuitively, you and I know that leaves will never be money. But at the same time, have you ever thought about why?

My observation is that 99.9% of us haven’t given any thought about what makes some money be good while other money is bad.

And yet, it’s vital to understand.

Why should you care?

Previously, in lesson 1, we established that money makes the world go around. Simply put, we need money in order to trade for products (like diapers or toy rockets) and services (like doctors visits).

If you agree with this simple framework, then the next logical question to ask is, “am I using good or bad quality money?”

Why? Because if you are using bad quality money, it means you are taking risks with your family’s financial future. And that is a bad thing.

What kind of risks? Here is an example.

Imagine on pay day, your boss thanks you for the good work and gives you a bag of leaves instead of your normal paycheck. And imagine, you decide to accept that bag of leaves as compensation.

The risk is, when you go to buy groceries, or diapers, or to pay a bill, you are going to be in for a rude surprise when other people won’t trade you products / services for that bag of leaves.

Yes, this is hyperbole, but the point I’m trying to make is that not all money is good. Some are bad. And as parents, we need to be able to distinguish between the two.

Not all money is created equal

First things first. “Good money” and “bad money” are relative terms. “Good” is only good when compared to something…not as good (ie. bad).

Now, zooming out, if you are lucky enough you live in the United States and / or get paid in US Dollars…congratulations, you are using (relatively) “good money”!

On the other end of the spectrum is “bad money”. An example would be the Argentinean Peso. (I’ll explain why shortly)

And then of course, there are a long list of things that are so bad at being money, like leaves, that it will never make the cut.

Now that we’re on the same page that there is a spectrum, let me explain what makes some money good, others bad, and some so bad that no one will accept it.

Good money vs. bad money

Here is a straight forward way to understand good vs. bad money.

Let’s say today, 100 units of “money” can roughly buy one month worth of diapers. But imagine right now, you already have a box of diapers at home and don’t have space to store more.

What would you do? As a parent, it’s simple – I would save that money for now (knowing that next month, I will need to buy more diapers).

Now here is where good money or bad money comes into play:

• If I am using a good money, then in the future, that same 100 units would still roughly buy one month worth of diapers
• If I am using a bad money, in the future, that 100 units of money would not be able to buy one month worth of diapers anymore

In Argentina, the money used to be of good quality. But now, it is bad quality (source).

That means in Argentina, if you earn and save 100 units of money today (that can buy a month worth of diapers today), by next month, that same box of diapers now costs 150 units (ie. 50 more than the previous month).

As a parent, I hope you can see how bad money comes with risks.

Specifically, it would mean that next month, you would have to work harder (ie. overtime, second job) to make 50 more units of money…just to buy the same box of diapers that costs 100 units today).

Else, you might find that you can no longer afford the diapers you need..

Getting paid in good money

As parents, we work and make money. We then spend some of the money right away (to buy products and services) and save some of it too (to buy products and services we need later).

But we need to make sure the money saved (to be used in the future) will still be able to buy roughly the same amount of stuff as it can today.

Otherwise, the whole concept of “saving for a rainy day” breaks down. And that would bring big issues for us, as parents, to weather a financial storm such as a last second doctors visit, a “check engine” light appearing in the car, or any other unexpected expense that can and will pop up.

Again, if you earn and save in US Dollars, relatively, you are using good money. As an aside, outside of the United States, it is why so many people also save using the US Dollar vs. their local form of money (ie. Argentinean Pesos, Lebanese Pound, etc).

What does this have to do with bitcoin?

If you’ve read this far, congrats! You are ahead of 90% of parents and well on your way to understanding bitcoin.

As a recap:

1. Money makes the world go around
2. Not all money is equal (ie. there are good and bad kinds of money)

And even though I haven’t directly talked about bitcoin yet, these two foundational concepts will help you see exactly how and where bitcoin fits in. I promise!

But first, we have to get on the same page about one last thing…what happens to bad quality money?

Let’s cover that next! You can read lesson 3 here.

“I don’t want to pay for it.”

“I DON’T want to pay for it!”

“I DON’T WANNNNNNNNT TO PAY FOR ITTTTTTTTTT!”

I nervously smiled at the cashier while checking out at Whole Foods, all while Jackson chanted over and over again that he didn’t want to pay for the groceries.

Before long, I noticed the cashier peering into the bottom of the stroller to make sure there weren’t any items I had “forgotten”. Of course, to make it obvious that I was not stealing, I made an over-the-top gesture to double and triple check the stroller basket while loudly telling Jackson about the importance of paying.

I’m sure this was quite the sight to see…!

You see, at 2.5 years old, Jackson is starting to grasp the concept of money. Of course, he doesn’t actually understand it yet…but enough where he deems there are some things worth buying (like toys) while other things (like groceries) don’t make the cut.

And every time we check out, he’ll remind me whether or not we should pay.

Even though Jackson is just starting to learn about money, he already understands that money makes the world go around.

And this is what I want to talk about today.

Why should you care?

Ultimately, my goal is to help you, as a fellow parent, understand why you should care about bitcoin. (sneak peek – I believe bitcoin is the most important thing to build financial freedom for your family)

But in order to do that, we have to first get on the same page about how critical money is in our lives. Once we’re there, we can then explore how and where bitcoin fits into the equation.

Ready? Let’s get started!

Money makes the world go around

For every kid you have (or want to have), plan to set aside roughly $300,000. That’s right, more than a quarter of a MILLION dollars, according to Investopedia!

That’s because there are going to be expenses like:

• food and diapers…which requires money to pay for
• school…which requires money to pay for
• extracurricular activities like soccer camp or music lessons…which also requires money to pay for

As parents, this is our responsibility. Put another way, when the bill comes due, the money needs to be there to pay for it. Else, there will be some kind of financial stress on the family to make ends meet.

Making sure the money is there

For most of us, we make money by working at a job. And it doesn’t matter if you are a doctor, teacher, cashier, or like me, a Product Manager working at tech startups.

At work, each of us trades our time (ie. by showing up, doing the work, and helping our respective company achieve their goals). And in exchange, we receive a paycheck for that time we put in.

Money is the tool that makes all the back-and-forth trading possible. This is what I mean when I say that money makes the world go around:

1. We trade our time for money at work
2. We then trade our money for products and services we need
3. Rinse and repeat

And just for shits and giggles, let’s imagine how chaotic life would be without money:

• how would you trade for groceries?
• what happens when your kids’ school sends a tuition bill to reserve a spot for next year?
• if it weren’t money, how would you get compensated for the work you do?

Again, to hammer the point home, money makes the world go around.

What if we just get rid of money?

Sure, maybe in some distant future, we’ll evolve past the need for money.

But for me, as a parent living in the here and now, with a need to buy food, diapers, pay for school, etc…I have no choice but to anchor to the reality that money makes the world go around.

Lesson learned

If you’ve gotten this far already, congrats! Even though it might not feel like it yet, you are already ahead of 80% parents on your way to understand bitcoin.

That’s because you now understand lesson #1: money makes the world go around.

But now, knowing that money is central for all the trading we need to perform, we need to look one level deeper at the quality of the money we are using.

Why? There are 100+ different kinds of money like US Dollars, Euros, or Argentinean Pesos. And simply put, not all those are good quality money. Meaning…some are bad quality money.

Why does this matter? Like it or not, if you are using a bad quality kind of money, sooner or later, your family is going to have problems. Big problems.

And as a parent, it is our responsibility to make sure that doesn’t happen. Because if it does, it means your family is going to face some kind of pain.

