As of late February 2024, I believe 99% of parents still see bitcoin the wrong way.
And I believe it’s causing parents all around the world to miss out on owning the MOST important asset that can help make life easier for them and their family (at least financially).
But not you, fellow parent!
That’s because in this article, I’m going to shine a whole new light on bitcoin (ie. The way I see it, which is a rational position developed over thousands of hours of study)
Why should you care?
Because with this new perspective, I believe it’ll put you ahead of 99% of other parents so you can actually evaluate if / how bitcoin can help your family’s financial future.
How most parents see bitcoin right now
Recently, I went out to dinner with a group of Dads. And of course, bitcoin came up in conversation, especially since the price has more than doubled in the past 6 months. (currently, it is around $60,000 as of Feb 28, 2024).
During dinner, one of the Dads said something that stuck out to me:
“…sure, the price of bitcoin has gone up a lot recently. But it’s just going to crash again soon…”
And the thing is, he is right…IF you only look at bitcoin with a short term horizon. Unfortunately, the reality is, that’s how most parents view bitcoin today.
Specifically, I believe 99% of parents are saying “no” to bitcoin right now because they think it is:
- more akin to a lottery ticket and / or something you gamble on
- something you have to day trade like a degen
- A high risk thing you definitely don’t hold for the long term
I don’t blame them for having this perspective. But at the same time, it is exactly the opposite way I see bitcoin.
The price goes up. The price goes down.
Like I said, I don’t blame all my fellow parents out there who still see bitcoin more akin to gambling or speculation and decide to stay away.
That’s because on a short term time horizon, bitcoin looks crazy. One minute the price of bitcoin going up (violently), and then down (violently), and then up again, and then down again.
For instance:
- in early January 2024 (right before bitcoin ETF’s were approved), the price was roughly $45,000
- right after the approval, the price shot up near $48,000
- by late January 2024, the price dropped significantly down to $40,000
- now, in late February 2024, the price is up significantly to $60,000
That’s a lot of up and and down price movements in a short period of time!
And when viewing bitcoin like most parents do, it is easy to conclude that in order to make money on it, you have to time the market (ie. buy it at just the right time and then sell it at just the right time…over and over again).
Now let’s be honest honest. No one can time the market. Especially over and over again.
And even if you could perfectly time the market, my bet is that no sane parent would want to spend all day (and all night) obsessively staring at their computer screen, looking at price charts, and timing each buy and sell trade.
Actually, that sounds like a nightmare to me.
When looking at bitcoin through a short term lens, it easy to see why most parents shy away.
How I see bitcoin
To me, all this short term price change is just NOISE. And I try my best to ignore the noise.
Am concerned when bitcoin drops by 10% in a day? No.
Am I selling when the bitcoin goes up 10% in a day? No.
How? Why? What? Let me now (finally) tell you how I see bitcoin!
Bitcoin is boring
If there is one key concept I want you to take away, it is that bitcoin is BORING (in the best way possible).
Yes. Boring. Even though in the short term, the price is going up and down and up and down.
Here’s why.
Instead of something you buy / sell / buy sell over and over again, I see bitcoin as a thing you simply just buy. And hold. And hold some more. And continue to hold for even longer.
Boring, right? But trust me, as a busy parent, this is a good thing.
And instead of a thing that you plan to sell in a few days / weeks / months to “buy low sell high”, bitcoin is something that you hold for at least 5 years. (For context, I’ve already held it for 10 years, and don’t have any plans to sell anytime soon)
Boring again, right? But, as a busy parent, having a boring investment is a good thing.
Basically, I see bitcoin as a boring long term savings account. Very similar to how I see my savings account at Bank of America.
But, it has ONE KEY difference. And that is…
My bitcoin long term savings account grows in value much MUCH faster than my Bank of America savings account!
Of course, I’m not talking about it going up in the next hour, day, week, month, or even year. Because in those short term time frames, it can be up or down significantly, just like it has been on for the past few days.
But if I zoom out over a multi-year time horizon, it’s very clear which way the price of bitcoin is going.
And that is…UP!
Don’t believe me? Look at this chart:
You can see that the price is steadily going up in the long run, right?
And before you think, “I’m late to bitcoin…it’s leveling off already”, take a look at the y-axis. Notice that it is moving up by an order magnitude each notch (ie. 1 —> 10 —> 100 —> 1,000 —> etc).
That means even though it looks like the price of bitcoin is leveling off, it’s still actually going up by a LOT (ie. from $10k to $100k, there is $90k of upside even though on the chart, it only goes up by one notch).
With this in mind, the next logical question might be, “how much work is required to own bitcoin to get in on the up side?”.
Here is the beautiful thing: nothing. With a long term view that bitcoin is a savings account, all you do is just buy some. And then hold it. And hold it more. And keep holding it (for at least 5 years).
It’s just like what I did growing up with birthday money. I put that money into a savings account at my bank and watched it grow over time.
I’ve come to a conclusion, after many hours of study, that the longer I own bitcoin, the better I do. And the less I try and do with it (ie. trade it, time the market, etc), the better off I am.
This is why I treat bitcoin as a boring long term savings account.
Number go up
I’m sure you are now wondering, “how does the price of bitcoin keep going up? And doesn’t that mean there will just be an epic crash around the corner?”
Great questions.
There is SO much to say here, which I’ll do so throughout this blog. But at a high level, there are foundational features of bitcoin, and that are unique to bitcoin, which makes the price go up (in the long run).
One is the 21 million fixed supply of bitcoin paired with an ever increasing demand for it. Another is the concept of proof of work. And another is Nakamoto consensus.
While each of these appear to be straight forward concepts at first, over time, the more I’ve come to understand bitcoin, the more I’ve developed a rational perspective that yes, indeed, in the long run, the price of bitcoin is going up.
Again, I promise I’ll write more about these later on!
Recap
If you want to really understand bitcoin, think about it as a boring long term savings tool…knowing that it consistently goes UP over the long run.
That way, all the short term price action just becomes noise that doesn’t matter.
With that said, it’ll be tempting to try and make moves in the short run. And that’s what causes people to get wrecked.
To avoid this, mentally commit that when you buy bitcoin, you won’t sell it (no matter what!) for at least 5 years.
That means no trying to time the market in the short term. No trading it back and forth. No taking leverage. No gambling.
Boring, right?
But again, boring is good. At least for me, by following this recipe and holding for long periods of time, I’ve found found that bitcoin has dramatically help build my family’s emergency fund.
Going further down the rabbit hole
Each of us starts off as a bitcoin skeptic, who thinks it’s either a scam or it is overvalued (ie. going to crash soon). Slowly, but surely though, as each person learns about bitcoin, they change their mind.
Recently, I came across a good article and podcast of a skeptic who has now changed his mind.
First, read the article, “Why I Bitcoin”.
Then, have a listen: