Author: Bitcoin New Dad

As new parents, Tiffany and I realize there is not enough time in the day, so we divide and conquer.

One of the things I take lead on is our finances and investments.

At the highest level, my goal (in progress) is to make sure we don’t need to worry about money day-to-day, month-to-month, and ultimately even year-to-year. More specifically, it is about researching investment opportunities, pulling the trigger, and tracking performance / making adjustments along the way.

One of those investments has been a rental property. And even though it has been a cash cow for the past 10 years, knowing what I now know, I don’t think real estate is a great investment.

Here’s why.

Situation 1: I currently owe $2,400 for repairs on an air conditioning unit at the rental property. And even though the issue has been fixed, the HVAC company gave me a heads up that the AC unit is on its last leg and can die any time. If / when that happens, it’ll cost another $8,000 to replace.

Ouch.

Situation 2: last year, there was a storm that ripped shingles off of the roof. I had to drop everything, file an insurance claim, and coordinate with a roofing company to fix it. My deductible (the amount I had to pay on my own for the repair) was $2,000. And now, the cost of my yearly premium has gone up too (due to filing the claim).

Ouch again.

To say the least, I’m not looking forward to these expenses.

On top of these examples, over the years, I’ve also had to chase down tenants for late payments, deal with evictions, and handle a slew of other repairs just to keep the house in good working condition.

Tallying up all the bills, AND the time spent dealing with fires (not literal, thankfully), AND the headaches that come with it, I just don’t think it is worth it…even though I have made money on it every year.

As a matter of fact, I’ve now kicked off the process to sell the rental property and buy a better asset instead (sneak peek: I’m buying more bitcoin).

I want to walk you through my process to arrive at this decision. But first, let’s start with why I bought a rental property at all.

Rewinding the clock

In 2011, I had already worked in the corporate world for 4 years. And during those 4 years, I was extra frugal with spending. Truth be told, even though I had a paycheck coming in every two weeks, I was still living a college lifestyle. That includes living with roommates, eating a lot of Trader Joes frozen burritos, and just figuring out how to stretch every dollar.

All that extra money earned, but not spent, was money that I planned to invest.

Mind you, this wasn’t too long after the 2008 financial crisis where the housing bubble popped. At that time, there were lots of deals in real estate if you could put up the down payment and actually get a mortgage.

Since I saved up, had a steady paycheck, and a clean credit history too, I was able to take advantage.

I bought a single family house in 2011, knowing most likely, I wouldn’t lose money on it. Actually, based on my calculations, I would be cashflow positive because I could charge more for rent compared to my monthly mortgage payment. And when comparing that opportunity vs. keeping cash in a savings account earning a paltry 0.1% interest, it was a no brainer. Making an investment to buy a rental property was a better financial decision.

A store of value

Cash is not a good store of value. It’s a common saying that “cash is trash”. That is because over time, due to inflation, it becomes worth less and less. Back in 2011, that is why I made the decision to get out of cash and into a better store of value, real estate.

Michael Saylor, the CEO of MicroStrategy (a publicly traded company holding multiple billions of dollars worth of bitcoin on their balance sheet) best describes the problem he faced with a big stash of cash on hand. In early 2020 (with COVID wrecking havoc and governments printing money to keep the economy afloat), he realized the money in his corporate savings account was like a “melting ice cube”, and one that was starting to melt away faster than before.

At first glance, it might seem like a melting ice cube means if you had $1 million this year, that it would become $900k the year after, and maybe $800k the year after that.

That doesn’t happen. But the effect is the same.

Instead of the $1 million number dwindling before your eyes, what really happens is that the amount of stuff you can buy with it goes down over time.

This is commonly referred to as your “purchasing power”. And losing purchasing power is bad. That is why even though I couldn’t exactly explain it back in 2011, I knew that buying real estate was a much better store of value compared to cash.

Understanding purchasing power

At the highest level, the purchasing power of your money is just how much stuff you can buy today. Or tomorrow. Or anytime in the future.

And if your purchasing power goes down over time, it becomes harder / takes longer to save up to buy that dream house, to pay for your kids tuition bills, retire early, etc.

This is what is happening today. When you save money (but don’t invest it), you are losing purchasing power each year.

Imagine if today, you had $10,000 in a savings account. And with that, it would be enough to renovate the basement and build out a kids play room. But in this scenario, for whatever reason, let’s say you decide not to move forward, and just leave the money in a savings account instead.

Imagine a few years pass by, and now you are serious about renovating. Except now, that same renovation costs $15,000.

When this happens, whether by a little or a lot, it means the purchasing power of your $10,000 has gone down, or as Michael Saylor says, “melted away”. Put another way, you now need to spend $15,000 on something that cost $10,000 just a few years ago.

This is the result of inflation. And now, inflation is rising faster…meaning the ice cube of your purchasing power is melting away faster.

It is why I bought real estate back in 2011. I wanted to make sure that my hard earned savings weren’t going to melt away due to inflation.

Real estate is not a great store of value

Having owned and operated a rental property for 10 years, I now know that real estate is not a great store of value.

Yes, it stores value much better than cash in a savings account. No comparison there.

But when you own real estate, there are a lot of ongoing expenses too. And each of these are a headache to deal with.

Here are some real life examples I’ve dealt with:

• every year, there are unexpected repairs (such as a broken AC unit, a roof that is leaking, or a water pipe that has burst)
• it’s not uncommon for tenants to pay rent late or stop paying altogether. I’ve had this happen more than once. However, I still have to pay the mortgage on the rental property.
• there are periods of time when the house sits empty (ie. in between tenants), but I still have to pay the mortgage
• every year, I have to pay taxes
• every year, I have to pay insurance
• every year, I have to pay a home owners association fee
• before I want to sell, I will have to invest $10k to $20k to remodel from all the wear and tear over the years
• when I want to sell, I will have to pay ~6% commission to a real estate agent

Adding up all of these expenses, you can start to see that it’s not an insignificant amount of money required each year to keep the rental property going.

Hopefully, you can see that while real estate is a better store of value compared to cash, it comes with it own troubles. And these expenses don’t even account for the headaches scrambling to find contractors to fix issues, no matter if it’s the weekend, if I have a busy work day, or if I am on vacation.

What does this have to do with bitcoin?

I’ll get to the punch line. We all need a way protect our savings. No one wants to work their ass off, to save their hard earned money, only to see that money become worth less (ie. have less purchasing power) in the future. I believe that bitcoin is the best store of value to protect your money.

Real estate has played a significant role as a store of value. It’s why international investors buy luxury apartments and leave them empty in New York City (link). And it’s why people own multiple houses around the world.

But as someone who now has owned a rental property for over 10 years, I will not be using rental properties as a store of value anymore. Instead, I will be using bitcoin to do that job.

Why?

• With real estate, there are various monthly / yearly expenses you need to pay. With bitcoin, there aren’t.
• With real estate, selling is a multi-month process. With bitcoin, you can sell it 24/7/365 in a matter of seconds.
• When you sell real estate, you have to pay a 6-10% transaction cost (agent fees, title, lawyer, mortgage origination fees, etc). With bitcoin, the transaction fee to sell on an exchange like Coinbase is 0.5% – 1.5%.
• Historically, real estate has increased in value by 5-10% per year. Bitcoin is increasing at ~200% per year.
• If you buy real estate in an area that gets affected by climate change (ie. hurricanes in Houston that cause flooding, or wildfires in California, etc), you could get wiped out. With bitcoin, there is volatility in the short term. But in the long term, it has proven it can’t be killed, and that means it will keep becoming more mainstream.
• With real estate, for the most part, you need to have 20% down payment to buy. The rental house I own and will be selling shortly will list around $420,000. That means you would need to have $84,000 just to qualify to put in an offer. With bitcoin, you can buy any amount, whether that be $1, $100, or $1 million.