So let’s take a look at what makes money good or bad. And of course, we’ll then be able to compare against what we are actually using day-to-day.

Continue reading here!

(~5 minute read)

I remember the first time “Nancy” (not her real name) asked,

“Can you pay me each day this week?”

You see, normally, we paid Nancy at the end of the week but not at the end of each day. So the ask caught me off guard.

And while it wasn’t a big deal to pay daily, it made me think about what she must have been going through financially…something that roughly HALF of all New York City households face (source).

Finally, it made me reflect how much better life is on the OTHER side of stressing out about how to make ends meet when living day-to-day or paycheck-to-paycheck.

That’s what I want to talk about today.

Setting the stage

When Jackson was born in late 2020, I took an extended paternity leave to enjoy the experience of being a new Dad. After roughly 1.5 years of play time together, sorting out nap schedules, and making sure he was hitting early developmental milestones, I decided to go back to work and landed an exciting opportunity at Coinbase.

As part of the transition, before starting at Coinbase, we found Nancy, a nanny who could help care for Jackson. Overall, she was a good fit for our family. And Jackson liked being with her during the day. And she helped around the house too – which was appreciated.

That was her end of the deal to uphold.

And my end of the deal was to make sure Nancy got paid each week, and ON TIME. That’s because I knew she was the primary breadwinner for her family. And they counted on her to make ends meet.

So of course, when she asked to be paid daily, I made sure she got paid before she walked out the door each evening.

Living day-to-day

Without passing judgement or criticizing anyone else’s financial situation, my observation is that “Nancy” was mostly living a “week-to-week” life, but sometimes regressed into “day-to-day” mode.

Put another way, most of the time, as long as she got paid weekly, she was able to keep up on a metaphorical treadmill.

However, when Nancy needed to be paid daily, that meant money was tight and she was facing some kind of financial stress (ie. maybe it was an overdue loan, or her cell phone company threatening to cut off service, or maybe even a nasty overdraft fee from her bank).

I don’t know the details, but whatever she was dealing with, I have empathy. That’s because growing up, I saw my parents in a similar financial position too.

And it wasn’t fun.

Now, as a parent myself, I take responsibility to protect my family from this kind of financial stress.

Why am I telling you this?

Contrasting against Nancy, I now live life from the other side.

After years of saving and investing, my family is now in a position where we do not have to worry about day-to-day, month-to-month, or even many year-to-year related expenses anymore.

For instance, I don’t have to worry about how we’ll buy groceries this week. Or how to pay the mortgage this month. Or even how to cover the cost of a vacation (like a recent last minute family reunion trip in Spain!).

Now, to be clear, it doesn’t mean we don’t have ANY money related stresses. Of course we do, and we still budget and plan for bigger ticket items.

But I won’t lie – as a parent, it feels good not having to stress about money every day.

Now, before this comes off as bragging / boasting, I want to assure you it is not the case. What I’m trying to do is to paint a picture, that as a parent, life is more fun when you don’t have to struggle with “day-to-day” expenses (like Nancy did) or even “month-to-month” ones (like 62% of Americans are, according to CNBC).

Also, I want to show you a straight forward strategy I use (and continue to use) help my family move ahead financially.

I promise…it’s not complicated. But sneak peek: it does involve bitcoin.

Ready? Let’s go.

The money ladder

Jeff Bezos, the founder of Amazon, is worth more than $100 billion (source). Without getting into whether it is fair that he has so much money…let’s just focus on that (big) number for now.

Assuming he has $100 billion, do you think he worries about how he is going to:

• pay for lunch or dinner?
• fix his car if it breaks down?
• pay next month’s rent?

The answer is, “No, no…and no”.

Now, contrast this with Nancy, who sometimes needed to be paid daily in order to make ends meet for literally, THAT DAY.

These are the opposite ends of the spectrum. And zooming out, most of us are somewhere in between. To help visualize:

I hope the concept is clear. But, let me go ahead and call out the key takeaway so you can see how you can try it out.

The objective: level up

The big idea is that, as a parent, you need to level up from living a “day-to-day” life to a “week-to week” life, and beyond.

For instance, if my family was operating “day-to-day” right now, my first and only goal is to figure out how to move up into at least a “week-to-week” level if not “month-to-month” in order to get some breathing room. Once there, then the next goal is aim to operate from a “year-to-year” or even “decade-to-decade” position.

Why? I mentioned this above, but the more my family levels up, the less we have to worry about the small(er) ticket items anymore. And over time, as we continue to level up, we also get to worry less about big(ger) ticket items too.

Not in the cards?

I’m sure you are thinking, “that’s great for Jeff Bezos, but I’m not the founder of a billion dollar start up…so how am I going to move ahead on the money ladder?”

Don’t worry. Either am I. But yet, my family has been able to do it. And everyday, I see other families taking advantage too.

How? This is where bitcoin comes in.

How bitcoin can help

When I first tell fellow parents about bitcoin, the most common reaction I get is, “you are insane…I don’t want to take crazy risks with my family’s financial future on something so volatile.”

And I don’t blame them. On the surface, most parents see the price of bitcoin with a day to day lens. And what they see is a wild roller coaster that goes up 5% in one day, down 10% the next day, and then back up again.

And the volatility is where most parents get stuck. But this is a big mistake…

Actually, I recommend doing the exact opposite thing. Instead of trying to time the market or day trading with foolish hopes of playing the volatility, all I do is just buy some. And hold it. And keep holding it with a multi-year time horizon.

Why? If you zoom out and look at bitcoin on a longer time horizon (ie. multi-year), instead of seeing crazy volatility, the picture is very clear.

Bitcoin is BY FAR the best performing asset of the last 10 years. And I say that as someone who also owns stocks and real estate too.

The strategy

Buy bitcoin. Hold bitcoin. That’s it.

I am grateful that when the price of bitcoin was just $500 (back in 2013), I just bought it instead of trying to time the market and wait for it to drop to $450 to get it for $50 cheaper.

That’s because most likely, if I waited for $450, I would’ve also tried to wait for it to go to $400 too. This is human nature. But, when the price of bitcoin shot up, I would’ve still been sitting on the sidelines with 0 allocation to bitcoin waiting for it to fall back to $400 or $450…but never to see it that low again.

Instead, because I bought it and held it for the long term, today, that initial $500 investment is now worth roughly worth $27,000 (as of 5/16/2023).

I like to think of my bitcoin strategy as the equivalent to taking $500, putting it in my couch cushions, waiting 10 years, and coming back to find that it has now become $27,000.

Sure, during that time, it has also gone through multiple short term +80% drawdowns. But since I just held it (ie. didn’t day trade), I’m up significantly. All without the stress of watching it go up 5% today, down 10% the next day, etc.

Finally, having studied bitcoin intensely, I will continue to keep bitcoin in the “couch cushions” for at least another 10 years because I know we’re still very early. (Check out this article from Jesse Myers, a Stanford MBA graduate and former Bain consultant, on bitcoin’s full potential value of $10 million / coin).

Life on the other side, revisited

If you own something that goes up by +5000%, it becomes life changing money.

And when it keeps consistently increasing in value, it gives your family the ability to live life without stressing about all the smaller ticket items in life like weekly groceries, a monthly mortgage payment, or even a nice annual vacation.

Now, here is the hard part: if you want to take advantage of bitcoin’s growth potential, it does require you to buy and hold some bitcoin in your family’s financial portfolio.

“I can’t afford a whole bitcoin”

No a problem. You can buy a tiny fraction of a bitcoin!

