Beyond the numbers, what is “generational wealth” and how does bitcoin enable us to achieve this?
Bitcoin Generational Wealth - The Prelude
This article was inspired by a fellow Bitcoiner, @chadlupkes and his constructive criticism of my first article on generational wealth. My first article focused too much on the generational wealth calculations in his humble opinion and I took his criticism to heart. In essence, my fellow Bitcoin brother would have liked to see more information on what exactly is generational wealth, the history thereof and why bitcoin is the best form of generational wealth. Thank you to @chadlupkes and the rest of my Bitcoin brothers and sisters who make me a better writer because of their continual quest for life, liberty and the pursuit of happiness through bitcoin. I hope you all enjoy this article that @chadlupkes and I collaborated on.
In the 21st century, most people can't plan for generational wealth because in the fiat world, 401ks and pensions are the typical investment vehicles used for planning a person's generational wealth. Unfortunately, 401ks and pension plans are flawed because most of them are not adjusted for inflation, have exorbitant fees and are poorly managed. Inflation is the hidden, insidious tax that stealthily robs Americans of the wealth they have stored in 401ks and pensions. Storing wealth in 401ks or pensions is like trying to hold water in a bucket full of holes. The holes in your 401k bucket are inflation, management expense ratios, front-end fees, back-end fees, hidden fees, overvalued companies, taxes and much more. These holes in your 401ks and pensions are why it is hard for you to create generational wealth. Do you think that people like Warren Buffett, Elon Musk, Bill Gates, and Jeff Bezos have 401k's and pensions? I highly doubt it. Instead they own cash-flow generating businesses that provide value to the world, and are tax havens that allows them to maintain generational wealth. If you think 401ks are the road to building generational wealth, read the book “401(k)haos” by Andy Tanner, and you will find that they are essentially Ponzi schemes.
Generational wealth refers to wealth that is passed from generation to generation into perpetuity. Those assets can be stocks, bonds, real estate, oil, businesses and any other good or service that can sustain your family for centuries. The wealthiest families in the world have assets that they never sell, and those assets generate a constant revenue stream so they and their heirs don’t have to. History shows both successes and failures in the quest to create 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 generational wealth for my family and it can be for your family too.
I have mentioned some successful families, but there are also examples of families that gained great wealth only to lose it like the Vanderbilts, who if he became orange-pilled today, would have likely invested much of his wealth into bitcoin. This is because he would truly understand that Bitcoin is digital energy. Bitcoin can be generational wealth for your family through its digital energy properties, like oil was liquid energy to the Rockefellers. Bitcoin is the first form of generational wealth that is similar to owning an energy well that will produce perpetual amounts of energy.
The biggest difference between storing your generational wealth in businesses, commodities, land or other assets that can be taken, seized or stolen versus bitcoin, is that bitcoin is unconfiscatable, 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 wealth. The slow accumulation of wealth that comes from stacking satoshis over time can build a foundation that can support any family. Just a few thousand satoshis could allow a family to generate perpetual wealth for centuries.
For those that don't know, 1 bitcoin = 100,000,000 satoshis.
Since time is money, think of satoshis as seeds of time. Every 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, if it is spent faster than it appreciates, it will quickly be depleted. This would be similar to your family cutting down the satoshi time tree orchard instead of allowing them to continue to grow and produce fruit. If you don't properly protect your trees from thieves (hold your own keys for cold storage), water them for nourishment (add more sats to your stack), and prune them to keep (only spend what you absolutely need for the sustainment of your family's wealth).
There is a generational wealth adage that the first generation creates the wealth, the second generation spends it and the third generation blows it. For this reason, it is paramount that every family have a plan on how they preserve their generational wealth to last forever. Most families that have generational wealth protect their wealth in trusts that only allow a certain percentage of money to be taken out by family members over their lifetime. If planned correctly, the amount of money taken out by family members will never be overcome by the appreciation rate of the entire trust's value.
For example, if you have $1 million of bitcoin and you need $50,000 (5% of $1 million) per year to live on, as long as the leftover bitcoin principal, $950,000 is appreciating faster than the 5% per year you are living on, you will be able to maintain your wealth forever. Since bitcoin will go up “forever Laura," your family will always have generational wealth as long as you don't spend more than you make. Normies think it is a joke that bitcoin will go up forever but it is a true statement because there is a finite amount of bitcoin and a theoretical infinite amount of demand.
Most Bitcoiners have not started generational wealth planning because they do not fully grasp how valuable their satoshis will be in the future. This would be no different than boomers buying a Ford Mustang in 1966 for a few thousand dollars and not taking care of it until today when it is now worth upwards of $15k. Had they treated this highly sought after muscle car with great care and TLC until today, the car would be closer in value to $35k. The object they once took for granted in the 1960s is now worth magnitudes more and most of them sold it a long time ago and are kicking themselves. Bitcoin is generational wealth, so protect every satoshi as if it were a precious piece of your time! Every satoshi counts and even the most bullish Bitcoiner does not fathom what their satoshis will someday be worth.
This article is the follow-up to my first article on generational wealth where you can see how just $68 or $680 worth of Bitcoin will become worth millions, in some cases billions.
This is a guest post by Jeremy Garcia. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.