Conclusion

I could keep going on, but after having an “ah ha” moment about these two different stores of value, I am now moving forward to sell real estate and transferring it into bitcoin.

Hopefully, you now have a more rounded out perspective why real estate might not be a great store of value compared to bitcoin!

Before Jackson was born, it was much easier to travel. While Tiffany and I still make an effort to go out on day trips, it feels like each time, we are packing up the whole house just to get out!

In a previous life, we traveled the complete opposite way. We loved finding last minute cheap flights, packing a small suitcase, and galavanting halfway around the world to explore. We consciously took advantage of this lifestyle, knowing that once we had a baby, travel would look and feel very different.

I’m glad we did, because we made so many fond memories along the way.

One of the trips that I’ll always remember was going to Argentina back in 2015. And while we ate and drank ourselves merry, that isn’t what stuck out. Instead, it was exchanging money on the black market when we first arrived!

Right after landing in Buenos Aires, we checked into our hotel and then made our way to the famous Florida street. Having read a travel guidebook, I knew that there were two different exchange rates – the official one you’d get at the bank / airport (which was good but not great), and the black market rate on Florida Street, where you would get way more bang for your buck.

Of course, being a deal hunter, I wanted to take advantage. And having done a little research, it seemed safe…enough.

To paint a picture of Florida Street, imagine people standing up and down a busy commercial street offering to exchange Argentinian Pesos for USD. Not knowing exactly what to do, we timidly approached a few people to ask the rate, and when we found a guy offering offering the best deal, we agreed to do the swap.

This was the first time I’ve done something like this, so I really had no idea what to expect. All I knew was that I had $1,500 US Dollars stuffed into a secret travel pouch that was strapped to my waist under my pants. And I needed to get that out to exchange it so we had spending money for our week long trip. But I knew I couldn’t just take it out in public. Around this time, I remember second guessing the whole strategy.

Here’s how it all went down.

The guy we agreed to exchange money with asked us to follow him. So we walked behind him down the street, looking back and forth at each other wondering if we should just run off while we still had the chance. After zig zagging through traffic, he pointed at an old dilapidated mall and opened the door for us to go inside. From there, he pointed at a store front which had all the windows taped up so you couldn’t see inside, unlocked the door, and told us to go inside.

As soon as we stepped inside, it was clear that this store was a front. There were a few dusty keychains and post cards for sale, but the real purpose of this location was to exchange money on the black market. Or…a place to get robbed…!

Luckily, nothing bad happened. We handed over US Dollars for Argentinian Pesos based on the black market rate, received back a huge stack of bills, stuffed it into the travel pouch, strapped it to my waist (under my pants again), and made a bee line back to our hotel.

On the walk back, I remember feeling like I was in an action / thriller movie! On one hand, I was trying to be nonchalant about the huge stack of bills I was carrying, but at the same time, repeatedly peering over my shoulder wondering if anyone was following us.

I know you are wondering…

What does this have to do with bitcoin?

I believe understanding why Argentinians desperately wanted USD instead of Pesos will help highlight the problem with fiat money that we all use today. And once you understand the problem, then it leads to an “ah ha” moment how bitcoin is a 10x better solution.

Let me explain!

You see, back in 2015, the official exchange rate (ie. not the black market rate from Florida Street) was 8.68. Now, six short years later, it is at a whopping 110.

It’s easy to gloss over just how terrible it would be to live with this level of rapid inflation, or to believe that it won’t happen to you. But it’s important to feel the pain, so that it becomes clear why inflation is a big problem and what to do if / when it happens to you.

So, let’s feel the pain together for a moment.

What if you lived / worked in Argentina during this time?

Let’s imagine it’s 2015, you are a Dad living / working in Argentina, and you have diligently saved 100,000 Argentinian Pesos to take your family on vacation to New York City. If in 2015, you exchanged Pesos, you’d get back $11,500 US Dollars for the trip. That amount would cover flights for the family, hotel stays, meals out, entertainment expenses, etc. And you would have a great time on vacation with your family!

But now, let’s throw in a wrinkle.

Imagine a family emergency came up and you couldn’t go on the trip. Then, life got busy, and before you know it, six years have passed by. So now, it’s 2021 and you finally plan a new trip to New York City. You take that same 100,000 Pesos (that has been sitting in your savings account for the past six years) to exchange at the bank.

But now, you would ONLY get back $909 US Dollars. I’m not sure this is enough to even buy one round trip flight, let alone flights for the rest of the family…

Ouch.

Inflation is a bitch

I’m not a math genius, but it’s easy to see that $909 is way less than $11,500. Unfortunately, this is inflation in action. And it is terrifying how fast it melts away your wealth.

Simply put, in this example, the fiat money (ie. Argentinian Pesos) that you, as the Argentinian Dad, worked for and saved has rapidly lost value. So even though you still have the same 100,000 number in your savings account, the amount of goods and services you can buy (ie. your purchasing power) has gone down significantly.

With rapid inflation, you are not incentivized to save money in the local currency. And that is why, back in 2015, it was already so popular for locals to get rid of their Pesos and to store their wealth in US Dollars. That’s because the US Dollar did a much better job at holding value and preserving purchasing power year after year.

It did so well actually, that people in Argentina were willing to pay a premium to exchange it on the black market!

However, this exchange from Argentinian Pesos to US Dollars is becoming less worthwhile. And that’s because there are now inflation problems in the US, just like there are inflation problems in Argentina.

What caused inflation issues in the US?

Due to COVID lockdowns, businesses closed and lots of people lost their jobs. In response, the US government printed a LOT of money and gave bailouts / stimulus checks to try and keep the economy afloat. How much money? Well, an astounding 40% of all US Dollars in existence were printed in 2020 alone (source).

As a result of all that new money, there are now significant inflation issues. Officially, in the US, the inflation rate is ~5% (versus the target rate of ~2%). What that really means is that the US Dollars sitting in your bank account is losing purchasing power at ~5% per year.

However, that’s only the official rate. Unofficially, the inflation rate (tracked through sites like Shadow Stats) is much higher, somewhere between 10-20%.

Big ouch.

What can you do to protect your wealth?

With that context in mind about the problem with inflation, let’s put ourselves back into the shoes of that Argentinian Dad who is looking for a way to not lose his purchasing power over time.

Here is what’s likely going through your mind:

• You know that the Argentinian Peso, the money you earn from your job, has lost value rapidly in the recent past
• You suspect / expect the Argentinian Peso will continue to lose value in the future (maybe at an even faster rate than before)
• you consider exchanging Pesos into US Dollars, but see there are inflation issues too (whether it be the 5% official rate, or the 10-20% unofficial rate). This would mean that even though you would be losing purchasing power at a lesser rate compared to keeping your savings in Pesos, you would still face the same core problem. And if inflation issues got worse in the US, you would need to then get rid of US Dollars and find another way to protect your wealth.
• Ideally, you want a reliable way to preserve your wealth where inflation can’t eat away at it

So where do you look? Bitcoin, of course!

Bitcoin adoption is taking off in Argentina (source). And the worse that inflation gets, the more that people will try out bitcoin. Actually, it’s happening so fast that now the President of Argentina is considering to adopt bitcoin to fight off inflation (source).

Why?

Because bitcoin doesn’t suffer from the inflation problems that affects fiat money. Simply put, is not possible to print more bitcoin to add to circulation. So for the Argentinian Dad, what it really means is that when he saves his wealth in bitcoin, he knows with certainty that his wealth cannot be eroded away through inflation.

Sure, there will be short term volatility with the price of bitcoin. But at least with bitcoin, the trend is in the right direction (ie. it becomes more valuable over time at a rate of around +200% per year) versus fiat money consistently trending in the wrong direction (ie. it becomes less valuable over time at a rate of 5%, 10%, 20%, or even more depending on the country).

Here is where it gets more interesting. Zooming out, bitcoin adoption is not only happening in Argentina. Rather, it is really happening around the world wherever inflation is getting out of hand – whether that be Lebanon, Cuba, Nigeria, and of course, now, in the US as well.