As a matter of fact, on Coinbase, CashApp, Robinhood, or many other places you can buy bitcoin, you can start with as little as $1.

And no matter what small fraction of a bitcoin you do buy, you’ll still benefit as the price of bitcoin rises.

Conclusion

Buying even just a fraction of a bitcoin now can have a big impact on your family’s financial future.

It has the power to move your family away from living “month-to-month“, like most Americans (source), and into a better financial position where you don’t have to stress so much about money anymore.

Holding bitcoin for the long term is a big part of how my family has moved ahead financially. And how we plan to keep moving ahead.

And from where I’m sitting on the other side, a place where I don’t worry anymore about how we’ll buy groceries, pay our mortgage, or afford a vacation…life is good and getting better!

(~9 minute read)

I just got back from a memorable (and last minute) trip in the south of Spain!

Now, when I say last minute, I mean we flew out with Jackson (2.25 years old) in tow, not having a hotel booked yet for the last leg of the adventure…(don’t worry, everything worked out just fine).

And when I say memorable, it’s because last minute, I casually brought up the idea with my parents and sister to come with, not thinking they would be able to pull it off. However, to my surprise, they were able to shuffle around schedules, get time off from work, and join us!

So, not only was the south of Spain a new part of the world we got to explore, but it turned into a surprise family reunion as well.

Time is scarce

The older I get, the more I appreciate how scarce time is.

Between work related obligations, our own travel schedule, and Jackson’s growing list of extracurricular activities, the reality is there aren’t too many times to pull off family reunion trips anymore.

To see just how little time is left, check out this visualization below from Wait But Why.

It shows that after high school, each of us will have already used up 93% of the in-person time with our parents. This is represented by all the red on the chart.

At first, I was depressed knowing there are only a handful of times remaining to see my parents (represented by the black dots on the bottom of the diagram). And even less opportunities to go on big trips together.

But as I get older, I’m more mindful to take advantage of what time there is left. This trip through the south of Spain was the perfect reminder.

Having time to travel

Backing up, in Q1 2023, I was impacted by a company wide reduction in force at Coinbase and unfortunately laid off.

Even though it sucked to lose a recurring paycheck and a job I loved, something wonderful also happened – my schedule completely opened up. All of a sudden, I had time on my side. And with it, an opportunity to travel!

After throwing around some wilder ideas like Japan or Thailand, Tiffany and I settled on the Andalusia region in the south of Spain.

Part of it was inspired from having read “The Alchemist”. Part of it was because in March time frame, it’s warm and sunny in the south of Spain vs. cold and wet and windy in New York City. And finally, a part of it was because this was our first international flight with Jackson and we didn’t feel like dragging him on a 12+ hour plane ride.

Even though it took some work to plan, I am so glad the trip came together.

Jackson was able to spend an extended period of time bonding with his grandparents and aunt. And we stayed in a beautiful house with a grand living room where we hung out throughout the day. And as an extended family, we were able to experience all of it together…which is priceless!

(Before continuing, I want to call out that I fully recognize how privileged I am to go travel after getting laid off. And I’m especially grateful because for most of my childhood, my family lived below the poverty line and would never dream of doing something like this.)

Bitcoin is scarce

Now that we’re on the same page that time is scarce, let me tell you about something else that is just as scarce.

Bitcoin!

I know, I know, I can almost see you furrowing your brows right now, wondering, “how is time scarcity at all related to bitcoin scarcity?”.

On the surface, they don’t seem at all related. But yet, understanding scarcity of time has been one of my key “ah ha” moments with bitcoin.

So let me explain because it may help you to have your own “ah ha” moment about bitcoin too!

Sometimes we understand scarcity. Other times, we don’t.

When it comes to the concept that “time is scarce”, every parent I talk to just “gets” it. For instance, we know once our kids grow up, we won’t be able to rewind the clock and do it again. And we also just “get it” that life is busy and there aren’t too many opportunities to do big family reunion trips anymore.

However, when it comes to the concept that “bitcoin is scarce” and why it matters, almost no one gets it at first. Myself included.

And yet, now that I do deeply understand what “bitcoin is scarce” means, it is a no-brainer why bitcoin belongs in my family’s long term financial portfolio.

Here’s why.

21 million is set in stone

Fact: there will only ever be 21 million bitcoin. And no matter what, no one will be able to create more.

Whether you’ve already heard about this 21 million number before, or if this is the first time, at first glance, I know this number feels trivial and meaningless.

However, 21 million is anything but…

Through thousands of hours of study (and without going too deep into the bitcoin’s monetary policy or game theory or the inner workings of the Nakamoto consensus), my key takeaway is that the 21 million bitcoin limit is set in stone.

I know this feels counterintuitive because after all, bitcoin is just software, and software gets changed all the time…so how could it be limited to only 21 million?

The good news is you don’t have to fully understand how bitcoin works from the inside out (design —> implementation —> incentive structure) before you can have your own “ah ha” moment that 21 million is really set in stone.

That’s because we have real world evidence to point to.

We know that the market cap of bitcoin is ~$500 billion dollars right now.

And we know whenever there is a honey pot, there are groups of hackers, companies, and even governments around the world who want to get in on it. That is because these actors (with deep pockets) have a lot to gain if they can change bitcoin in a material way, like the 21 million limit. As an example, “The Blocksize Wars” documents one of these change attempts back in 2017.

And just to be clear, what happened in the book wasn’t an isolated incidence. Rather, this is happening every day.

This is important.

Why should you care?

Instead of just theorizing if / how bitcoin can maintain this 21 million limit, we have real world data on our side.

We can observe that no matter how many people try to change bitcoin, they are unsuccessful. That’s because the 21 million limit is still in place!

It’s now been 14+ years since bitcoin has launched, and the limit hasn’t changed. And with each passing day, we continue to see the 21 million limit enforced.

With this key insight and more real world evidence rolling in each each day (ie. the 21 million limit is still in place), eventually, we come to develop conviction that bitcoin is indeed, scarce.

And the beauty is, since bitcoin is open source software, anyone can verify this limit hasn’t changed. On sites like CoinMarketCap, you can see the bitcoin max supply is, you guessed it, 21 million.

Now, let’s come full circle and talk about why this scarcity is a key component that makes bitcoin work.

Econ 101

Indulge me by going on a slight tangent…back to university days.

Do you remember that in Econ 101, we learned there was a relationship between [a] supply (how much of a thing there is available) and [b] demand (how many people who want that thing)?

Take shoes for example.

Imagine Nike releases a new limited edition shoe. Which happens to be the hottest and most anticipated shoe of the year. And for whatever reason, they decide to only make 100 pairs.

What do you think is going to happen on a shoe marketplace like Flight Club?

It doesn’t take a rocket scientist to figure it out – the price is going up.

This is the key insight so I’m stating it again: when there is more demand (ie. for the shoes) than there is supply of it, the price goes up.

Back to bitcoin

What we’ve established so far is that:

• there will only ever be 21 million bitcoin
• the limit is verifiable

And now, having dusted off some Econ 101, what we also know is that over time, with more demand of a thing AND when there is a fixed supply of that thing (ie. 100 pairs of shoes, 21 million bitcoin, etc), the price goes up in the long run.

Now it gets juicy – what if we can figure out whether bitcoin demand is going up (or down)? If we could, then we can see how bitcoin scarcity becomes a factor.

Luckily, we can see how many people are buying bitcoin and / or have a meaningful allocation already.

Look at the orange line below:

What do you see? To me, directionally, it looks like more and more people are buying bitcoin. And not just a few dollars here and there, but rather, at least 1 whole bitcoin (currently at ~$30k USD).

