Bitcoin Dollar Cost Averaging @BTCDCA
Would you believe me if I told you that there’s an investment strategy that a 6-year-old could understand, will take you 10 minutes of work per year, outperform 90% of finance professionals in the long run, and make you a multi-millionaire over time?
Dollar Cost Averaging (DCA) is the discipline of buying a fixed dollar amount of a security or fund on a regular schedule regardless of share price or market direction.
When I started my professional career, my uncle recommended that I invest in 3 low expense ratio index funds using a DCA strategy. The PDF below outlining his recommended DCA strategy has proven to be extremely successful for my portfolio. There is much wisdom in this PDF regardless of your views on traditional investing.
Please read this PDF prior to proceeding.
Although, I have been pleased with my more traditional investment plan, Bitcoin challenged everything I thought I knew about money.
In the Bitcoin white paper, Satoshi Nakamoto gave us a roadmap for censorship resistant transactions, a life raft for those suffering from hyperinflation, a way to check the power of authoritarian regimes and the first digitally native and scarce store of value.
Bitcoin is fungible, permission-less, borderless, portable, leaderless, and decentralized. No other cryptocurrency can claim all of these properties. Additionally, Bitcoin was the very first of the entire class and has brand recognition with the Lindy effect. Furthermore the creator or creators of Bitcoin have disappeared and will never be heard from again. Satoshi Nakamoto’s OPSEC was so advanced that their identity has never been revealed. This fact is astounding for the 21st century.
While there were many attempts at a digital cash, e-gold, or e-cash before Bitcoin, all failed due to the attack vector of centralization. The people who started these projects did not remain anonymous and thus were simply threatened with crimes, jail, fines or unreasonable taxation by regulators. The lack of anonymity by the creators of these products sealed the fate of these prior attempts at digital cash. Bitcoin however is immune from this problem.
Bitcoin is undeniably a monetary policy and social network based upon peers who value savings and not debt. Its value proposition is based upon its scarcity. It’s a savings system of first resort and a payment system of last resort.
Bitcoin is immutabile (digital version of something that moves forward and cannot go back), and applies time in a digital sense and anchors it to energy (proof of work) which is the only thing in life we cannot forge, duplicate, or replicate.
However, the only way to prove that the bitcoin you accumulate is actually immutable is to run your own full Bitcoin node to verify your transactions. This is very cheap to accomplish and can be done using small computers which cost as little as $40. These beginner computers are also a great way to learn the basics of computer science. Buying a raspberry pi computer and running the Bitcoin software is a good place to start learning the advantages of being your own bank. This takes responsibility but who would you rather trust your hard earned money to?
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An often-overlooked feature of Bitcoin, but arguably its most important quality is that it cannot be confiscated, as long as you hold and maintain the private keys (seed words).
There can only ever be 21 million Bitcoin.
However, over 4 million Bitcoin have been lost, destroyed, or the private keys are missing. This leaves only approximately 17 million Bitcoin that will ever be available in the future. Bitcoin is so scarce that not even every millionaire can own their own Bitcoin (only 36 millionaires in world). In addition, many millionaires have already purchased more than an entire Bitcoin and have no intention to sell until well into the future. These lucky sovereign individuals understand the importance of protecting their money from the ravages of government, central banks, inflation, and centralized seigniorage. There will be fewer bitcoins available in the future according to the halvening schedule:
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A review of the world debt clocks leads one to the conclusion that the current fiat banking system is an illusion. Does anyone really think governments will start to control their debt levels?
If I could go back in time, I would buy a fixed dollar amount of Bitcoin both on a regular schedule and within my budget, regardless of the share price or market direction just as I approach my other traditional investments.
In the early days, this would have been very difficult if not impossible, but fortunately this strategy is very easy to accomplish with a variety of current exchanges. Cash App is great, however both Swan Bitcoin and River Financial are specifically geared towards Bitcoin DCA. They even offer discounts for DCA set and forget orders!
Cash App — Bitcoin
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Not too many years from now, the number of Bitcoiners in the United States of America will cross ten million. When we…
River Financial - Buy & Sell Bitcoin. Easy & Secure.
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Many early Bitcoin adopters sold their bags too early since their understanding of the value proposition of bitcoin had not fully matured.
On the other hand, others purchased Bitcoin in amounts well beyond their budget at the top of the market cycle. These particular investors panicked and capitulated when the price came down 85% from their purchase price. This behavior is all too common among amateur investors. Buying high and selling low unfortunately has a distinct biological basis which is related to our fight and flight evolutionary programming for survival.
DCA is a tool to take control of the more primitive parts of our brains. Removing emotion from the investing equation and auto buying on a regular / consistent basis regardless of the market price of whatever you are buying is magic.
Track your Bitcoin DCA performance with this calculator:
Build a Bitcoin Nest Egg for your future!
29,910.9874 bitcoin worth $261,343,115.82 today.
The best way to DCA into a solid Bitcoin position is the same way to read Mises Human Action: slowly and consistently. As your understanding improves, your bitcoin stack becomes the most important and only real private property you will ever own. Download Mises book “Human Action” for free :
The Mises Academy is the online education platform of the Mises Institute. Drawing on the Institute's expert faculty…
No matter how many Satoshis or “sats” one accumulates, your % of the total supply will never decrease nor can this % be inflated away by governments, politicians, dictators, socialists, law enforcement, religions, central banks, or corporations. This is the first time in human history we have had such a financial instrument.
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This material is not financial advice. The author owns Bitcoin and Vanguard index funds. This article is my opinion only. I am not paid by any of the products listed above.