It has even become legal tender in El Salvador (source). And there are more countries publicly discussing making it legal tender too – like Argentina, Ukraine, and Paraguay.

Conclusion

Every single fiat money suffers from inflation because more of it can be printed and added into circulation. And that new money is taking away purchasing power from anyone with savings. Bitcoin is the opposite – it protects your purchasing power over time. And it rewards you with more purchasing power the longer you hold it.

Argentinians have already had the “ah ha” moment. And as more people around the world come to the same conclusion, it will drive more demand to hold bitcoin. And as I mentioned on this post, when there is a fixed quantity (21 million coins), and demand goes up, price has nowhere to go but up!

I’ve been slowly converting more of my savings into bitcoin. And I’m going to continue doing so because I don’t want my hard earned money to melt away from inflation.

Jackson (8 months old as of this writing) is ready to crawl. And I think it’ll happen in the next week or so!

This will be a big milestone because once he connects the dots on a number of pre-requisite skills he has been working on (like tummy time, flipping over, sitting up, etc), he’ll be more able to independently explore his surroundings.

Of course, this will wreck havoc on our apartment…but that is another story for another day!

When family and friends ask about his development, I realize I tend to talk about it as a smooth progression. For instance,

• at month 1, he became comfortable doing tummy time
• at month 3, he was able to flip over
• at month 6, he was able to sit up and stay balanced
• (and of course now) at 8 months, he is on the cusp of crawling

However, the reality is that his development has been anything but smooth – in fact, I’d say “volatile” is a much better word to describe it.

For instance, after he was finally able to flip over both from tummy-to-back and back-to-tummy, we thought we checked the box on completing that skill. He was doing it over and over again and seemed to commit it to muscle memory. But then randomly, for a brief period, he forgot how to flip over and became stuck anytime we put him down on his play mat.

The same goes for learning to sit up. Some days, he is steady and I can leave him on his play mat, clean up around the apartment, and come back to find him still happily playing with toys. But on other days, I put him down, turn my back for a minute, and find him toppled over like a log.

However, I am not concerned about the two steps forward and one step back progression.

Actually, the more I learn about his development, the more I understand this is perfectly normal and to be expected. His brain and body are being overloaded while he is learning new skills. And as he is rapidly growing and developing, there will good days and bad days too. If anything, I’m prepared and ready for this volatility to continue.

At the same time, I do pay attention to the long term trend. And that trend is “up and to the right” as Jackson continues to develop motor skills and interact with the world around him.

What does this have to do with bitcoin?

Volatility, of course!

The concept of volatility has been on my mind recently with both a big pull back in the price from $64k down to $30k, and then the current sharp rise up again from $30k to $50k. That’s because a friend, and fellow dad, told me he even though he was interested in bitcoin, he wasn’t comfortable to buy it.

Why? Because it was “too volatile”.

We talked about how stocks can be volatile. He was fine with that. We talked about how both our kids were volatile going through developmental leaps and regressions. And he understood that too. But when it came to volatility with bitcoin, he struggled with it.

I don’t blame him. When you first buy bitcoin, it feels weird to see it go up (or down) so much, especially when it happens in a short period of time. With stocks, a 3-5% move in one day, whether up or down, would be newsworthy.

However, when it comes to bitcoin, a 3-5% move each day is completely normal. Routinely, there are days / weeks / months when it just shoots up way more than that, and other times when it feels like it is nosediving with no end in sight.

The thing is, it is still very early in the grand scheme of things for bitcoin. For comparison, all of the bitcoin in circulation (ie. 18.5 million), put together, is worth just under $1 trillion (denominated in USD) right now. Compared to gold ($11 trillion), stocks ($95 trillion), bonds ($120 trillion), or real estate ($280 trillion), bitcoin is a small fish in a big pond.

But it is growing fast, having gone from:

• $1 billion market cap in 2013
• $250 billion market cap in 2017
• almost $1 trillion (aka $1,000 billion) market cap in 2021

During this period, even though these few data points might suggest it, it was not a smooth path to get to where it is today. Actually, there have been multiple times when the price of bitcoin fell by 50%. And even a few times when it fell by 80% or more.

And to set expectations, just like it wasn’t smooth getting to a $1 trillion market cap, it will also not be a smooth path going forward either.

Why? Because in the short run, the market acts more like a “voting machine”. But in the long run, it behaves much more like a “weighing machine”.

Let me explain.

At the highest level, in the short run, everyone is trying to figure out much bitcoin is worth. There will be periods where there are a flood of positive news, attracting more buyers in the market than sellers, which drives the price up. Other times, it’ll be the opposite. From this, we get the intense volatility in prices. Up. Down. Up. Down.

This is the short term voting machine in action. And because bitcoin is still small compared to other asset classes, you feel the volatility more.

I try and ignore all of these short term price changes. Put another way, as long as you aren’t trying to day trade bitcoin (and I strongly suggest you don’t), just treat volatility as noise.

But, extend the timeline out, and you’ll see the “weighing machine” in action. It’s a clear signal too – bitcoin has gone up on average by 200% per year, for the past 10 years. And it is on track to do it again this year. And if I had to bet, I would bet it will do it again next year too.

I believe this is happening because after each volatility cycle (no matter if it lasts for a day, week, month, or year), a subset of buyers start really learning about bitcoin. And as they go down the rabbit hole and have “ah ha” moments, they decide to hold (ie. not sell) their bitcoin, no matter what happens to the price. And when they do, the net effect is that the price trends upwards.

How to deal with the volatility (assuming you don’t own bitcoin yet):

1. Accept that volatility is just part of the equation to own an asset that is growing 200% every single year
2. Get off 0 bitcoin (even if that means buying just $5 of it). When you have some skin in the game, the volatility will feel more real and intense compared to someone who doesn’t own any bitcoin and is just watching on the sidelines
3. Soak in the experience of feeling the volatility for a few days. Go ahead and refresh the price every few minutes! Set price alerts and get push notifications on your phone! Day dream a little about how great it would feel to buy a massive dip and how much money you could make in the process! (this is common when first buying bitcoin)

How to ignore the volatility (assuming you already own bitcoin):

1. Set up a fixed frequency (ie. once a week or month) to buy bitcoin. This is called “dollar cost averaging” and it’ll help you get past the mindset of trying to time the market (ie. “I’ll buy when it dips”). Sometimes, you might end up buying when there is a dip. Other times, it may be in the middle of a big rise. But over time, it’ll average out, all without having to deal with the emotional rollercoaster of big price changes.
2. Commit to hold bitcoin for at least 3-5 years (or longer). Once you buy, do not sell. There is a saying that it’s not about timing the market, but rather, “time in the market”. Simply put, the longer you are holding bitcoin, the more likely you’ll be making money on the investment.
3. Stop checking the price! While it can be fun to see the price move up or down, it also causes heartache. Instead, anytime you want to sell, learn more about the DNA of bitcoin (ie. the attributes that make it what it is) – this will take you from having a loose opinion about bitcoin, to a belief, and finally to a deep level of conviction. Here is one video to get you started going down that rabbit hole: https://youtu.be/l1si5ZWLgy0

Conclusion

Ignore the short term price volatility. Focus on the signal – buy and hold bitcoin for the long term!

Jackson seems to have a natural 6am wake up time. And that means, I now have a 6am wake up time too!

I won’t lie. Part of me wishes he would sleep in later, so that I can sleep a bit more too.

But another part of me actually enjoys waking up early now. That’s because we get to go on a daily morning walk outside while the city is still asleep.

This was inspired by Ryan Holiday* as part of his morning routine to go for daily run / walk with his kids.

(*best selling author of books including “The Obstacle is the Way” and “Ego is the Enemy”, as well as the writer behind the “The Daily Stoic” and “The Daily Dad” emails I subscribe to)

In the morning, my mind is clear. The air is crisp. And there are very few people outside so it feels like we have the whole neighborhood to ourselves.