Is it as high as 1 million people as the chart suggests? Of course not, since one person can have multiple addresses.

But zooming out, directionally, it’s pretty clear what is happening – more people are buying bitcoin.

Bitcoin is really scarce

Now, to bring it all home, let’s put this scarcity into perspective.

Around the world, there are 62 million millionaires (source). These are people who could afford to buy 1 bitcoin (~$30k as of now).

But do you notice a problem already? There are significantly more millionaires in the world (62 million) than there are bitcoin available (21 million).

That means not every millionaire will even be able to buy just ONE bitcoin for their portfolio.

On top of that, this is assuming that all 21 million bitcoin are for sale. Which isn’t the case. Take MicroStrategy with over 140,000 bitcoin or the Winklevoss twins who own over 100,000 bitcoin, as just two examples of bitcoin not available for sale.

Putting all these these separate points together, I can’t help but wonder what happens as more millionaires (62 million of them around the world!) try to buy bitcoin…

Simply put, there isn’t enough bitcoin for sale!

In the long run, due to the 21 million fixed limit, and as more people “get” bitcoin and try to buy it, the price will trend upwards.

Conclusion

Time is valuable because it is scarce. We only have so much of it, and won’t be able to make more.

Bitcoin is valuable because it is also scarce. There are only 21 million of it, and no one can make more of it.

And as more people have their own “ah ha” moment that bitcoin is actually scarce, more and more people will try to buy bitcoin.

How much will price go up? And how soon?

Good questions – the truth is, no one knows! In the short term, there is lots of volatility so you’ll see bitcoin up 5% one day, or down 10% the next. But as a long term investment, one I’ve already held for 10 years, and one that I’ll hold for at least 10+ years more, I know that in the long run, bitcoin is scarce, demand is increasing, and the price will eventually follow.

I hope by better understanding why scarcity matters for bitcoin, it’ll help you evaluate whether you should own some in your family’s long term portfolio too!

Jackson, now 2 years old, loves playing with his LoveEvery stacking cups set. Each cup in the set has a different pattern of holes on the bottom and sides. So when water is added in, it’ll come out in different patterns and at different rates.

As a curious toddler taking a bath, Jackson loves to fill up different cups and compare / contrast how fast or slow water leaks out (just like in the stock photo of the toddler above from the LoveEvery blog)

As entertainment value, I’d give it 5/5 stars!

However, these cups are NOT good for rinsing out shampoo. That’s because the water either leaks out faster than I can scoop. Or, because of the holes on the sides / bottom, it sprays water right in Jackson’s eyes as I am trying to wash out the shampoo on his head.

When it comes to washing out shampoo, I would only rate these cups 1/5 stars.

Zooming out

In general, life is easier when you pick the right tool for the job.

So when it comes to bath time play, the stacking cups are great. But it doesn’t make sense to use these leaky cups for other jobs, like rinsing out shampoo!

Now, zooming out, there are many situations in life when it doesn’t make sense to use a “leaky cup”.

I want to talk about one of those situations: saving money.

The art and science of saving money

As a parent, I’m responsible for where to store our family savings. Let me unpack this.

By “savings”, what I mean is the money that we earn today but don’t need / want to use right away. Instead, it is the money that we plan to use later…whether to cover the mortgage, pay for a vacation, settle tuition expenses, etc.

And specifically, when it comes to where we store our savings, this could range from keeping cash in the bank, buying stocks, bonds, real estate, or another type of asset.

(for more background context, I wrote about the make up of our savings here)

What to consider when it comes to your savings

When it comes to saving money, my two primary goals are to make sure:

1. whatever money we save today, we’ll be able to access it in the future
2. Whenever we need to use the money (ie. whether it is 1 or 5 or 10+ years from now), we’ll be able to buy as much stuff with it then that we could today*

*to hammer point 2 home, I desperately want to avoid a scenario where I save ONE MILLION hard earned dollars in the bank today, knowing it could buy the equivalent of a nice vacation house in Colorado…but by the time I go to use it in a few years, to find out that same ONE million dollars can now only afford a roll of toilet paper, like what is pictured below.

I don’t know about you, but I would be pissed off if my ONE MILLION hard earned dollars became worthless. If that were the case, why bother to even save, right?

Through this lens, when it comes to my family’s long term savings, it’s clear why there are some forms of money that I would never use as savings. Those include the Argentinean Peso, Lebanese Pound, or the Venezuelan Bolivar.

Why? It’s because they leak. A LOT. (and just to be clear, this is a bad thing)

How much is too much leaking?

Through countless hours of studying, I’ve realized that you can think about different kinds of money (ie. US Dollars, Euros, Argentinean Peso, etc) as the different cups in the LoveEvery toy set. Then, all you have to do is replace the word “inflation rate” (the number that CNBC throws out every day) with how leaky each cup is.

Putting these cups next to each other, it’s clear some are better than others when it comes to leakiness.

In the real world:

• Historically, the US Dollar has a 2% inflation rate. So think about this like a cup that only leaks 2% of the water out.
• The Argentinean Peso has nearly a 100% inflation rate (source). So this water cup will leak nearly ALL of its content out right away.
• The Venezuelan Bolivar has >>100% inflation rate (source). So now, imagine a water cup that doesn’t even have a bottom anymore…

Now, do you see why I wouldn’t store my savings in the Argentinean Peso or the Venezuelan Bolivar?

It’d be the equivalent of me putting water (ie. my savings) into a cup that has a lot of holes in it and one that will leak away fast! (again, a bad thing)

Everyone wants the US Dollar

It also explains why around the world, everyone wants the US Dollar. Even though it still leaks, it leaks the least.

As a matter of fact, when Tiffany and I traveled through Argentina back in 2015 (back story), everyone wanted us to pay using crisp and new $100 USD bills (vs. mangled up old bills). It’s because Argentineans were (and still are) storing their savings in US Dollars and wanted the crisp ones to put under their mattress.

Good news, bad news

The good news is that the US Dollar is the most desired form of money around the world. And it’s because it leaks the least (at historically, ~2%).

So if you are earn and hold US Dollars, good job! You are already doing better than most by default.

However, the bad news is that now (and going forward), the US Dollar is leaking more. Instead of 2%, it’s now something like 6% (source) with no signs it’ll be going back to 2% anytime soon…

Zooming out (again)

As the US Dollar leaks more, it is inevitable that more people will become aware that their savings are leaking away. That’s because each of us will notice (or have already noticed) that it is is getting harder to save up for things like your children’s schooling costs, buying a house, retiring early, etc.

So, knowing what I now know about leaky money, I’ve decided to do something about it.

Let me guess, bitcoin, right?

At bath time, I don’t use the leaky cups. It doesn’t make sense to. Instead, I use a cup that doesn’t have holes on the bottom. It’s just a better tool for the job.

Bitcoin is like a water cup. That doesn’t leak. And it doesn’t have holes on the side or bottom. And no matter what, no holes can be added either.

“How it does that” is a whole series of future articles that digs into monetary policy, decentralization, proof-of-work, mining, the Nakamoto consensus, and more.

But for now, the key takeaway idea is that bitcoin is a new savings tool that doesn’t / can’t leak away your wealth.

And with it, bitcoin is becoming an attractive place for families around the world to include as part of their long term savings portfolio. It’s not a coincidence that people living in countries with higher inflation also have higher bitcoin adoption. Like in Argentina (source), Lebanon (source). And Venezuela (source).

