Bitcoin has excited many people about a range of possibilities, to own their money, to avoid inflation, to get rich, to earn an income from anywhere and so much more. Some may like one aspect some may like all, but I think the biggest drawcard to Bitcoin for the retail investor is to capture more purchasing power, to get rich by simpleton standards.
Bitcoin has this idea of wealth without work, and it can be, if you put in a few dollars 10 years or 5 years ago, technically now you’d be a whole bundle richer if your measurement of wealth is fiat currency.
Short selling, short-sighted
In this short period in history that is Bitcoins existence, people are buying low and selling high, like they would stocks or real estate and thinking they’re doing well. On paper, yes you could be making more money, but every time you sell Bitcoin for fiat, you’re either realising gains, or you’re generating additional income.
As Bitcoin is already mainstream countries are now taking it seriously and are looking to get their piece of the action. In previous years you could get away with buying and selling Bitcoin and collecting your profits tax-free. Still, now governments all over the world are either putting capital gains tax on it, or income tax depending on the situation.
Selling Bitcoin means you have to give a piece of it to the government and on top of that move it into a currency that is losing value to buy something. Whatever that is, that is up to you, but I cannot honestly see any product I would want to buy that would encourage me to sell my Bitcoin.
There’s a better way
The longer you hold on to Bitcoin, the more upside you will get each year, adding to your position methodically within your means that it doesn’t affect your living standards is a great way to secure your future. I think of Bitcoin as the ultimate savings account, it pays me to save and rewards me reach year for doing so at compounding rates we’ve never seen before.
So you accumulate all this Bitcoin, the price goes up, time to sell, right? No, selling is a losing game!
Don’t sell, only borrow
If you want to sell Bitcoin for fiat be my guest, ill happily be the one picking it from your weak hands but for me, I see no reason to sell any of it, ever. Once this is a trillion-dollar asset class and a hold a sizeable percentage of the supply can leverage it to get whatever I want and refinance that leverage each year to get anything I want.
Using that fiat collateralized by Bitcoin, to secure other assets, then paying back the loan without having a tax implication.
Bitcoin is any real estate investors dream property; it’s the pristine collateral that can be leveraged up tot eh moon and back.
I don’t see fiat money going away; I see it losing value to Bitcoin, so my game plan is secure Bitcoin, lend against it buy productive assets, avoid having to pay tax, service the debt and it gets cheaper over time and then uses the profit to buy more Bitcoin.
Still a few years off
The onramps and off-ramps have yet to be built, so my phase one is to continue to build my position. The more you HODL now, the less you’ll have to work in the future.
Governments are going to get increasingly sensitive to losing out on capital they could tax or inflate away from you to find these growing debts. Selling Bitcoin only makes you a target, and you continue to play into their hands.
Borrowing, however, puts you in the power seat that no one can take away from you.