It is a great way to start the morning. And I’d like to keep it up for as long as possible.

Part of what makes it enjoyable to go on a daily morning walk is because I’m still on my mini-retirement / extended paternity leave. Put another way, I don’t feel the rush of getting ready in the morning, needing to get Jackson packed up for day care, and then scrambling out the door and commuting to the office.

Through these daily walks, I’ve been getting a sneak peek of how my life could be, long term, in what I’ll call a “post-bitcoin world”. Let me explain!

The future is already here

There is a saying that, “the future is here…it’s just not distributed evenly”.

As an example of how the future is not evenly distributed, I remember when Uber just launched in New York City. At the time, there were generous promotions being handed out, like getting 10 free rides. And of course, I took advantage of it!

The first time I opened the app, summoned a car with the press of a button, and magically watched on screen as the car came to my apartment (all while I was sitting on my couch), I had an “ah ha” moment how Uber was going to change the game.

And by adopting Uber early, in a way, I experienced the future ahead of most.

In contrast, when I traveled to other cities where Uber had not launched yet, I realized even though I experienced the future already, it wasn’t close to being distributed evenly. First of all, most people in these cities had not even heard of Uber. And even if they had, the majority had never tried it out for themselves.

Hypothetically, since I experienced the future ahead of most other people, I had an advantage. In theory, I could have invested in the company, or taken advantage of their referral bonuses by getting people to try it out (and in the process, earning more free rides), or even sold my car (and reduced the associated insurance / maintenance costs) and used Uber to get around everywhere.

I believe that if / when you can experience the future first, you gain a distinct advantage.

What does this have to do with bitcoin?

I am experiencing the future again right now. With bitcoin!

Since a sizable portion of my net worth is in bitcoin, I am getting a sneak peek what life could be like in a post-bitcoin world (for long term bitcoiners, this is commonly referred to as “hyperbitcoinization” or a “bitcoin standard”). Simply put, it’s when bitcoin tips over in the mainstream mindset as the best way to save, preserve, and increase wealth.

And ready or not, we’re rapidly heading towards this new world.

To put it in perspective, in the late 90’s, when the internet was becoming mainstream, it was growing around 60% annually. And at the time, this was by far the fastest rate a new technology had been adopted.

But guess what is being adopted even faster? Bitcoin! For reference, it is growing WAY faster compared to the pace that the internet was adopted, clocking in at around 115% annual growth. If you project that growth forward, and think about how ubiquitous the internet is, you can get a glimpse just how big this bitcoin thing is going to be.

And with all the growth ahead, I believe there will be some notable differences in the day-to-day life of someone who owns bitcoin in their portfolio.

Work

One thing I believe will be quite different about daily life in a post-bitcoin world is the need to work a normal 9am-5pm job.

I’m not saying that everyone will stop working. There are certainly fulfilling jobs that give a sense of purpose. There are jobs that help develop important skills. And there are jobs that create massive positive change.

But, at some point, assuming you own bitcoin, you’ll be faced with a dilemma. And that is, you’ll need to do a calculation whether it still makes sense to keep trading time (ie. 40 hours a week) for money (ie. a paycheck).

How do I know this? Because multiple times now, I’ve experienced how it feels when the value of my bitcoin goes up way way faster than what I earn on a pay check.

The first time was during the 2017 bull run when bitcoin kissed $20k. And at the time, it felt too good to be true. Then, earlier this year, the price rocketed up from $11k to $64k in just a few months. In that time, there were multiple days when again, I “made” (unrealized gains) significantly more money by just hodling bitcoin compared to what I got paid at my job as a Product Manager working at venture backed startups in New York City.

Now, it’s happening again on this most recent rebound from $30k to up $46k in the past month.

Even though the gains are only on paper, I experienced the feeling of seeing my net worth rise very quickly due to owning bitcoin.

Given enough of these days / weeks / months / years strung together, at some point, I won’t have a choice. I will need to decide whether it makes sense to keep working vs. spending those 40+ hours of precious / scarce time <link to time scarcity article> each week doing something else.

The outcome will be different for everyone. For some, it might mean transitioning part time. For others, it could be a career switch. And for others, it might mean fully “retiring”. Of course, that will depend on how much bitcoin you own.

Activities / hobbies / side projects

Given that there will be time gained back from not working (or working reduced hours), I believe activities / hobbies / side projects will move into the spotlight in a post-bitcoin world.

That’s because each of us will need to find other ways to get that sense of purpose and progress.

For me, that time will be spent on writing this blog, running, learning to code, and going through the online courses I’ve paid for but not finished. Actually, it’s part of why I’m taking a mini-retirement / extended paternity leave right now. I am test driving this new lifestyle to make sure I know what I’m getting myself into.

For you, it might be a completely different set of things like creating art, learning to cook, surfing, or more.

I believe as long as you create vs. consume (ie. watching Netflix all day), progressively master a skill, and have a sense of autonomy as you practice, you’ll find that the time gained back (from not working) will be more than filled up.

Taking the time to smell the roses

Additionally, with the extra time each day, I believe the pace of life will slow down…in a good way.

Instead of rushing through lunch, there will be more time to enjoy each bite. Instead of only having time to call your parents once a week / month, there will be more time to catch up (and you might even decide to spend a long period of time hanging with them, like I did recently). And instead of cramming your weekends with things to do, these will get spread throughout the week at a more leisurely and enjoyable pace.

And in this post-bitcoin world, being a new parent will be more enjoyable too. You’ll have time to go on a daily morning walk, like Jackson and I get to do. You might find yourself hanging out at the park more often and letting your kid play a little longer. And there will also be more time and energy to teach them about dinosaurs, astronauts, and anything else they are curious about.

Conclusion

Over the next few years, the future (ie. bitcoin) will become more evenly distributed. And as it does, I fully expect other new parents to also have this “ah ha” moment that they can be more in control of their time.

I’m learning how to do this right now on my mini-retirement / extended paternity leave. And so far, I’m liking what I see!

It feels good to be back home in Brooklyn after spending 3 months on the road.

Starting in late March, the family and I have been on an extended road trip to Houston (Texas) and Raleigh (North Carolina). The goal was for Jackson (who was almost 4 months at the start of the trip) to spend a meaningful amount of time with both sets of grandparents.

When Jackson was born, COVID vaccines were not available yet, meaning that it wasn’t feasible for the grandparents to come up to New York to meet him. On top of that, our apartment is less than 800 square feet with only 1 bathroom…which would be a tough setup for 4 adults and 1 baby to spend an extended period of time together.

And yet, it was important for us that Jackson be able to spend quality time with his grandparents. That’s why early on, Tiffany and I made plans for this once-in-a-lifetime trip.

It wasn’t easy.

It took us a week to drive 1,600 miles to Houston (where Tiffany’s parents live). Along the way, we had to start each day at 3am (so that Jackson would be asleep and I could drive a long stretch). There were many diaper changes in the backseat while parked at sketchy gas stations when the bathroom was either too dirty or lacked a changing station. And to top it off, we had a daily ritual of frantically searching for a last minute hotel once Jackson started screaming and made it clear he was done sitting in his car seat for the day. 

Even when we got to Houston (and later Raleigh), it wasn’t easy. We lived out of a suit case the whole time. And Jackson had to get used to new environments while going through developmental leaps and regressions.

However, even with all the obstacles, it was 100% worth it.

The grandparents were able to see Jackson roll over, learn how to nap on his own, eat solid foods for the first time, take a dip in the pool, etc. And just seeing them bond and hang out and laugh together was so special.

If you really think about it, there aren’t too many opportunities in life to spend 3 months on the road when you have a baby. And I feel like it only gets harder as Jackson grows up due to upcoming school schedules, activities, classes, etc.

Time is scarce.

I’m really starting to understand this. And the more I do, the more I appreciate the limited time available.