Conclusion

As a parent, I believe it’s vital to save for your family’s financial future. And I don’t think it’s too much to ask to have a way to save that doesn’t leak.

For me and my family, bitcoin is the water cup that doesn’t leak away our savings.

You know what sucks?
Getting laid off.

You know what sucks more?
Getting laid off AND then not knowing how you are going to pay rent, tuition fees, medical bills, or handle other financial curveballs that life throws your way.

As a Dad, this is my worst fear. And recently, I was reminded how fast financial duress can creep up.

Until a few weeks ago, I had a coveted Product Manager role at Coinbase working in the crypto industry. I loved the work I was doing. And I was good at it. And I was getting paid handsomely to do it too.

But then, all of a sudden, that was gone.

On January 13, 2023, my team, and 20% of the company, was laid off as part of the January 2023 reduction in force.

And with it, a recurring paycheck.

Even though I was bummed about losing a job I loved, I am grateful I didn’t need to deal with the stress of answering, “how am I going to pay for ________ now?”.

Weathering a 10+ year storm

As part of my family’s journey to financial freedom, my wife and I have built an emergency fund that can weather a 10+ year storm. That means even if both or us lost our jobs AND all other passive sources of income too, we could still maintain our current lifestyle for 10+ years.

So, instead of stressing out about losing my job, I’ve been able to spend time playing with my son, reading, writing, relaxing with my wife at night, and planning a last minute opportunistic family getaway to Europe!

Why should you care?

According to CNBC, 2 out of every 3 Americans are living paycheck to paycheck…meaning every month, a lot of people are delicately balancing expenses to make ends meet. It also means if they were to get laid off (like I was), they would immediately fall into financial stress.

Being a parent is hard enough as is. And I believe no parent should have to go through the heartbreaking exercise each month figuring out how to pay rent, cover kids tuition fees, or settle large medical bills.

I also believe every parent can take a few simple steps to start building an emergency fund that can also weather a multi-year storm.

So I’m going to show you you how I’ve set up my family’s emergency fund. That way, you can use it as a blueprint for yours. (trust me, it’s simple to set up and simple to maintain!)

Question 1: How do I think about an emergency fund?

Right away, I mentally segment an emergency fund into a short term part and a long term part. That way, its easier to keep track. I also like to call it the “oh shit fund” and the “f*ck around fund” to make it easier to remember.

1. Short term emergency fund = “oh shit fund” Losing a job, like I did, would be an “oh shit” type of event. It would potentially trigger tapping into the “oh shit fund” in order to buy groceries, cover rent, pay off outstanding credit cards, or handle other monthly expenses.
2. Long term emergency fund = “f*ck around fund” Buying a house, going on a nice vacation, upgrading your car, etc., would potentially trigger using the “f*ck around fund”. Of course, if needed, it could also be used to pay for things like unexpected medical bills, ongoing tuition costs, etc.

Visually, it would look like this:

	“Oh shit” fund	“F*ck around” fund
Time horizon	Short term	Long term

Question 2: what goes into the emergency fund?

Within the “oh shit fund”, I keep it simple – I keep cash ($USD) because it is the most accessible. That means in a bind, I can easily go to the bank, get the money out, and immediately turn around to pay for something I need.

To be conservative, we keep roughly 1 years worth of cash accessible.

In contrast, the “f*ck around fund” is made up of investments (whether it be stocks, bonds, real estate, etc). These are things that you’d expect to go up in value when looking over a multi-year horizon. At the same time, they are things that might need to be sold at a discount (or even a deep discount) if you need to sell it in a hurry.

	“Oh shit fund”	“F*ck around fund”
Composition	Cash	Stocks Bonds Real estate

The biggest difference between most parents emergency fund vs. my family’s fund is that I think it’s important to have bitcoin in the mix.

	“Oh shit fund”	“F*ck around fund”
Traditional composition	Cash	Stocks Bonds Real Estate
New composition	^same	^same + bitcoin

With that said, by no means am I saying you should go all in on bitcoin. But I believe staying on 0% is also not smart.

Why? For me, bitcoin started out as a small part of my “f*ck around fund” back in 2013. Over time, because of how much it has gone up, it is now an important part of how my family can weather a 10+ year storm.

Since 2013, I’ve been studying bitcoin, and have developed a strong conviction that bitcoin will 100x from here. Throughout this blog, I’ll share why, but the key idea is that we’re still very early. Put another way, a small investment today matters because it can become a big part of your own “f*ck around” fund in the future.

And so that you know I put my money where my mouth is, the more I study bitcoin, the more bitcoin I buy for my family’s “f*ck around fund”, including when it was down at $16k just a few months ago.

Question 3: how big of a storm can I handle?

Using round numbers, let’s assume your family’s annual expenses are $100k. Of course, every family is different and this is just for illustrative purposes. (For my family, this amount is made up of how much our mortgage is, how much goes on our credit cards each month, how often we eat out, how many vacations we take, and a slush fund for other unexpected purchases).

Using this example, if you have $100k in your “oh shit fund” and $0 in your “f*ck around fund”, you could roughly withstand a 1 year storm.

If you have $1 million in your emergency fund (let’s assume $100k in the “oh shit fund” and $900k in the “f*ck around fund”), you could roughly withstand a 10 year storm.

Now of course, some of the investments in the “f*ck around fund” might not be worth as much as you think, especially if you have to sell it in a hurry. So to be conservative, I take a haircut on it. Even if the numbers show that my family could withstand a 20 year storm, I chop that down in half (to a 10 year storm) just to be ultra conservative.

The big picture

The core idea behind an emergency fund is to be able to deal with curve balls in life without going into financial duress. And the bigger the storm that you can endure, the better it is for your family’s sense of financial security!

2023 has been off to a rocky start already with over 200k tech workers losing their jobs in January alone. And the rest of year is on track to be to even more crazy…which is exactly why it’s important to make sure your family’s emergency fund is set up now.

If you have any questions, come say hi at @BitcoinNewDad on Twitter. I’m just a friendly Dad looking to help other parents get on better financial footing.

Further reading

Jesse Meyers (@Croesus_BTC) recently analyzed the full potential valuation of bitcoin. Spoiler alert: $10 million per bitcoin!

23,000 people read my latest piece this weekend.

Thanks in large part to tweets from Saylor, Pysh, and Foss. (great law firm name)

Blown away by the support and positive feedback.

Now that you're back in the office, check it out:https://t.co/UWtrOaHMkO

— Jesse Myers (Croesus 🔴) (@Croesus_BTC) February 21, 2023

We’ve been transitioning Jackson away from bottles and toward sippy cups. One reason is because our pediatrician told us that babies are more likely to form cavities when using a bottle for too long. Also, selfishly, I’m tired of washing and steaming all the parts on each bottle so I am certainly ready for the switch.

From the outside looking in, it seems trivial to switch from a bottle to a sippy cup. But that was not the case!

When seeing the world through Jackson’s point of view, it makes sense why it didn’t happen over night. This change is big for him – it is the first time he is encountering these new drinking devices, which work very differently from the bottles he has been using since birth.

Here’s how the transition went:

1. Bottle –> stainless steel cup

Our first attempt was to try a stainless baby sized stainless steel cup that didn’t have a lid on it. This came from a LoveEvery kit for 6-9 month olds so we thought it would be appropriate.

It was a disaster to say the least.

Jackson wasn’t coordinated enough to hold the cup and didn’t have a concept of up from down…meaning that the liquid never stayed inside the cup. And even when we held the cup up to his mouth, he couldn’t grasp the motion of drinking from it.

