After listening to Dr Jeff Ross on SLP recently I started thinking more about this idea to sell 8% of your stack per year when the time has come to retire. The idea of selling around 8% per year takes comfort in bitcoins "number go up" technology to find out that you most likely won't be able to spend it all. He gave an example that if someone today had 10 bitcoin, or roughly $600,000 worth, they would sell 80 million sats ($48000) in the first year. Then the next year 8% of the remaining BTC (9.2BTC) gets sold, and so on for as long as they live. As long as bitcoin continues to grow at a similar rate, you'll never be able to spend it all. Even if it grew at a much lower rate like 20% CAGR, you would still outperform everything else.
I did some math and it kinda checks out, but only if you have a lot of bitcoin AND you don't live for another 100 years. There are however too many variables like fiat inflation, cost of goods, improvements in tech (that bring costs down and living standards up), debt, interest rates, and war. Some of the numbers start getting ridiculous fast, and therefore carry less meaning as it's too far out in the future.
Some of the questions and criticisms I had of this idea are:
How long you are planing to live for? People are generally living longer these days due to advances in medical technology. Could there be another technological breakthrough that allows us to live a lot longer that we might be planning for?
Can bitcoin really go up foreva Laura? It's currently doing something like a 50% CAGR. If the whole world is on a bitcoin standard in say 50 years, will it still increase in purchasing power?
It also comes down to how much bitcoin you have. Someone with 1 bitcoin will have to wait until a certain price point (maybe $400-500k/BTC) for this plan to become possible. Someone with 10 million sats might have to wait for a million dollar BTC, and someone with a million sats might have to wait for the $10 million BTC. But again, this will all come down to other variables like the cost of things where you live, whether you own your home or not, and how frugal or lavish your lifestyle is. Then there are also unknown costs like an emergency operation or an expensive new hobby.
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For me, it is interesting to entertain the thought of retiring this way, but in the end I don't think it's for me. I want to keep working on stuff I'm interested in as long as my health permits. Hopefully I'll be providing enough value to people with sats to pay me when the time comes, and won't need to sell 8% of my stack every year.
Yes this could work for sure or sell only to buy the things you need each year up to a limit of 8% maybe even better .
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It's a useful thought experiment, but it's a strange plan.
Why discretely sell off 8% each year, instead of just spending your bitcoin on what you need as you need it?
I could imagine using something like this as retirement advice: i.e. "Don't retire until 8% of your stack covers your annual expenses."
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39 sats \ 1 reply \ @OT OP 2 Oct
I kinda took it as spending in general. Of course you never want to sell your bitcoin to a large exchange.
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It just struck me as an odd framing.
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5% works for me. Future rate of value growth is of course unknown and can only be guesstimated.
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I believe @benwehrman is working on getting Jeff on SN for an AMA.
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50 sats \ 0 replies \ @OT OP 2 Oct
Nice! Hope he can clarify some more things.
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Have been for a while, he's a slippery mf
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I think this becomes more interesting if you're not selling it for fiat and you're just spending the Bitcoin directly, the issue with this calculation is how do you factor in the taxes of going back to fiat
Logic would dictate you start by selling your most recent UTXOs to try and lower your tax obligation but even at its lowest, you're going to be eating into that assumed 20% CAGR and if taxes keep going up and CAGR doesn't trends down, you're selling more bitcoin to get less fiat in some cases
Ofcourse if you really have a massive stack it doesn't matter but very few of us are going to be 50-100 coiners
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sell into what excuse me? who are your idols?
adollartree (idolatry)
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I think he means spending in general. Like all the things you need to live when you retire.
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He makes some good comments, but it is all based on btc rising in value.
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Well of course. Do you actually believe they won't keep printing fiat? Do you actually believe bitcoin will not take some of the market share away from other things people buy to store their wealth?
I'm sure you do. But the question is when and how much. Its an open question. Unlike many bitcoiners I don't think we are on the brink of the dollar collapsing. I mean it could happen soon but I doubt it. If it does, it won't be pretty for Americans or anyone really. Now I think it will collapse as all fiat currencies do but it likely has a longer life than we think.