Like time, we place value on things that are scarce. Put another way, things that are (a) scarce AND (b) in demand have intrinsic value.

And connecting these dots led to an “ah ha” moment about how the scarcity of 21 million coins gives bitcoin value.

My take on scarcity

Scarcity operates on a spectrum. On one end are things that I’ll call “fake scarce” while on the other end are things that I’ll call “truly scarce”.

To appreciate true scarcity, let’s first explore fake scarcity. 

Starting off at one end of the spectrum are fake scarce things. Most things in life that appear to be scarce (like “limited time only” McRib sandwiches or rare Air Jordan shoes) are not. In actuality, there is nothing stopping these companies from producing more.

Moving along to the middle of the scarcity spectrum could be things like concert tickets. They are scarce in the sense that the musician might only be playing at that venue for one night. But it’s not truly scarce because likely the musician will be playing at other venues, or you might be able to live stream it, or even watch a recorded version later.

Now, approaching the other end of the scarcity spectrum, we get to gold. Before bitcoin was invented, gold was one of the closest “truly scarce” things around. That is because year after year, gold miners are only able to add 1-2% new gold supply. And without getting into the details of history and human psychology, let’s just establish that there is demand for gold. Globally. Throughout history. Due to the scarcity of gold, plus demand for it, results in that shiny metal being worth a lot ($1800 / oz right now).

Finally, if we keep moving along the scarcity spectrum to “truly scarce” territory, we get to bitcoin. That’s because there is a hard limit of 21 million bitcoin that will ever exist. This limit cannot be changed and anyone can verify the open source code to make sure. What this really means is that no matter what, there will not be any more created. And there is no way to counterfeit it either.

Understanding this hard limit (ie. the true scarcity) is important. Because then, it makes much more sense why the price of bitcoin keeps going up (to the tune of 200% per year). 

To elaborate, let’s look at a simple supply and demand graph from an Econ 101 class. This graph shows the relationship between supply, demand, and the price as any of those variables change.

Generally speaking, if you have a “thing” (ie. whether it be baseball cards, a gallon of milk, etc) where the demand and supply are not changing, the price of said item will be where the two lines cross on the graph. That means the price should not move up or down very much.

Now, if you have a situation where demand for this “thing” increases (and assuming supply stays the same), in the short term, the price will need to go up. It will rise until more of the “thing” is produced. And when that happens, the price will start to come back down until a new equilibrium is re-established.

Following so far? Good, because here is where it gets interesting.

Question: what happens if the supply of an item is fixed and there is NO way to increase / decrease it…like the hard limit of 21 million bitcoin? And specifically, what happens if demand keeps rising?

Answer: the price has to go up.

Just think about it. Let’s say there is a one-of-a-kind scarce piece of artwork. And let’s say the artist is dead and no more originals exist. Now, let’s imagine demand rising for it. At first, maybe only 100 people want it. But then over time, it becomes 1,000. And then, 10,000. Then 100,000. Then 1 million…

Hopefully you can infer how this plays out. The price will go up for that one-of-a-kind piece. How far up is unknown. That will be determined by the number of people who want it (ie. demand), and how much they are willing to pay.

It’s the same with bitcoin. There will only ever be 21 million coins. And while this might seem like a lot, for comparison, there are 56 million people in the world who have a net worth of at least $1 million (ie. they are considered “millionaires”). That means, not even every millionaire in the world can own 1 bitcoin. There just aren’t enough to go around. And this doesn’t even take into account some of the big buyers who already own billions of dollars worth of bitcoin and are still buying as fast as they can.

Based on upcoming demand, Ark Invest models indicate that we’ll see $500,000 bitcoin in the next few years. And some even crazier ones predict $100 million per bitcoin within our lifetime! 

Truth be told, no one knows just how high it can go. But what is clear to bitcoiners is that demand is rising.

Already, companies like Tesla, Square, and MicroStrategy own bitcoin. Retail investors are talking about and buying bitcoin. Recently, legendary fund managers like Paul Tudor Jones, Stanley Drunkenmiller, and Ray Dalio have publicly stated they now own bitcoin. And countries are even getting into the mix – in June 2021, El Salvador made bitcoin legal tender (which will undoubtably increase the demand for bitcoin).

Slowly but surely, more people, companies, and countries will own bitcoin. And a big reason for that is the realization that bitcoin is truly scarce AND in demand.

And not to beat a dead horse, but when a thing is scarce AND in demand, it will be valuable.

I know you are thinking, “but bitcoin just recently dropped more than 50% from $64k down to $30k!”. Yes, that is true. In the short term, there is volatility in the price. But as you zoom out, you’ll see bitcoin has had an annual growth rate of 200% for the past 10 years. And each year, there is more and more demand for it.

That is why the price will trend up in the near term, medium term, and long term.

The 21 million fixed supply is genius. As bitcoin demand increases, the scarcity of bitcoin will keep creating pressure on the price to move up. As a new dad who owns bitcoin, all I have to do is sit back, HODL, and keep an eye out whether more people, companies, and countries buy bitcoin. As long as they do, I am confident the value of my bitcoin will continue to rise!

Before Jackson was born (~6 months ago), I was in marathon running shape. That’s because during the past 12 years, I’ve trained for and run a marathon each and every year.

In 2012, at the peak of my training, I ran a personal best time of 3 hours 14 minutes (7:30 min / mile) at the Philadelphia marathon. While not world class by any stretch…for me, it was (and still is) a big accomplishment.

When it comes to running a marathon, there is no way to fake it. You’ve either put in the work to train, or you haven’t. To run a 7:30 minute / mile pace over 26.2 miles, I had to commit 6+ months. Each week, there were multiple runs, alternating from speed workouts, +10 mile long runs on weekends, and even hill repeats.

I like to refer to this as the “proof of work” I put in to prepare.

Going into marathon race day, because I knew I had put in the work, I felt confident about what I could do on the course.  And throughout the race, I reminded myself of all those training sessions while furiously turning over my legs, mile after mile.

I know you are wondering, “what does training for a marathon have to do with bitcoin”?

Proof of work, of course!

Recently, there has been a lot of FUD (fear, uncertainty, doubt) about the energy used / wasted by the Bitcoin network. And it boils down to the underlying proof of work involved.

I’ll just get it out of the way – proof of work, and the energy used in the process, is a feature, not a bug. Yes, energy is used. But it is not wasted. It serves a very important function – to protect the monetary value (~$700 billion USD as of this writing) that is stored on the network. 

Let me explain.

To do so, I need to first start with an example using PayPal so I can compare / contrast against how the Bitcoin network operates. This will help connect the dots why proof of work is needed at all. 

PayPal(centralized)

At the very highest level, PayPal is a centralized service whereas the Bitcoin network is decentralized.

That means when I try to send a friend $100 USD on PayPal, PayPal is solely responsible to check that I have the funds available, that the country my friend lives in isn’t on a sanction list, that both of our accounts are in good standing, along with potentially hundreds of other criteria before allowing the transaction to go through.

Put another way, PayPal, as a centralized service, acts as the single source of truth for all transactions that get processed on their network. That means if PayPal allows the transaction to go through, then my friend knows he is now be able to use that $100 USD. 

Now, let’s contrast this against how the Bitcoin network operates.

Bitcoin (decentralized)

As mentioned above, the Bitcoin network is decentralized. Zooming out, this is critically important for security, especially when ~$700 billion is at stake. That’s because the concept of a honeypot is removed as an attack vector. What that really means is that it is much (much) harder to hack or attack.

While this is good for security, decentralization also has drawbacks. One glaring conundrum is knowing what transactions should be processed vs. rejected without a middleman involved (ie. PayPal). 

This is where bitcoin miners (and proof of work) come in.