The end result was zero liquid got in his mouth and all of it ended up on his clothes or on the ground!

2. Stainless steel cup —> sippy cup with a flap

From there, we tried a sippy cup with a lid, handle, and a pressure activated flap. It was spill-proof but also required Jackson to suck from a flap (that would release water when there was pressure applied).

To start, he had no idea what to do with this sippy cup. He’d chew on the handle, repeatedly slam it on the table, or hold it upside down and use it to mash his food.

Once the novelty wore off and he realized there was something to drink inside, he still couldn’t figure out the new form (sucking from the flap vs. a nipple). After putting it up to his mouth, demonstrating the drinking motion, and repeating the process, he did finally suck from the flap and got water / milk out. But, he then could not connect the dots on swallowing what was in his mouth. Either, he would spit out big mouthfuls or choke and spray liquid everywhere.

Again, very little water got into his mouth and a lot got on his clothes or on us!

After multiple days of multiple outfit changes, we realized he wasn’t ready for that sippy cup yet. Even though it was labeled for 6 months and older, it didn’t work for Jackson at the time.

Sippy cup with a flap —> sippy cup with a modified nipple

We changed forms again and went with a different sippy cup with a modified nipple. Our hypothesis was that the nipple would be more familiar with the bottles he was used to drinking from.

This was a clear victory and Jackson figured out how to drink from it pretty quickly!

The problem was that it still used a nipple. Also, once he did figure it out, he started playing with / pulling the nipple, resulting in leaks and spills as he carried this sippy cup around the house.

Sippy cup with a modified nipple —> (back to) sippy cup with a flap

After letting him get used to the sippy cup with a modified nipple, we went back to the sippy cup with the flap. Same thing – first day, he didn’t know how to suck from it. But on day two, he connected it all together.

And just like that (and by that, I mean multiple weeks of practice), he can get the water into his mouth and swallow it too…without spitting it out, choking, or any leaks!

Lesson learned

Watching Jackson struggle reminded me that often, it takes a while before something new “clicks”. And often, it doesn’t happen on the first or second attempt. And that is okay!

And this lesson relates to bitcoin too!

“Getting” bitcoin

My observation is that on first contact, 99% of people won’t get it. And that is okay (and to be expected)!

Most likely, first contact comes from an article headline about how much the price. Maybe it is about how much the price has gone up (which makes most people think “bubble that is about to pop”) or how much the price has gone down (which makes most people think “it’s going to zero”). Or they might have heard about it from a friend or co-worker who didn’t do a great job explaining bitcoin (which makes most people think, “it’s a cult” or “it’s a ponzi scheme”).

I understand that skepticism. When I first came across bitcoin, I also thought it was magic internet money. And through my journey to understand it, I’ve gone through all those thoughts about it being a scam, bubble, that it’s about to die, or that people who are into bitcoin are part of a cult or about to be rug pulled in a giant ponzi scheme.

(side note: this is a great article by Croesus helping articulate why yuppies struggle understanding bitcoin)

However, in the past few weeks, I’ve noticed a lot more people start to have their own “ah ha” moment with bitcoin.

Maybe it is because of the Canadian trucker protest and the response from government to seize / freeze bank accounts for anyone involved…without due process.

This led people to see how important it is to have a form of money that cannot be confiscated. And that is bitcoin!

Or maybe it’s the images of the long lines of people desperately trying to take money out of ATM’s throughout Ukraine, knowing that they needed to flee the country due to Russia invading.

This led people to to realize that with bitcoin, you don’t have to stand in line at the ATM because you can just load your bitcoin onto a hardware wallet, or memorize 12-24 words that serve as your password, or even to store your bitcoin on a wallet app on your phone. And since bitcoin isn’t physical, it’s much easier to transport when you need to leave in a hurry compared to carrying a big stack of cash or a bar of gold.

Or maybe it was the massive devaluation of the Russian ruble currency, which dropped almost 30% overnight, and in the process, reduced the life savings of the average Russian citizen by 30%.

This devaluation led people to realize that through no fault of their own, government actions can wipe out a significant portion of their life savings. It shined a light how governments don’t always have your best interests at heart. But with bitcoin, since it doesn’t care about countries or borders or governments, your life savings are not directly impacted from those actions, whether it be going to war, printing money, being sanctioned, etc.

Either way, what I’ve noticed is that more and more people are starting to see the value of bitcoin as a new form of money that cannot be corrupted or confiscated.

In my previous article, I included a tweet from DHH, a fierce bitcoin critic, who recently had his own “ah ha” moment. Here he is talking more about how and why his worldview changed:

Just like Jackson didn’t figure out his sippy cup overnight, MOST people don’t “get” bitcoin overnight. But with repeated exposure, it’s inevitable that they’ll have their “ah ha” moment with it.

It seems like, lately, that is happening faster. And that is good for bitcoin!

Diaper rashes. Let’s go there.

Recently, Jackson (13 months old) had a bout of diaper rash. We’re not sure if it was due to the transition to cows milk, his stomach maturing, or the mix of foods he was eating (ie. not enough carbs and too much protein / vegetables)? But either way, he went through a week consistently pooping FIVE times a day!

As first time parents, both Tiffany and I freaked out about how often Jackson was pooping. But after talking to our pediatrician, we were assured this is perfectly normal. Actually, we were told there is a wide range of poop frequency – some toddlers only poop once every few days while others, like Jackson, poop multiple times per day!

At first, it was just annoying to deal with all the diaper changes. But after a few days, all the wiping started causing redness and rawness on his butt.

By then, Jackson connected the dots that diaper changes were going to hurt. And instinctively, he would squeeze his legs together which made it THAT much harder to wipe and clean. While that made it hard, the worst part was seeing the tears stream down his face from the stinging that he felt.

Both Tiffany and I had to psych ourselves up for diaper changes knowing how much of a struggle it would be, both physically trying to get him to cooperate, and emotionally seeing his tears and hearing his screams of pain.

Of course, we made sure to be as gentle as possible, and gave him lots of hugs, kisses, and snacks afterwards. But no matter what, during that week, every single diaper change sucked for everyone involved.

A blessing in disguise

Jackson was also uncomfortable throughout the day because of the rawness…so much so that he didn’t want to sit on his butt. And that is tough because 13 month olds spend a lot of time sitting each day while playing!

Poor baby.

Now, thankfully, his diaper rash is over. And diaper changes have gone back to normal. With it, we’ve been able to breathe a sigh of relief, build in better ways to detect and get ahead of future diaper rashes, and even see a little silver lining in all of it.

One key observation was how much Jackson stood up vs. sat down while he had diaper rash. Instead of plopping down to play with toys like he normally does, we noticed that he would stand, lean against the edge of the coffee table and / or couch, and scoot / shuffle back and forth while pushing his toy cars around.

At first we felt bad knowing how uncomfortable he was. But now, with a little distance from the diaper rash event, I see all of this as a blessing in disguise.

That’s because I believe that all the standing he did during that period will actually lead to him walking sooner. Due to his sore butt, Jackson got way more practice time standing and scooting which has improved his balance, strength, and coordination.

As of today, he can easily get up and push his walker unassisted from one end of the house to the other. He is also getting more comfortable letting go of whatever surface he is holding onto and standing on his own (for a few seconds). And when I extend my arms out, he happily reaches for them and stands up to walk with me. All three of these examples were things he wasn’t able to do before the diaper rash incident.

Now, we eagerly await his first steps…which should be coming any day now!

A blessing in disguise for bitcoin

I’m sure you are wondering, what does this have to do with bitcoin? Well, I believe that there are many blessings in disguise for bitcoin.

Here is what I mean.

On the surface, there will be short term bad news. And the knee jerk reaction is to think bitcoin will die. But, underneath the surface, it’s actually a blessing in disguise helping speed up global adoption.

Here is an example to illustrate.

Last week, the Canadian government evoked emergency laws not used in 50 years to stop Canadian truckers protesting in Ottawa.

I won’t get into the background why protests are happening. You can easily google that if you are curious.

The key point I want to highlight is that multiple millions of dollars were fundraised by supporters throughout the world for the truckers. But, the Canadian government forced these fundraising sites (like GoFundMe and GiveSendSo) to seize / refund the money. And the government has explicitly stated that they will target and block bitcoin related donations as well.

In a heavy handed way, the government has also required banks to freeze bank accounts of anyone directly or indirectly involved. Without due process! That means no arrest, no trial, no court process, no lawyers, and no jury involved.

This includes people who donate to the cause, people who are protesting, and even those who are tangentially involved.

Canada's Finance Minister Chrystia Freeland announces that the emergency act measures will expand the powers of Canada’s banks and financial intelligence agency to monitor and stem the flow of funds to convoy protesters. pic.twitter.com/QY4wgyAmwc

— The Globe and Mail (@globeandmail) February 15, 2022

Regardless if you are supportive of the truckers or against what they are doing, you have to admit, it’s scary to know that the government can just freeze you out of your bank account without due process. Especially in a democratic country like Canada!

Just think about the chaos that would be caused if you donated $20 before Canada enacted these emergency laws and then all of a sudden find that your bank account does not work anymore. How would you pay your mortgage, buy groceries for the family, or even pick up medicine for your baby?

While this is dark and gloom, I believe all of this chaos is actually a blessing in disguise for bitcoin. That’s because it has become a huge wake up call why bitcoin is needed in the first place.

As these protests are happening, Canadians are having an “ah ha” moment. It doesn’t take a rocket scientist to project forward that maybe even if they don’t support this particular protest, it’s only a matter of time before there is another protest / cause / reason that the government does not approve of. And when that happens, they’ll have the ability and the precedence to cut off more bank accounts.

With that problem staring Canadians in the face, those affected (and those who are wary they could be affected in the near future) will naturally start looking for a different solution to store their money. And one of the key criteria will be a solution where no government / bank / intermediary has the ability to seize it.

Of course, they will find bitcoin as a solution since one of the key value propositions is that it cannot be confiscated.

When these people do find bitcoin, a subset will start learning about what it really is and how it works.

And then another subset will buy bitcoin for the first time.

And another subset of that will tell their friends and family about bitcoin.

And when that happens, it will accelerate the adoption of bitcoin among a group of people who a month ago might never have been interested in bitcoin or had a reason to care. As an example, DHH, a well known entrepreneur and vocal bitcoin critic, has just changed his opinion.

"I still can't believe that this is the protest that would prove every Bitcoin crank a prophet. And for me to have to slice a piece of humble pie, and admit that I was wrong on crypto's fundamental necessity in Western democracies." https://t.co/9smNKyabm0

— DHH (@dhh) February 21, 2022

Bitcoin can be confusing. And counter-intuitive. But when the time is right, each of us will have our own “ah ha” moment about it. The blessing in disguise right now is that the Canadian government have accelerated the journey for people around the world to have their own “ah ha” moment why bitcoin is needed.

All roads lead to bitcoin, and this seemingly bad news is no exception.

Jackson recently turned one. That means, he is now out of the newborn stage and onto toddler-hood. It’s hard wrap my head around the fact that the tiny baby we brought home from the hospital a year ago is now a non-stop ball of energy climbing and crawling all over the apartment!

But yet, here we are.

Before I became a dad, I had a very naive perspective what it meant to be a parent. And of course, why wouldn’t I?

From the outside looking in, parenting seemed like a combination of playing at the park, taking pictures (and posting them on social media), reading books together, and generally, having fun. Sure, I had a vague notion of sleepless nights. But, I did not have a real understanding of everything else that comes with the territory.

As a newborn, I quickly learned about the sleepless nights. And yet, I still had no idea what lay ahead. As an example, I vividly remember nights when Jackson would wake up crying around 3am. No matter how much singing and rocking or shushing I did, he just would not go back to sleep. And in those moments of desperation, I naively thought, “I can’t wait until he gets out of newborn phase…I won’t have to worry as much”.

Well, now, he is one…and guess what…that worrying has not gone away.

The truth is, even though he is one now, there are still nights when something is going on (ie. he is sick, going through a regression, etc) and he needs help at 3am.

Actually, if I think about it, there are more things I worry about now compared to when Jackson was a newborn.

Here are just a few of the many things I now worry about:

• whether his development (ie. crawling, talking, walking) is on track
• whether he is eating enough, and eating the right mix of nutrients
• whether he is hot / cold / dressed appropriately
• how many poops he has had, and whether that is too many poops in a day
• how to deal with his diaper rash
• how much sleep he is getting
• when he gets too close to the edge of the bed / sofa / coffee table and might fall off

The list of worries goes on and on…

But yet, even with all the worrying I do (and now know I will continue to do in the future), I wouldn’t trade it for the world. Being a dad is the most gratifying thing I have done. And seeing Jackson grow up each day fills me with joy.

Enough gushing though…

I’m sure you are wondering, what does this have to do with bitcoin?

I want to share what my experience has been like to actually HODL bitcoin. And as you might have guessed, there is a parallel to what parenting seems like from the outside vs. what it’s actually like from the inside.

What it’s like to HODL bitcoin

To set the context, I don’t day trade bitcoin. Instead, I buy it and hold it for the long term (10+ years). That’s because I believe it will be worth significantly more than it is today.

With that said, the price of bitcoin has been all over the place recently. Back in November, it rocketed up all the way up to $69,000. And just last week, it fell all the way down to $33,000. That is over a 50% drawdown!

So what is it really like? Well first, let me tell you what most people think it is like.

When I talk to friends about bitcoin, inevitably, they’ll ask when I got in. And when I tell them I first bought around $500, I see this look in their eyes.

This is what they think my experience must be:

• get lucky and buy at $500
• continue living life without worrying about bitcoin price
• <x years passes by>
• profit!

This picture perfectly sums it up:

However, this outside perspective is naive and couldn’t be further from the truth. If anything, it’s similar to the naive perspective I had about what it meant to be a parent before Jackson was born.

Here is how it actually feels.

When the price of bitcoin is rocketing up to the moon, from the outside, it’s easy to think, “if that were me, I wouldn’t sell it. I would have discipline to watch it continue to go up”. But the truth is, while it is happening, there is an incredible pressure to sell and realize some gains. Gains that can be used to pay off debts, to buy something nice that you’ve been saving up for, or to use as down payment for a house.

And on the flip side, when the price is tanking, from the outside, everyone naively thinks, “I would have the discipline to ride it out and not sell”. But, when the price of bitcoin goes into a free fall, there is also an incredible pressure to cave in and sell from all the FUD (fear, uncertainty, doubt). That’s because it feels like the things you started daydreaming you would buy with your gains have “disappeared”, or worse, the security of your family’s financial future is in jeopardy.

If anything, this is much more the reality:

When I become a parent, I had a series of “ah ha” moments about what it’s actually like. And similar to parenting, as I HODL bitcoin, I also continue to have “ah ha” moments about what it takes to hold on through all the ups and downs.

