Bitcoin was introduced in 2008 and launched in 2009 by a person or group using the pseudonym Satoshi Nakamoto. I followed it from the sidelines before I even began investing in stocks with early retirement in mind.
In 2019, I wrote about FIRE (Financial Independence Retire Early), a strategy of extreme savings and investments that allows you to retire early in life.
The FIRE movement mainly focuses on investing in stocks and especially index funds, assuming an average annual return of ~7%. The premise is that your investment portfolio should be worth 25 times your annual expenses, so you can live solely off small withdrawals from your returns.
I have followed that strategy since then. At the time of writing, my portfolio had returned 16% over almost two years, keeping me on track for my goal of retiring at 54.
Meanwhile, I became more optimistic about Bitcoin and started a parallel strategy I call AFIRE: Accelerated Financial Independence, Retire Early.
With Bitcoin I expect to reach financial independence in a few years. For this, there is no need to own as much Bitcoin as you might think.
I bought into Bitcoin during its 2017 price surge. Buying at a high point is a familiar mistake, although in retrospect my timing was not as bad as I thought.
Bitcoin's volatility is too much for many people. At the time of writing, its longer-term trend looked different from its short-term swings. Always think long term.
My fellow Dutchman Plan B created the Bitcoin Stock-to-Flow (S2F) model where he uses scarcity to quantify its future value. I found the model persuasive at the time.
https://twitter.com/100trillionUSD/status/1364843211857014791
Bitcoin has an average annual return of 200% since its launch in 2009.
It's the first scarce digital asset ever. By design, only 21 million Bitcoin will ever be mined and most of these already have been.
Every four years the number of Bitcoin produced by mining halves, boosting stock-2-flow. I expected this reduction in new supply to support the price.
That becomes even clearer when you look at the S2F chart on a linear scale:
https://twitter.com/100trillionusd/status/1366367840790536193?s=21
At the time, I thought the market was still early. If you felt you had missed the opportunity, I suggested looking at the long-term chart.
When you need €600k of fuck you money, like in the example I used before, you can become AFIRE in ~5 years by owning as little as 0,1 BTC.
I don't think there is a need to aim for owning more than 1 Bitcoin. My hope was that one Bitcoin might eventually support substantial withdrawals, if its value rose as far as I expected.
If you hold 0.1 #Bitcoin:
— Simply Bitcoin (@SimplyBitcoinTV) November 21, 2024
- There are only 21M coins, placing you among the wealthiest 210M people globally (top 2.63%).
- With 4M+ Bitcoin lost forever, you’re actually in the top 2.13%.
- But here’s the kicker: some own more than 0.1 Bitcoin. Only 4.5M addresses hold more than…
At the time, I felt no need to aim for more. Let's leave those coins available for others, there will be only 21.000.000 created eventually so let's share the success. I'll invest the rest in other assets such as real estate, gold and stocks.
I am sharing how I thought about my own investments, not trying to persuade you to buy Bitcoin.
If you want to investigate if Bitcoin is for you, I would suggest starting with the following sources:
- Satoshi's whitepaper "Bitcoin: A Peer-to-Peer Electronic Cash System"
- Saifedean Ammous' book "The Bitcoin Standard: The Decentralized Alternative to Central Banking"
- Plan B's article "Modeling Bitcoin Value with Scarcity"
- Vijay Boyapati's article "The Bullish Case for Bitcoin"