The role of miners in the Bitcoin network

@GreenidgeLLC January 2020
🇺🇸 🇺🇸 🇺🇸@BITMAINtech @Antminer_main S17’s pic.twitter.com/h8Qwsf8auI

— Kevin Zhang (@SinoCrypto) July 9, 2021

Miners (who are scattered all around the world and competing against each other around the clock) are responsible for taking new valid transactions (that still need to be settled), bundling them together into a new block, and adding that new block to the blockchain. As a reward for doing this task over and over again, they earn newly minted bitcoin.

This is important because once a transaction makes it into a block and is then added to the blockchain, the transaction cannot be reversed. This is how the source of truth is established for who owns bitcoin and how much they own as of right now.

Extending the example above, instead of PayPal, I could instead use the Bitcoin network to send money to a friend. Assuming I had 1 bitcoin (~$33k USD as of this writing) and sent it to a friend, behind the scenes, the transaction would get picked up by a miner, added to a block, and appended to the blockchain. When that happens, my friend would now own the bitcoin.

Still following along? Now, let’s drill in one layer deeper into the actual proof of work that miners are required to perform in order to earn bitcoin rewards.

Proof of work(performed by miners) 

Since the Bitcoin network is decentralized, no permission is required to start mining. Put another way, you can literally start mining today. However, since anyone can participate, it means that any miner could attempt to add invalid transactions in a new block (whether out of negligence, malice, or otherwise).

If this were to happen, it would corrupt the entire blockchain ledger and screw up tracking of how much bitcoin each of us own. It’s not hyperbole to say that if this were to happen, bitcoin would be worthless. Immediately.

But it hasn’t happened. And it won’t, because the Bitcoin network has a mechanism to prevent and disincentivize it. And, as you guessed, it’s called proof of work!

As a miner, to create a new block (with new transactions that need to be settled) and add it to the blockchain, the last required step is to solve a difficult math problem. By design, the only way to solve this problem is through brute force. That means each computer in a mining operation is purpose built to quickly try and find the answer by guessing over and over again.

Only when a miner successfully finds the answer (and assuming they are the first one to do so for a block before all other miners), and then have their answer verified by full nodes (other participants on the Bitcoin network), does the new block get added to the blockchain. Finally, at this point in time, the miner earns newly minted bitcoin.

Roughly every 10 minutes, a new block is created. And as soon as that happens, the whole process resets and all miners compete trying to put together the next block in the blockchain.

Using the“roll-a-ball” carnival game to better explain proof of work

I know at this point, when I was learning about miners and proof of work, it was confusing. However, once I realized that there were similarities to a carnival game that I used to play as a kid, it started to make much more sense.

At the carnival, there is a game called “roll-a-ball” (link to YouTube clip to see it in action). The objective is to get your horse from one side of the board. If you are the first one to do so, you win a prize.

Here is how it works:

• to play, each participant pays the game operator a token (something equivalent to $1-5 in the USA)
• once the race starts, each player rolls a ball down their lane (which can land in one of many different holes at the end of the lane, corresponding to a different distance their horse will move across the board)
• the person to roll the right combination of balls will cross the finish line first
• there is one winner each round, and they receive a stuffed animal (or something related) as a reward
• Once someone wins, the whole board resets and the horse race starts over again

Now, let’s connect this to miners and proof of work:

• miners are like the participants in the “roll-a-ball” game
• proof of work is like the act of continuously rolling the ball during the game in order to move your horse across the board (ie. have to brute force keep rolling over and over again)
• there are many miners competing, just like there are multiple players at the same time for the carnival game
• In order to join, miners have to buy in (ie. it requires specialized computers and related electricity costs to run those computers), just like players in the “roll-a-ball” game have to pay a token to the game operator in order to play
• similar to roll-a-ball game, the first miner to solve the problem will earn a reward, but none of the other players earn a reward
• as soon as a new block is created, the whole process resets, just like it does once a horse crosses the finish line in the “roll-a-ball” game

With this connection established, let’s discuss why proof of work even matters.

Back to proof of work

The essence of proof of work is that miners must do work (ie. putting together a block which includes brute force finding the answer to a computationally intense math problem) in order to earn a reward. And the work costs money in the real world.

When a miner successfully puts together a new block, they get rewarded with newly minted bitcoin. But for each block, there is only one winner. That means every other miner around the world will have incurred an electricity bill running their equipment, but not receive any reward.

This well designed check-and-balance ensures that each miner behaves (ie. only attempts to add valid transactions into a block so they can compete to earn the reward). If they were to try and add any invalid transactions, their work would not pass validation by full nodes (other participants in the Bitcoin network), resulting in that block getting tossed out. Put another way, these miners would literally be throwing out money but yet never adding new blocks to the blockchain.

(and remember, while all of this is going on, as a by-product of each miner selfishly trying to earn bitcoin rewards, what they are actually doing is settling valid transactions and recording it to the ledger)

Conclusion

Now that I’ve put in the energy to learn about proof of work, I am confident I can ignore the FUD (fear, uncertainty, doubt). And actually, I now sleep better at night knowing that my bitcoin are secure because of proof of work!

As part of Jackson’s sleep routine, Tiffany and I sing “Twinkle Twinkle Little Star” right before he goes to bed each night.

Consistently, night after night, when we start, he joins in.

On good nights, if we’ve timed it right, he’ll happily sing along, coo’ing and caw’ing with us, and then fall asleep shortly after. Other nights, when he is either over-tired or isn’t ready for bed yet, he’ll make a series of sad faces once we start. And inevitably, when the sad face comes out, he’ll wail and scream as we sing.

But the thing is, he always has a reaction (unlike with other songs that we sing to him throughout the day).

This is fascinating.

I believe he is connecting the dots that “Twinkle Twinkle Little Star” means bed time is coming up next. Put another way, he is picking up on a pattern.

I’m surprised that at only 4 months old, he is able to recognize this pattern and predict what is coming next. But since he can, we make sure to stick with it every night.

I’ll be honest. When Tiffany first proposed we create a bedtime routine for Jackson, I was skeptical. I thought that he wouldn’t / couldn’t care less.

But, now having done the same routine night after night for a month, I’ll admit that I was wrong.

As a new dad, I now understand that babies crave proutines. That’s because routines creates predictability. And in a chaotic world with so much newness, a sense of predictability allows a baby to look ahead and know what is coming next.

Realizing this, it has become easy to see many other routines that Jackson also recognizes…like when he is going to be fed, when it is play time, and of course, when it’s time for bed.

The more I’ve seen these patterns throughout his day, the more I started thinking about the power of patterns and predictability in my own life. And of course, that led me back to bitcoin and towards a better understanding where the price is and where it is potentially headed next.

Predicting the price of bitcoin

Rewinding the clock, in the fall of 2019 while on my honeymoon (when bitcoin was <$10k), I first heard about the Stock-to-Flow (S2F) model (link). It predicted that the price of bitcoin would be $100k in 2021, $1M in 2025, and a whopping $10M in 2029.

At first, I found it amusing but immediately dismissed it because it seemed so outrageous. But yet, here we are, roughly halfway through 2021, and the price of bitcoin is ~$58k.

Right on schedule.

One #bitcoin price prediction tool, Stock-to-Flow has proven to be remarkably accurate. Here's what you need to know: by @Steven_Ehrlich https://t.co/ig21REAW9v

— Forbes Crypto (@ForbesCrypto) April 29, 2021

How is it possible?

First, you have to understand a few predictable qualities about bitcoin.

Without any doubt, it can easily be verified:

• how much bitcoin is in circulation (~18.9 million out of a possible 21 million)
• much new bitcoin is “mined” right now (900 bitcoin / day until 2024)
• how much new bitcoin will be mined in the future (450 per day from 2024 to 2028, and then 225 per day from 2028 to 2032, etc due to the halving event every 4 years…which as you can guess, cuts the amount of new bitcoin that enters circulation by half)

The beauty is that these amounts are algorithmic and cannot be changed. Put another way, it is 100% predictable.

Why does this matter?

When the current supply is known, and you can predict what new supply will be, you can model out what the price could / should be in the future.