Yes, it can be brutal at times. And euphoric at other times. And there is a lot of worrying and stress. And sleepless nights wondering if you are making the right financial decision for your family’s future.

But yet, as I zoom out and think back to all the FUD I’ve overcome, and all the times when I could have sold and realized gains, I’m glad I didn’t.

Why am I sharing this?

Personally, I believe bitcoin has at least a 100x upside from where it is right now.

But at the same time, I can guarantee that it will not get there is a smooth / orderly way. There is a saying that “the market moves along the path of maximum pain”. And that is very true for bitcoin! Especially right now.

So if / when you plan to buy bitcoin, get ready for a wild rollercoaster ride. But, whatever you do, don’t panic sell. Hold on for dear life!

Jackson (10 months as of this post) is the first grandkid on my side of the family…which means he gets all the attention. As an example, about two months ago, my Mom, Dad, and younger sister drove 9 hours just so they could hang out with him!

As part of this extended family reunion, we rented an Airbnb house in the Hudson Valley to enjoy some early fall foliage, go apple picking, and just be in a more relaxed / spread out environment compared to a tiny apartment in Brooklyn.

I’m consistently surprised how just 1-2 hours outside of New York City, it is a 180 degree change of pace from the hustle and bustle of the city.

With that slower pace, we spent a lot of time just hanging out at the house. That means, we had a lot of time to talk. And you can probably guess what I talked to them about…

Bitcoin, of course!

My Mom was on one end of the spectrum. Even though she hasn’t taken the time to study the fundamentals yet, she has seen the price go up and up and up, and is of the mindset that it makes sense to buy some in case that trend continues.

However, my Dad was on the other end of the spectrum. Each night, we talked about different aspects of bitcoin, including what problem it is solving, and why it seems to die but then comes back stronger each time. For context, My Dad is on the verge of retirement and had lots of concerns about putting his hard earned money into this “magic internet money”.

I helped him get past each issue, and through those daily conversations, saw some “ah ha moments”. And while he wasn’t going all in on bitcoin, he did say he would buy some and treat it like an insurance policy.

(if I’m being honest, part of me thinks his real “ah ha moment” was to agree and buy some just so I would stop talking about bitcoin…)

Just before he pulled the trigger though, he said the famous words, “the price just went up a lot. I’m going to wait until the price comes down a little bit before I buy…”

Back in September, while we were at the Hudson Valley house, the price of bitcoin was $51k. My Dad wanted to wait until it was back in the mid-40’s (where it had been a few weeks prior to the trip).

As I write this, bitcoin is at $65k.

And unfortunately, he is still waiting for the dip…

“I’m too late”

I’ve noticed that with my Dad, as well as other friends who are interested to buy bitcoin (but haven’t bought any yet), there is a prevailing feeling that they’ve missed the boat and are “too late”.

I believe the exact opposite is true. And that’s what I want to talk about today.

If anything, I believe we are still early. And there are still life-changing (not hyperbole) gains ahead for those who get past the hump and commit to buy and hold bitcoin.

After reflecting, I’ve finally figured it out. I know why I, (as someone who owns bitcoin) feel we’re early, and at the same time, why my Dad (as someone who doesn’t own bitcoin) feels he is late.

I believe it’s because my Dad was (and still is) looking at the bitcoin price chart all wrong.

And it all comes down to one small setting change – whether to view the price of bitcoin on a linear scale (the default view on Coinbase, CNBC, Google Finance, etc) vs. a logarithmic scale.

Using one view, you’ll feel like you are too late. Using the other, you’ll clearly see where the price is headed next and feel like you are early.

Let me explain. And trust me, you don’t need a math pro to follow along.

The problem with a linear scale chart

I’m sure it has been years since taking a math class, so let’s first get our bearings. On a chart above with a linear scale, the vertical y-axis goes 1 → 2 → 3 → 4. Put another way, each increment is spaced out evenly. On the chart above, that would be $10k, $20k, $30k, etc.

When looking at a chart of bitcoin price through a linear scale, it’s easy to see why you would feel like you’ve missed the boat. On the chart above, it appears that up until mid 2020, the price was relatively flat. But then, at the end of 2020, the price just starts violently shooting up, up, and UP.

Of course, this leads to the feeling that:

1. “it’s too late, I’ve missed out” AND / OR
2. “I’ll wait to buy because anything that goes up that fast has to come crashing back down soon”

I believe that a linear scale is not the correct way to look at the price of bitcoin over time. That’s because it always makes it feel like you are too late. And that is a big mistake.

The problem is that a linear scale hides previous all time highs, like when bitcoin went from ~$100 to ~$1,000 in 2013 (which is a barely a blip on the chart). See below.

Why is this important?

Let’s rewind the clock. Imagine it is 2013, and you are considering to buy bitcoin and look at a price chart using a linear scale (see below chart for a zoomed in view of price during 2013).

Guess what? It still leaves you with the exact same feeling that you missed the boat already.

But keep in mind that back in 2013, the price was between $100 – $1,000. If you did buy $1,000 back then (even though the linear chart makes it feel like the price is so high), that investment would now be worth $50,000 – $100,000. This is what I mean when I say life-changing!

The same could be said during the bull run of 2017. And the same thing is unfolding right now with the current bull run in late 2021.

This is the trap my Dad has fallen for…he is looking at the price of bitcoin incorrectly.

Why does it always feel like “it’s too late”

For something that is growing linearly (like stocks), a linear scale works just fine and you can quickly glance at it to get a high level overview how it is performing.

But bitcoin is not growing linearly. It is growing exponentially!

If you look at something growing exponentially on a linear chart, you’ll be left with one conclusion. You are looking at a bubble that is ready to pop at any moment!

Now, let’s contrast and take a look at bitcoin price using a log scale.

Looking at bitcoin price through a log scale

The main difference on a log scale is that instead of the y-axis going from 1 → 2 → 3 → 4, it goes from 1 → 10 → 100 → 1,000 (and so on). Put another way, each increment on the y-axis is an order of magnitude bigger than the previous.

By doing this, instead of seeing what looks like a violent and sudden price move up (that again, just makes it feel like you are too late and / or “it’s about to crash anytime now”), you see a very different (and clear) pattern.

All of a sudden, you can see that every 4 years (near end of 2013, end of 2017, and the current 2021 bull cycle that we’re currently in), the price of bitcoin seems to consistently move up to the next order of magnitude.

During the 2013 cycle, it was ~$1,000.

During the 2017 cycle, it was ~$10,000.

And if all goes well, in the 2021 cycle, it looks like we’re headed to $100,000.

The beauty of a log chart is that it doesn’t flatten out the previous all time high prices. And that is important because it allows you to see a pattern unfold.

When I first switched over from a linear scale to a log scale, I had one of many “ah ha moments” about where bitcoin price was headed.

Of course, that led me further down the rabbit hole to understand why the pattern exists and how long it could continue for. That is really the topic for another post, but at a high level, I now understand it’s due to the 4-year halvening cycle that is built into the Bitcoin protocol, and for the foreseeable future, it should keep repeating that similar pattern.

Conclusion

Even now, when I see the price of bitcoin on a linear scale, it throws me off. I can’t help think, “oh no, anything that has gone up that fast will surely come crashing back down soon”. But each time I do, I remind myself to use the right tool for the job (ie. switch the chart setting to a log scale).

And as soon as I do, I feel a sense of calm.

We’re in the middle of another bull run right now. Even though it looks like the price of bitcoin is too high at $65k, by switching over to a log scale, it gives me confidence where we’re headed.

$100k, here we come!