Would your spending and investment habits change if you knew that time was ticking in the race to acquire a meaningful stake of the best money the world has ever seen? Would you forgo late nights at the club or a new gadget or toy to set yourself up for a future where your wealth was protected?
Every decision we make can be seen as an investment. Regular exercise, good sleep and nutrient-rich meals can be seen as low time preference (long term) investments in oneself. These habits are an investment in our current and future health, with a payoff that tends to compound as we set ourselves up for success in all areas of our lives. Conversely, when we treat our bodies poorly and over-indulge, seeking high time preference (short term) gratification, these actions tend to compound too, leading to all sorts of undesirable effects over time. By analyzing our time preference and how it affects our investments, we may gain insight into our actual goals and how we may achieve them.
Fiat money is a melting ice cube
For as long as most of us have lived, we have used inflationary fiat currencies, which cause prices of goods to go up. When money loses value every day due to inflation, we feel the need to spend it. We are subconsciously and often overtly incentivized to use the cash we have on hand, lest we miss out on a good deal, further inducing high time preference decisions. The prices of cars, houses and university education have grown astronomically in the past four decades, meaning we often must go into debt to attain these things.
Living in debt can be taxing on the mind, body and spirit. It can lead to a vicious cycle where we are indebted in the act of acquiring what we desire, but not necessarily what we need.
There is another way
Flying in the face of this is a fascinating knock-on effect that can happen when you begin to learn about and invest in Bitcoin. As a good tool for practising low time preference, Bitcoin introduces sound money and sustainable wealth preservation into our lives.
While beginning to invest in Bitcoin, you may decide that accumulating a few thousand more Sats (a Sat, or satoshi, is the smallest unit of a Bitcoin, 100,000,000 Sats = 1 Bitcoin) has become more important to you than buying an expensive coffee. A $6 coffee, purchased three days a week for one year, equates to $936. At five days a week, that is $1,560 in one year! You may start making coffee at home most mornings when you consider how much money you could instead be saving and investing in Bitcoin.
The implications of saving with Bitcoin and lowering one’s time preference are endless. It could mean less wasteful consumerism and pollution, less empty and instant gratification, and certainly less predatory credit and lending practices which could free individuals and the collective from debt. Less debt could mean more time allocated to doing what you love.
A Bitcoin DCA strategy in action, with Amber
Using Amber’s Investment Calculator to figure out how much money we would have saved in Bitcoin over a calendar year by Dollar Cost Averaging $30 a week into Bitcoin. From September 1, 2020, to September 1, 2021, you would have invested $1,564 and watched it turn into $3,090! That is a nearly 100% year over year and total return on your investment. That is the power of saving in Bitcoin.
How Amber’s recurring buying option works
- You pick the amount. Select your frequency: daily, weekly, bi-weekly or monthly, and start “stacking Sats” on autopilot.
- Cancel/stop at any time; you’re in complete control.
- Manage risk by investing a fixed amount of money at regular intervals regardless of the price.
Looking at Bitcoin’s history, time has told us that consistent accumulation through Dollar Cost Averaging has been the safest and most stress-free way to grow one’s stack. Bitcoin’s price is volatile. The broader cryptocurrency market and the global capital markets, in general, are full of noise, hype, FOMO (fear of missing out) and FUD (fear, uncertainty and doubt).
Lower your risk and rest easy
Drastic price swings can happen at any time in Bitcoin’s highly liquid and 24/7 market. Bitcoin is still in its monetization period, and the global economy is still figuring out what it is worth. You can mitigate risks of over-exposure by setting up a conservative purchase amount, at a predetermined cadence, completely automated and barely noticeable, as small amounts of money flow out of your bank account and convert into Bitcoin.
Getting off zero is a significant first step on the journey towards learning about and investing in Bitcoin. Making your first investment and implementing an investment strategy is a great way to incentivize learning more.
Looking to “Buy the Dip” or “Sell the Pump”?
With your DCA strategy all set up and your confidence and conviction possibly growing, there may come a time when you want to make one-time purchases as well. You may wish to “Buy the Dip”. Because Bitcoin’s price is still relatively volatile and susceptible to media-frenzy induced drops, these dips in price are often great entry points for one time purchases. Amber lets you do this as well.
You can also “Sell the Pump”. Suppose you believe that the market is overheated and possibly due for a correction downwards, or you just want to sell some Bitcoin because you need some extra cash for an unexpected expense. In that case, Amber will help facilitate this transaction. In short, Amber can be your one-stop shop for Bitcoin accumulation and investment management.
Just keep stacking Sats
It’s important to note that there are also downsides to having the Buy/Sell option readily available at your fingertips. In the highly competitive world of full-time investing and trading, relatively few individuals make a living from trying to pick specific entry and exit points in the stock market, Bitcoin market or any capital market.
The old adage, “time in the market beats trying to time the market”, is a cliche for a reason. Many of Bitcoin’s historic gains in price have come during relatively few days during the year. If you happen to have sold right before a big run-up, then you miss out. Sometimes you buy and then the price goes down. Patience and a long-term perspective, coupled with steady buying with recurring purchases are helpful tools while riding these waves.
Enjoy the ride to global Bitcoin adoption
Our time is the only thing more scarce than Bitcoin. Lowering your time preference by investing in Bitcoin while changing some of your spending habits may help you make the most of the time you have.
If past performance can help us project what future results may hold, a Bitcoin DCA plan is undeniably a good strategy to deploy. Over a long enough time horizon, Bitcoin’s price will continue to rise as it obtains dominance as a worldwide preferred store of value. Betting on Bitcoin today is believing that there will continue to be an appetite for secure, uncensorable, un-inflatable, non-political, digital and global money.
Sounds like a good bet!