And that’s where S2F comes in.

At a very high level, the S2F model compares the “stock” (ie. the current circulating supply of ~18.9 million bitcoin) vs. the “flow” (ie. the rate of new bitcoins that enter circulation). Using this ratio, it has accurately predicted when bitcoin would reach prior milestones of $1k and $10k. And so far, it is right on schedule for the next milestone of when bitcoin should hit $100k.

In general, a higher S2F ratio means a higher price. So with each upcoming halving event (every 4 years), the S2F ratio for bitcoin goes higher. And with it, the price should move up too.

Beyond bitcoin, the S2F model also works to determine the price of gold, silver, and other precious metals. That’s what makes it really interesting to consider when thinking ahead to the $100k, $1M, and $10M price predictions for bitcoin.

Why this matters

As a new dad, I know there are lots of big expenses in the future. My goal is to ensure that my family is financially prepared so that we can live the lifestyle we want. S2F helps me “see ahead” to what the price of bitcoin could be, which then takes away much of the risk to HODL.

It also removes the temptation of selling for small gains today, knowing there are bigger gains to be had in the future.

If bitcoin really does follow the S2F model and hits $100k in 2021, and then $1M in 2025, and $10M in 2029, it’ll not only set us up financially, but it will actually create generational wealth.

It goes without saying that I also understand that this is just one model about the price of bitcoin. And with all predictions, it can fall flat on its face. But since it has been right on schedule with predicting prior milestones, I’ll keep leaning on it personally.

And while we’re moving towards $100k, I’ll be continuing to sing “Twinkle Twinkle Little Star” each night while following along with the upwards price movements.

It’s impossible to walk a block in Park Slope without seeing parents and strollers. And one particular brand, Uppababy, seems to dominate this part of the market.

Why is that?

As a new Uppababy stroller owner myself, I now understand. And more importantly, due to this understanding, I also had an “ah ha” moment why bitcoin is being adopted left and right.

Let me explain.

One small step for man. One giant step for mankind new parents.

Jackson, my son, was at the end of 2020. In addition to being in a global pandemic, a winter baby in New York City presents unique challenges. That’s because it is not trivial to strike the right balance between going out for much needed fresh air vs. staying safe indoors until the weather is nicer and COVID restrictions are lifted (ie. living within our comfort zone).

However, with only a <800 square foot apartment for our family of three, staying indoors for too many days in a row makes all of us feel stir crazy.

Starting month two, after Tiffany and I had a better sense of Jackson’s feeding / sleeping schedule, we psyched ourselves up to venture out. Mind you, we’re still playing it safe with COVID so we aren’t going to neighborhood coffee shops, eating at restaurants, or to see friends in their apartments. Basically, we’re left with outdoor walks around the neighborhood.

Strollers are tools

The Uppababy stroller has been exactly what we need. Put another way, it is a tool that gives us confidence going out, dealing with uneven sidewalks, navigating leftover snow on the ground, going “off roading” in the park, etc.

It’s not only a tool. It’s THE right tool for the job.

If you really think about it, we’re surrounded by tools – from strollers (to push a baby around during a walk), to carriers (so we can body wear a baby around the house), to portable diaper change stations (so we can take care of poopy diapers on the go).

Each one solves a specific problem we have. And by using these different tools, it allows us to live a little more of a cushy lifestyle.

Tools evolve and get better

You can’t really compare the Uppababy against the crappy stroller that I was pushed around in as a kid.

I remember my Dad needing to tilt the old school stroller on the back two wheels to go over most uneven sidewalks or bumps. And if he didn’t see a bump or didn’t tilt the stroller at just the right angle…it would get stuck and I’d get jostled around. Not comfortable, to say the least.

Even though I look back and think how crappy that stroller was, I bet at the time, my parents thought, “this is the best thing since sliced bread”…just like I do right now with the stroller I own.

Go forward another 10 years…and I wouldn’t be surprised if there are robo-strollers that push themselves around. Maybe it’ll even levitate like baby Yoda’s “stroller” in The Mandalorian.

This is to be expected. Tools evolve. And improve…or something else better will come along to take its place.

Money is a tool

Having established how important tools are for new dads, let’s shift over to talk about one of the most important tools that makes the world go around – money.

Without getting too philosophical, as a tool, money is:

• the “thing” we earn by working at a job
• and the “thing” we use to pay for products (ex. strollers) or services (ex. child care) (referred to as medium of exchange)
• and when there is an excess of the amount we make vs. spend, the remainder amount should hold its value over time so that later on, we can still afford to buy the things we want / need (referred to as store of value)

In the past, money came in the form of shells, and then beads, carvings on wooden sticks, and shiny rocks. And for a long time, it was gold. Now, for all intents and purposes, money is the US Dollar / Euro / RMB / other types of government backed paper that we hold in our wallets.

It has evolved many times. And it will continue to change form when something better comes along.

At first, this was unsettling that government backed money, the only form of money I’ve known, could be disrupted.

But then you realize that of course it will. Money has already changed forms. Multiple times. And of course, it will again. As the saying goes, “change is the only constant”.

I believe that bitcoin is that tool, that is here to displace (whether partially, or entirely) every government based money.

Bitcoin is money

At the highest level, bitcoin is a new form of money. I know, that sounds far out there to put on paper. If you are like me, then your monkey mind is probably shouting “scam”, “pyramid scheme”, “fake magic internet money”. I was like that too. But just hear me out first.

Bitcoin is money. And money is a tool. So really, bitcoin is a tool.

It’s worth repeating: bitcoin is a tool.

Why?

Something happens when thinking about bitcoin as a tool. For whatever reason, it seems to get rid of the monkey mind for a second, right?

Of course, I’m not saying you should get rid of that nagging feeling and dump your life savings into bitcoin, but for now, first think about bitcoin through the lens of a tool, similar to how you think about a stroller as a tool.

Practically speaking, a tool is used to help solve a problem.
Thinking about bitcoin as a tool helped me see the problem it was solving. Which then led me down the rabbit hole of how big the problem was. Which then helped make sense why so many people are adopting bitcoin as money. And that gave me more conviction that bitcoin matters.

As a tool, bitcoin attempts to solve a nasty problem that the current form of money (ie. government backed dollars, Euros, etc) cannot fix. And each day, it is proving that it is a better tool for the job.

The problem with saving money

Our current form of money (ie. US Dollars, Euros, etc) is great in many ways. It’s convenient day-to-day as a medium of exchange to buy goods and services.

But it has a big problem. And it particularly affects new parents.

The big problem is that the money (in the form of US dollars, Euros, etc) we store in a bank is steadily losing value. It is not holding up as a “store of value”. 

The reason is due to “inflation”. And unfortunately, inflation is part of the foundation of how our money system (ie. government backed money) works.

That means, inflation won’t be going away.

On one hand, it may not feel like there is a lot of inflation because a gallon of milk and loaf of bread roughly cost the same as it did last year, and the year before that.

But, for the bigger ticket items like school tuition fees (up 213% for public school since the late 1980’s), doctors visits (up 908% since 1980), buying a house (up 413% in the US since 1980), etc… we are seeing the nasty effects of inflation.

Inflation is a problem. But the real REAL problem is that these expenses are rising FASTER than you are getting pay raises.

As a new dad, I’m sure you are hyper aware of new expenses already. And you know there will continue to be new expenses around the corner that you need to budget and save for.

We’re caught between a rock and a hard place.

On one hand, the money we are trying to save is losing value, while on the other hand, there are also more expenses (that require money) that we need to budget for.

This is a losing battle.

Bitcoin and inflation

Bitcoin addresses the problem of inflation head on. Instead of losing value over time like government based money, it is designed / engineered to become more valuable. It is deflationary instead of inflationary.

To truly appreciate a deflationary form of money, you’ll have to really go down the “what is money” rabbit hole. Along the way, you’ll learn about the impact of a fixed supply, game theory, Austrian vs. Keynesian economics, and more. And when you piece it all together, you’ll see that bitcoin is really deflationary.