IMO far to many bitcoiners are looking to buy bitcoin and check out. Retire. Guys, that sounds so boring. There is always gonna be work to do. I just want to not have my work squandered away and leave my boys something to build a legacy with.
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Right, but as our money inflates to zero....will investing keep up?
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Think about it... I don't think you need me to explain this.
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Probable that China continues to grow while USA continues to decline. When exactly the transition to Chinese global resource hegemony taking over that the US now holds will be undeniable is arguable - but the trend is clear. China is building massive global infrastructure across Asia and globally while the infrastructure and manufacturing capacity of the west is in constant chronic decline. Kids in the west are far more fascinated with financial engineering than structural/productive engineering while kids in China are far more focused on productive engineering. The CCP politburo is majority composed of trained engineers in contrast to western politicians who are mostly bankers, lawyers and corporate lobbyist proxies. I guesstimate 5-10 years and China will be on equal or dominant position relative to US/The West. The wars in Middle East and Ukraine are proxy wars between US and China and the outcome of neither is certain- but what is certain is that China is increasingly confident and challenging the US global monetary and resource hegemony. https://www.newyorker.com/news/daily-comment/russia-and-china-unveil-a-pact-against-america-and-the-west China is unlikely to look favourably upon Bitcoin- the entire ethos of Bitcoin being a very western one and alien to the collectivist Chinese mindset. This is the greatest near term threat to Bitcoin market value IMO. Bitcoin will continue to be of value as the west declines but it seems very unlikely to become the new dominant global currency if China becomes dominant.
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Its a bit off topic. Do you think China wants the CNY to be the world reserve currency? Who will trust them? And why haven't they sold their BTC?
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Have you studied The Opium Wars? Britain forced itself upon China and by using Hong Kong as a base for banking gained entry and control over trade in China. China suffered more than a century of humiliation and only in recent decades have reached a degree of development and capacity to respond to the reality of western imperialism. One aspect of a logical response will be to understand the potency of monetary hegemony- control of trade payments- and China clearly does understand that ability to make (and sanction) international trade payments is highly strategic - it after all perhaps the wests most potent strategic lever- having been applied to Iran and Russia- and yet Iran and Russia are now still functional economies - more than that able to invade and attack the wests allies and associates, with Chinas support in trade and trade payments. China is the largest trading economy in the world- there are few if any nations that can afford not to trade with China- it is inevitable that China - like every predecessor in history to have held such a dominant trade position, will gain monetary dominance. Its not so much a matter of whether they want to, than that they must. The west with its growing insolvency cannot continue to provision a credible global trade payments protocol- unless you were to consider Bitcoin, which (unfortunately) China is not and will not!
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I know Ray Dalio thinks China will likely be the next superpower. In his book he talks pretty candid about how the US might want to preempt an attack on China before they get too powerful. One could argue that that is already happening through economic actions.
What makes BTC special is that it isn't tied to any state. Its working well and is continuing to grow. Nation states will come to realize why they need bitcoin in time. Even if China demands you buy in their currency, doesn't mean you need to hold onto the sh$tcoin. When you need Yuan to buy something, swap it with your BTC reserve.
Are you arguing that China is going to destroy bitcoin somehow? You know how many times they've banned it right?
You have been on this china rant for a while.
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Characterising a fact based and reasoned opinion stated in good faith on a what may be a major threat to western civilisation, as a rant, when you have failed to respond with any credible reasoned retort is not a contest of ideas or even polite.
We still enjoy supposed freedom of speech but I suggest this topic is one that most in power and many not in power prefer to ignore and pretend is not happening.
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I think only btc will.
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10 sats \ 1 reply \ @kepford 2 Oct
There will be many things to sink your life force into going into the future besides btc. Everything has tradeoffs. But even if bitcoin doesn't eat every other store of wealth it will take some market share away from things like gold. This is not really that bullish but even that will make bitcoin's purchasing power insane compared to today.
One need not be a fatalist to believe bitcoin is going to continue to grow in value. IMO its a very rational view of the future.
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Same. I'm over 80% sure it will succeed most other things, but not 100%.
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