Bitcoin Generational Wealth – The Prelude
This article was inspired by another bitcoiner, @chadlupkes, and his constructive criticism of my first article on generational wealth. In his humble opinion, my first article focused too much on calculating generational wealth, and I took his criticism to heart. Essentially, my bitcoin colleague would have liked to see more information on what exactly generational wealth is, its history, and why bitcoin is the best form of generational wealth. Thanks to @chadlupkes and the rest of my bitcoin brothers and sisters who make me a better writer because of their continuous pursuit of life, liberty and the pursuit of happiness through bitcoin. I hope you all enjoy this article @chadlupkes and I collaborated on.
In the 21st century most people cannot plan generational wealth as in the fiat world 401ks and annuities are the typical investment vehicles used to plan a person’s generational wealth. Unfortunately, 401ks and pension plans are flawed as most of them are not adjusted for inflation, have exorbitant fees, and are poorly managed. Inflation is the hidden, insidious tax that is secretly robbing Americans of the wealth they’ve accumulated in 401k and pensions. Storing wealth in 401ks or annuities is like trying to keep water in a bucket full of holes. The holes in your 401,000 bucket are inflation, management expense ratios, front-end fees, back-end fees, hidden fees, overvalued companies, taxes, and more. Those holes in your 401ks and pensions are why you have a hard time creating generational wealth. Do you think people like Warren Buffett, Elon Musk, Bill Gates and Jeff Bezos have 401k and pensions? I strongly doubt it. Instead, they own cash-flow generating companies that add value to the world and are tax havens that allow them to perpetuate the wealth of generations. If you believe 401ks are the way to build generational wealth, read Andy Tanner’s book 401(k)haos and you’ll see that they’re essentially Ponzi schemes.
Generational wealth refers to wealth passed down from generation to generation forever. These assets can be stocks, bonds, real estate, oil, businesses, and any other good or service that can support your family for centuries. The wealthiest families in the world have assets that they never sell, and those assets generate a constant source of income so they and their heirs don’t have to. History shows both successes and failures in the quest for generational wealth. The oil industry created generational wealth for the Rockefellers just as Wal-Mart provides generational wealth for the Walton family. While there will always be opportunities to identify a new market and build a business within that market, Bitcoin will be a generational legacy for my family and it can be for your family too.
I’ve mentioned a few successful families, but there are also examples of families that gained great wealth only to lose it, like the Vanderbilts, who if they were given the orange pill today probably would have invested much of their wealth in bitcoin. Because he would really understand that Bitcoin is digital energy. Bitcoin, through its digital energy properties, can be generational wealth for your family like oil was liquid energy for the Rockefellers. Bitcoin is the first form of generational wealth, akin to owning an energy well that produces perpetual amounts of energy.
The biggest difference between storing your generational wealth in business, goods, land or any other asset that can be taken, confiscated or stolen versus bitcoin is that bitcoin cannot be confiscated as long as it is secured in a cold wallet. Only the people with the seed phrase can open the wallet and gain access to your assets. The slow accumulation of wealth that comes from stacking satoshis over time can provide a foundation that can support any family. Just a few thousand satoshis could enable a family to create everlasting wealth for centuries to come.
For those who don’t know, 1 bitcoin = 100,000,000 satoshis.
Since time is money, think of satoshis as seeds of time. Each Satoshi you plant will grow into a Satoshi Time Tree that will produce fruit and shade for your family for centuries. As long as your family diligently tends to their Satoshi Time Tree orchard, it will produce and store value for future generations. Like any form of generational wealth, it will quickly be depleted if it is spent faster than it is valued. That would be like having your family cut down the Satoshi Time Tree orchard instead of allowing them to keep growing and producing fruit. If you’re not properly protecting your trees from thieves (keep your own cold storage keys), water them for nutrition (add more sats to your stack), and prune them to keep them (only spend what what you absolutely need for the preservation of your family fortune).
There is a generational wisdom saying that the first generation creates wealth, the second generation spends it and the third generation destroys it. For this reason, it is of paramount importance that every family has a plan for forever preserving its generational wealth. Most families with generational wealth protect their wealth in trusts, which only allow a certain percentage of the money that family members can withdraw over their lifetime. With proper planning, the rate of appreciation of the entire trust will never outweigh the amount of money withdrawn from family members.
For example, if you have $1 million worth of bitcoin and you need $50,000 (5% of $1 million) per year to live on, $950,000 will appreciate faster than the 5% per year, from which you live as long as the remaining bitcoin principal is $950,000. You will be able to keep your wealth forever. Since Bitcoin is “going to rise forever, Laura,” your family will always have generational wealth as long as you don’t spend more than you make. Normies think it’s a joke that bitcoin will go up forever, but it’s a true statement because there’s a finite amount of bitcoin and a theoretically infinite amount of demand.
Most bitcoiners haven’t started generational planning yet because they don’t fully understand how valuable their satoshis will be in the future. That wouldn’t be any different than boomers who bought a 1966 Ford Mustang for a few thousand dollars and to this day don’t care if it’s worth more than $15,000 now. Had they taken great care and TLC on this coveted muscle car to date, the car’s value would be closer to $35,000. The object they took for granted in the 1960s is now worth orders of magnitude more, and most of them sold it long ago and are kneeling. Bitcoin is generational wealth, so protect every satoshi like it’s a precious piece of your time! Every satoshi counts, and even the most bullish bitcoiner has no idea what their satoshis will one day be worth.
This article is a follow-up to my first article on generational wealth, where you can see how as little as $68 or $680 worth of bitcoin becomes worth millions, billions in some cases.
This is a guest post by Jeremy Garcia. The opinions expressed are solely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.