Practically speaking though, as a new dad, all this means is that you’ll be rewarded for saving your hard earned money in the form of bitcoin. That’s because in the future, the bitcoin will be able to buy more than it can today.

Here is deflation in action.

• in 2010, it cost 10,000 bitcoin to buy two pizzas
• In 2015, a group sushi dinner cost ~10 bitcoin
• In 2021, a Tesla Model 3 costs only ~1 bitcoin (price of bitcoin as of this writing is ~$55k USD, price of a top end Performance Model 3 is ~$50k USD).

As you can see, the purchasing power of bitcoin is increasing over time.

This matters.

By viewing it as a tool, I was able connect the dots that bitcoin helps me plan, save, and pay for future big ticket items for the family.

And to take advantage of it, all I have to do is buy and then hold. Which is exactly the game plan I’ve implemented. Next time, I’ll share more about this simple and effective strategy.

But for now, it’s time to put Jackson into the Uppababy and go out for another family walk!

I’d be lying if I told you I haven’t repeatedly checked the price of bitcoin this week. It’s been volatile to say the least.

But I know that checking over and over again is a trap.

In this post, I want to share a lesson learned from a baby sleep training class that reminded me why it’s best to ignore the price of bitcoin in the short term.

Let’s start with the baby sleep training class…

Last night, I only got 3 hours of sleep. It was brutal. I’m on coffee #2 and already planning for coffee #3 too.

Overall, Jackson (2 months old, as of this writing) is an easy baby. We are lucky that he eats well. And that he’s happy. And healthy. However, the one area he struggles with is sleep. He doesn’t get enough sleep, and has trouble staying asleep when we put him down.

Before Jackson, Tiffany and I were both solid eight-hour-a-night sleepers.

So, in hopes of getting him there too, we are taking an online class called “Taking Cara Babies”.

An immediate goal of the class is for Jackson to sleep one longer stretch each night. And that’s what we are implementing right now.

(in case you are curious: the principle is that by stretching out night time feedings, by even just 10-15 minutes per day, a baby will get more comfortable to sleep longer at night without freaking out)

Here is how he has been sleeping for the past week (where 1 = terrible and 5 = great):

• Feb 18: 2
• Feb 19: 1
• Feb 20: 2
• Feb 21: 3
• Feb 22: 5
• Feb 23: 2
• Feb 24: 1

The teacher, Cara, reminds us that it’s not a straight shot path for a baby to be able to consistently sleep longer through the night. I’m glad I remembered that lesson at 3am last night.

That’s because last night, Jackson woke up way earlier than his scheduled feeding time. And that meant for 1.5 hours between 3am – 4:30am, I was holding / rocking / bouncing him, while pacing around the apartment, stalling until it was feeding time.

I was frustrated, exhausted, and questioning the entire plan from the class.

The problem is, at 3am, I zoomed in too close and only looked at what was going on in front of me (ie. being up in the middle of the night with a hungry / crying baby). I got lost in the noise of daily volatility in Jackson’s quality of sleep.

But, by zooming out, it was easy to see past the volatility and instead focus on the overall trend. And the trend is absolutely going in the right direction (ie. more and better quality sleeps). It was just the “ah ha” moment that I needed.

With bitcoin, it’s the same. Looking at price too much is a trap.

Here’s what I mean. In my last post, I wrote about bitcoin’s +200% annual returns. But it’s not steady day-to-day. Rather, there are big up and down days along the way.

A few weeks ago, bitcoin was at $38k. Two days ago, it was at $58k. That is a $20k increase!

And then, yesterday, in just one day, it dropped $10k.

Looking too closely at the volatility (whether it be the ups or down days) means you are losing sight of where bitcoin is heading. And worse, it could lead to buying high and / or selling low…the exact opposite of what you should do to build wealth.

Focusing too closely on price is like me zooming too far in on the quality of one night of sleep vs. zooming out at the overall positive trend.

Here is the bigger picture. Here is the trend for bitcoin:

• it has now crossed over $1 trillion market cap in just 12 years
• retail adoption is becoming mainstream and you can now buy bitcoin on Robinhood, CashApp, PayPal, and more
• corporate adoption has started (ie. companies like Tesla are now holding bitcoin on their balance sheets)
• state level / government level adoption is around the corner

These are incredibly powerful long term trends. And this is what will really move the price of bitcoin to $100k, $1 million, and eventually $10 million.

From time to time, I need reminders not to worry about the short term volatility. And as this bull run gets going, now is the perfect time to zoom out and see the bigger picture again.

I didn’t grow up with money.

As a kid, I remember how we got our furniture. And it wasn’t from a furniture store.

Once a year, the town I lived in had a gently used / unwanted furniture give-away event. If you had anything that you wanted to part with, you would set it out on your driveway on that day. And it was understood that if anyone wanted what you were giving away, they could just pick it up and carry it off.

Growing up, we’d make a day of it. All of our furniture, and I mean everything, was acquired this way. Mattresses, a couch, mismatched dressers, a dinner table, and more.

Now, don’t get me wrong – I didn’t have a sad childhood. Quite the opposite. We were a happy family! And I have fond memories growing up.

But we certainly didn’t have a lot of money. And that means I had a front row seat seeing life through a money scarcity mindset.

Now in life, I’m in a much better financial situation. Realistically, I don’t have the money constraints that my parents did. That means, I spend zero energy worrying about day-to-day or month-to-month expenses anymore. I just know there is more than enough money to our family name to cover these and more.

I’m not telling you this brag, but rather…

Having gone through a childhood where my parents had to get creative in order to make ends meet vs. now not needing to worry about day-to-day or month-to-month expenses…all else equal, I’d much rather have money.

As Naval Ravikant says, “you can’t fix your problems with money, but you can fix your money problems with money”.

Having money means that I don’t have to stress about mortgage payments, budgeting for an upcoming vacation, deciding if I can afford the Uppababy Vista stroller, etc.

But more importantly than toys, vacations, and mortgages…having money has given me the ability to take an extended paternity leave / mini-retirement.

Right now, I have time freedom over each day – meaning I have the luxury of time to wake up slowly in the morning, and time to be present while playing with Jackson, time to go on a daily family walk in the afternoon, and time to just bond as a new family of three.

It is a luxury. And I have Bitcoin to thank for it.

You won’t be able to save enough to pay for all the expenses

Doing some quick back-of-napkin math, you’ll quickly see that working a 9-5 and saving a part of each paycheck isn’t enough.

That’s because if you are just holding USD, your hard earned money is literally becoming worth less (and less) each year. This is inflation in action.

Choosing to have money

I’m sure you already figured out that saving money (ie. USD) isn’t enough.

To me, back to the choice of having money vs. not, it is table stakes that investing needs to be part of the equation in order to account for additional expenses as a new dad.

Before Bitcoin, I invested in both real estate and the stock market.

I’ve made money on both. And I still own both. But when it comes to upside, the numbers don’t lie. Bitcoin has been the best investment. And will continue to be the best investment. By far.

Historically, here is how much each asset grows per year:

Savings account: 0%
Real estate: 5-10%
Stocks: 10-15%
Bitcoin: +200% (since inception from 12 years ago)

As you can see, the returns on Bitcoin easily beat out the stock market, real estate, and basically every other possible investment out there.

How could it not? Bitcoin has been engineered to perform like this. And right now, exactly according to plan, we are at the start of another bull cycle.

With where Bitcoin has come, and where it is heading, I believe Bitcoin is the best vehicle to build long term wealth. In future posts, I’ll share the various “ah ha” moments that helped me develop my conviction, but for now, let’s recall a key first stat to help you have your first “ah ha” moment.

On average Bitcoin grows at +200% per year. This is orders of magnitude better than stocks, real estate, etc.

And this is why I choose to allocate a part of my portfolio in Bitcoin.