The greater the risk, the greater the reward. There is no market where these words are more true than in the cryptocurrency market. Those who got into Bitcoin early and invested at a time that would be considered extremely reckless or dangerous. These are the people who have become whales in the industry now. While that golden opportunity to become a jointed whale has passed for most people, the dream of being super early with coins and hitting the jackpot still lives on. This is what makes altcoins “hidden gems” so enticing to many people. Although extremely dangerous and risky, if you are lucky, a fortune can still be made. There was a story of someone who invested $1000 in a Shiba Inu while it was very new and continued to HODL even as the price skyrocketed.
In every bull run we hear the same stories time and time again. People get carried away by FOMO as prices rise and decide to make drastic decisions to maximize their profits. Last year, when Bitcoin was climbing to new all-time highs, there were countless stories of people refinancing their mortgages to invest in Bitcoin. Or even take out loans for it. It's also a risky game. Yes, it can turn out well for you and there are stories of it happening to many people. People who took a risky loan and had bitcoin or ethereum explode in price. They completely change their lives financially. But the opposite has also happened. They take out a loan only to see the coin price plummet and their lives financially ruined. As I said at the beginning of the article, the greater the risk, the greater the reward.
But what if you didn't take out that leveraged loan or mortgage. What if you just decided to go all in with Bitcoin or the cryptocurrency of your choice instead? Living with Bitcoin as your primary currency. Can it be done? Can it make you rich? What would be the advantages and disadvantages of this.
Let's dig into this.
First for me, I consider myself to be what is called an "open bitcoin maxi". Which means I prefer and like bitcoin the most and am most passionate about it. With that said, I always keep my mind open to other coins and actually do it like other coins. Even if you own them. At the end of the day, more often than not, I'd just rather buy more bitcoins than other coins. So what if you decide to live by the Bitcoin standard? Would it be viable?
Let's first talk about what would lead to this. You will initially pay your salary in bitcoins, or instantly convert everything to bitcoins the moment you get paid. You will then pay all your bills in Bitcoin and also keep your savings in Bitcoin. A few years ago this would have been impossible to accomplish. There just weren't enough places that either accepted bitcoin payments or bitcoin payment methods. But that has changed and now it has become possible to do so. I have not gone all-in with Bitcoin as my unit of account. But it's something I'm starting to consider more and more. Especially because of the currency situation where I live, Japan, where the exchange rate has gone down in recent weeks. It's an idea that's becoming more and more appealing by the day. Something that became more viable after the recent announcement that Jack Mallers made at the recent Bitcoin 2022 conference. Where he announced that the machines of the major payment providers will be compatible and accept Bitcoin lightning. Making it a real Bitcoin Lightning payment option at a large number of retailers.
How would that be possible?
Of course, there will still be places where you won't be able to pay with Bitcoin, but it will probably be easier than you think. There are a growing number of crypto debit cards, such as the Coinbase card or even the Crypto.com card, that allow you to buy anything just like you could with a normal debit card. This would make bill paying and online shopping extremely easy. All the while you can also earn great cashback rewards. But just as Jack Mahler announced, more and more providers are accepting lightning payments and this would make it possible to pay with any of your lightning wallets on your phone as well. There aren't many things you couldn't pay for with Bitcoin.
This is the part everyone wants to know about. Although Bitcoin is volatile, it is not as volatile as some other crypto coins. Which is arguably a good thing if you use it as your unit of account. While the value will decrease, it won't drop as much as other coins. But the real potential advantage is that the value of your assets can increase significantly. We reward you for your hard work and save. Let's say you got paid in Bitcoin around March 2020 or even soon after. The price of Bitcoin at that time ranged from $3500 to $7,000. If you make a monthly salary of $4000, in today's value that would equate to a monthly salary of $23,000 – $40,000. A sum of money that is a year's salary for many people. But now consider that they didn't just pay you in bitcoins for that 1 month, but every month. In the years when Bitcoin really goes up in value, this can be a method that completely changes your life financially. But we have to be realistic. No one will be able to save their entire salary as we all have bills to pay. Let's say you managed to save $500 Bitcoins per month after paying all your bills. This would still equate to $3,000 – $5,000+ worth of savings. Again, an amount many of us would be excited about. If you're a firm believer in Bitcoin, this is a way to go all-in and add more leverage to your belief. As you can see, this would have the potential to increase your savings significantly. No one will be able to save their entire salary as we all have bills to pay. Let's say you managed to save $500 Bitcoins per month after paying all your bills. This would still equate to $3,000 – $5,000+ worth of savings. Again, an amount many of us would be excited about. If you're a firm believer in Bitcoin, this is a way to go all-in and add more leverage to your belief. As you can see, this would have the potential to increase your savings significantly. No one will be able to save their entire salary as we all have bills to pay. Let's say you managed to save $500 Bitcoins per month after paying all your bills. This would still equate to $3,000 – $5,000+ worth of savings. Again, an amount many of us would be excited about. If you're a firm believer in Bitcoin, this is a way to go all-in and add more leverage to your belief. As you can see, this would have the potential to increase your savings significantly. and add more strength to your conviction. As you can see, this would have the potential to increase your savings significantly. and add more strength to your conviction. As you can see, this would have the potential to increase your savings significantly.
But beyond the obvious advantage of numbers, your savings increase and increase. The real advantage for me is that I believe it will make me much more frugal with my money. Similar to how people who only use cash tend to be more frugal than people who pay with credit or debit cards. I would keep two main wallets for my bitcoins. The initial salary will go into wallet 1, which I would consider my spending wallet or checking account. Then the amount left at the end of the month will be transferred to wallet 2 which will be my HODL wallet. Since my main goal is to accumulate as many bitcoins as possible, there is a good chance that this will help me reduce the purchases of things I don't need. That Starbucks coffee would be nice, but it would be even nicer to put that bitcoin in my HODL wallet by the end of the month. Basically, it will most likely improve my spending habits.
Another advantage would be that there are better ways to increase your bitcoin savings as well. While a fiat bank savings account has interest rates close to 0%, you can lend your bitcoins often at 4-6%. If your salary is paid in bitcoins, you should be able to earn quite a bit of interest on your bitcoins, this would become a good passive income for many.
While the benefits of this endeavor are great, there are also great risks or drawbacks that you should be aware of. The first is that Bitcoin remains volatile. It can work in your favor when the price goes up, but as we've seen over the past few months. The price may also drop. There is a chance that the value of your Bitcoin will be halved within a month. Something that can put you in financial trouble if you don't have enough savings to tide you over. You have to accept that there will be months, seasons and years where you lose money. This will be offset by bull market years, but something to be aware of. Another thing to keep in mind, especially in the US, is that any time you use Bitcoin to pay for something. This is a taxable event.
Living with only bitcoins can also bring you a lot of stress and anxiety. In the past, if you only invested in Bitcoin as a potential nest egg, you may not have worried too much about price action. But if you were being paid in Bitcoin, there's a chance you'd be a lot more concerned about it.
While I don't think I'm quite ready to live a Bitcoin-only life, I'm a lot closer than I was a year ago. If some small changes were made, such as smaller purchases made without bitcoin being tax free, it would make my decision much easier. People who take the biggest risks will make the biggest profits. Although your portfolio may be negative in the short term. Always remember that anyone who has invested in Bitcoin for more than 2 1/2 years is in profit. There are only some big price moves up and down before we get to that point. The real question is, will you be able to wait out the storm and those bearish periods to get to the moon?
What about you? Have you ever thought about going all-in with Bitcoin and using it as your account?