No one has escaped in recent days, Bitcoin is for sale. “Two for the price of one!” Remember when you said to yourself “You came so late, it’s so expensive now, I should have bought some when it was half”? Well, it looks like the market has given you a second chance.
Here are some things to think about.
1. Save instead of speculate
First of all, always keep in mind the usual caveat: never risk investing/speculating what you cannot afford to lose entirely (eg getting a mortgage on your house to invest everything in one system, be it bitcoin or something else, It is clearly very dangerous.)
Let’s also not forget that Bitcoin is only 13 years old and no one can predict everything that could happen in the next 10 years (I’m not talking about scams by other “crypto” projects selling the dream, but there is a critical flaw in the network itself , or even the Internet, or changes in regulations in your country, etc.).
Moreover, even if the exchange rate does not collapse to zero, BTC may simply lose 50% of its exchange rate against the dollar for a year or more, as it did in previous swings. Will you have any reserves to keep until the winter passes…?
In short, whatever your budget, expect all of your BTC to be zero, at least temporarily!
A healthy way is to look at your BTC savings like a piggy bank that you put in a little regularly, an amount that you can dispense with without even realizing it.
An example I sometimes give is the price of a pack of cigarettes. A smoker who consumes one pack a day spends about 250 Swiss francs a month, which literally turns out to be smoke. One can imagine that allocating 250 Swiss Francs per month (in BTC for example) would not be a real concern for this person. A quick calculation shows that for a BTC savings of $250 per month that started 4 years ago, the total amount spent would be $12,250 and the current value of bitcoins obtained in this way would be around $47,750.
Warning: The purpose of this example is not to say “the price always goes up and what happened historically will necessarily happen again”!! This is just an example to show that “getting rid of” the equivalent of a pack of cigarettes a day can be a profitable bet under certain circumstances.
Thus, we are no longer talking about a final lump sum in the future, but rather about a recurring amount linked to the present. It’s a change of perspective that makes all the difference. It makes the original question outdated, or conversely more useful, by changing the angle one looks at buying BTC.
Note: This example also works for non-smokers who play the lottery once a week.
2. The world’s population has limited Bitcoin
The amount of BTC per person is another (a bit fancy, I give you, but interesting) way to approach the question. If we remember that there will only be a maximum of 21 million bitcoins (that is, 2,100,000,000,000 satoshis, a satoshi is the smallest denomination of BTC) ever traded and that there are 8 billion people on earth, that is, on average 262,500 satoshi per person. Today, that’s the equivalent of 100 Swiss francs. If you hoard more than 100 BTC francs today, you have already accumulated your share of the global planetary mass. It is still too early.
“Today, we are told scary rates of 6 to 8%, and doing nothing, keeping your savings in cash, is tantamount to watching them inevitably vanish…”
For reference, €100 would have lost half its value and would have a purchasing power of €50 in 10 years if inflation remained above 6% by then.
Unfortunately, no risk-free investment can effectively protect your savings. It will require an investment that will bring more than inflation, and at these rates it means big risk. Moreover, not everyone can have access to this kind of return.
If we go back to the price of a pack of cigarettes per day, and hope that the price of BTC will go up a bit in the long run, or at least not fall by 6% per year, then we can hope to “protect” a portion of their savings against dying as a result of this metaphorical ice cube melting. …always keeping in mind the other points discussed above, starting with rule #1.
5. Millions for two pizza
One final reflection angle is Laszlo’s famous “Pizza” episode. As a reminder, in 2010, when Bitcoin had almost no price and no media coverage, one of the few participants in the network offered 10,000 BTC to anyone who would supply him with pizza (about $30). Inevitably, at the current price, pizza would be expensive, but at the time it was the first BTC purchase transaction for a physical commodity, which made it possible to start the Bitcoin economy as we know it today.
The price of BTC will likely rise to the point where an investment of $30 today will also be worth millions in 12 years. It is entirely possible that this may not be the case. Nobody knows of course.
But one thing is for sure: people who hear this story today and think “If only I had known about Bitcoin at the time and bought 10,000 BTC for $30…” don’t realize that $30 seemed as unimportant as it is today.
Today, $30 buys 75,000 satoshis. It is impossible to predict whether we will see the price of Bitcoin reach the millions, until these 75,000 can turn lives. But it’s small enough not to be dramatic if you lose, and it’s easy to set aside regularly in regular savings, if you feel like it.
zero or more
So for the question “How many BTC should you have at least?” You realize that there is no one-size-fits-all answer. For some like Warren Buffett, it’s “zero”, for others like Elon Musk, it’s “more than zero”…
The only possible answer, in my opinion, is the advice I give my friends: the most important thing is to learn and understand. Only then can you answer your question yourself, depending on your finances and trust in the protocol and its ecosystem.
Remember that you can buy a fraction of Bitcoin. 10,000 satoshis are only a few francs. So I encourage them to invest a little, according to their means (the student doesn’t have as much money to lose as a private banker), but enough to make them want to know how it works, read how to get it right, educate yourself on how to carefully protect your savings, and find out why The invention of Bitcoin, how money works in general, inflation, central banks, etc.
Having a few satoshis allows you to learn about the technology, culture, and financial mechanisms of this unique system. And as you know, you may want to expand your position. (Or not. But you’ll know why).
And who knows, maybe if you cherish them for a few years, those few satoshis will end up with more than two pizzas?
comments? Problems? answers? I await your messages by e-mail or on Twitter @ZLOK (twitter.com/zlok)
Yves Benaim
Did you find an error?Please, let us know.
– How much bitcoin should you have at a minimum?
Someone asked me, “How many bitcoins do you think is enough for someone who works hard but doesn’t make a lot of money?” Contrary to appearances, this is a difficult question to which I do not have a simple answer, because it has many variables: age, geographic location, etc. So I will suggest a standard response.
Yves Yes – Founder of 2b4ch . Think Tank