It has been a few days since our initial discussions around the “Why” of collecting cryptocurrency. You hopefully came up with a good reason to start. Still, now that you’ve been grinding it out for a few days, you might be wondering if your initial reasons were right or if that weekend job for minimum wage might be better. Whatever your reason, whether to invest, buy something, retain some privacy, whatever, the reason is right for you because it is your reason. Don’t let anyone tell you that your reason is bad. Your motives may be harmful, and we can talk about that when we discuss ethics, but your motivation is yours and yours alone.
I would submit to you an additional or secondary reason that you might want to build a crypto empire, capital accumulation. Some of you may navigate away immediately, triggered by the mere mention of the phrase. Convinced that capitalism is a societal ill, you will do all you can to see it defeated and relegated to the dustbin of history. Power to the people, we’re all in this together, I can’t get a job or pay my own way, whatever other slogan you have, I wish you well. We’re not here to discuss macro-economic systems at large, but by the way, capital is required in all economic systems. Some just generate and manage it more effectively than others.
Capital is the accumulation of resources that can later be used to accomplish something. It doesn’t matter where you live. If you don’t have enough capital to buy enough bricks, you won’t build a house. You see this all over Jamaica, for example. People will take years and decades to build a house. They don’t have a home, can’t find a suitable place to rent, but they don’t have the money to buy enough building supplies to build their house in a short time. They live in half-completed buildings with some walls and a second floor as a ceiling but no doors, windows, or actual roof.
You can also see it in the mindset of most consumers. Even making good money, they do not build capital because driving a new car, having lots of clothes, or owning more house than they need is a better goal. So they borrow what they need to accumulate those possessions. It is the reason for the term “house poor.” At best, some people consider capital accumulation as something to fund their retirement. Still, even then, most people do not have enough saved. They live like this and then shout in anger at those who can afford to go wherever they want, travel wherever they want, or do whatever they want. They are angry at the 1%.
Capital is one of the few things that separate the 99% from the 1%. Sure, some can come from nothing to build a fortune, but most don’t start from zero. Those that do often have a unique, natural talent or lucked into it. Do you think that Zuckerberg saw what Facebook would become when he started? He didn’t, but he had talent and was in the right place at the right time to take advantage of something most people didn’t even realize they wanted, social connection.
Those without that exceptional talent had to either create their wealth through hard work or perhaps inherit it. Most of us have seen it, that one guy who had the house that seems nicer than what we think his salary will afford. We say he has “family money,” and perhaps he does. Good for him. I’m not jealous, and neither should you be. Someone in his family figured it out. They figured out how to accumulate capital, and he got a piece of it. You can spend your time hating, or you can spend your time building, but you can’t effectively do both.
So, what does this have to do with cryptocurrency? Today, we are at a point where you can obtain cryptocurrency by working (or purchasing it). The ascending value of it will build wealth for you faster than what traditional investments can do. There are more than a few Bitcoin millionaires out there, and there will be even more as people collect the altcoins, and they ascend in value.
Let’s make this real. I have been building my crypto empire through sheer work, no purchasing of cryptocurrency. I earned enough that I was able to stake a few thousand altcoins. (If you don’t know what staking is, that’s ok. We’ll get to it.) I was able to stake at over 20% annual return with the payout every day. I’m building wealth at above 40x the rate that I could with a certificate of deposit at my local bank, 2.5x what I could with an index fund. I’m doing it with a smaller amount of starter funds. I can pull my coins at any time I feel I need to. I did all of this without spending one dime of money that I went to my job to earn.
Let’s make this a bit more personal. What could you do if you had 2 BTC and could put it away for your kid’s education or your retirement? I don’t know many investment vehicles that accept crypto right now, but let’s say that you grind out 2 BTC in four years. Complicated, sure, but I know of someone whose goal was to grind 1 BTC out in a year, and he is halfway there.
Anyway, put that approximately $100k away. Invest it so it will still grow. You would have $100k in capital. You could borrow against that to purchase your kid’s education. Would you have to pay it back with interest? Yes, but with the right investment vehicle, you would be paying it back to yourself. You would be borrowing money from yourself and paying yourself back with interest. You would, in essence, become your own bank. That labor you expend to pay that interest is going back to your capital nest egg, not paying off a big company. Think about that. Imagine the freedom your child would have if, instead of establishing a college fund for them, you built a retirement fund for them. They could borrow against it for their education ( or their first home, and all that interest money would be going back to them.
Is it as straightforward as going to a financial advisor and handing them the Bitcoin address? No. Laws and regulations vary from country to country, so you must figure out that part yourself, but the principle remains the same. If you have capital, you can become your own bank. That is powerful. That is freedom. You can’t borrow your way there, though. Production comes before consumption. This won’t work if you decide to spend the rent money to buy cryptocurrency. You’ll end up eating your seed money when the water pipe breaks, and you have to call the plumber. Freedom isn’t free. You have to work for it one way or another.
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