It has always been my passion to learn more about investing. The best way to learn anything is if people who have succeeded share their stories. During my whole career as active wealth manager I was blessed to learn from extraordinarily successful people, they clearly had a positive impact on me: I stayed curious and kept learning. The aim of my Financial Imagineer blog is to share these lessons with my readers, hopefully having a positive impact and empowering you to imaginer your own life!
When talking about Bitcoin, it’s still something abstract, something intangible for most. Many do not understand it well enough or stay away as they do not know how to invest in it. Personally, I got exposed to Bitcoin for the first time at work as some colleagues were talking about it over lunch. The price just crossed $100 per coin. It seemed crazy. How could an intangible algorithm created by an anonymous guy called Satoshi Nakamoto suddenly become valuable at all?
It is assumed that in the very early days of Bitcoin one dominant miner which is now believed to be Satoshi Nakamoto mined around 1.1 million Bitcoins. At current prices around $40,000 these coins are worth around $44,000,000,000 (!!!), this is $44bn (!!!!!!) and places an anonymous “Mr. Nakamoto” straight into the top league of the wealthiest people on the planet! Nobody knows who he is!!! We don’t even know if he’s still alive or not. He might be the first human to become the wealthiest individual on this planet without anyone else knowing about it. He might be your low-key neighbor driving a Toyota and eating sandwiches. He’s a John Doe!
So, what does this have to do with “the rest of us”?
Well, Satoshi was not the only person to mine or invest in Bitcoins. There are many, many others who jumped in at an early stage as well. And whenever Bitcoin reaches new highs, you can read headlines about people having lost their passwords to $200 million worth of the cryptocurrency and how some of those people suddenly sell some Bitcoins and instantly become extremely wealthy.
Back in 2018 I got contacted by such an individual the first time. We had an initial email conversation which turned into a phone call shortly thereafter. I was thrilled to get to know an early investor and therefore a real Bitcoin visionary myself. I asked him one simple question:
“Whenever you sell your Bitcoins, can you please let me write your story?”
In early 2021 I received another email from him; it said: “If you like to write the story, it’s time! I’ve just sold and am now financially independent.”
I can’t tell you how thrilled I was to get onto this. I replied immediately and said: Let’s do this!
This is the story of a man in his 30es having achieved 8-figure wealth, with and thanks to Bitcoin.
The two most interesting things to ask someone like him are:
First: How did you become a Bitcoin Millionaire?
And second: How do you plan to remain a [Bitcoin] Millionaire?
Without further ado, this is the story of my friend who cashed out from Bitcoin to live the life of his dreams and choses to remain anonymous [for now].
If you are similar like me and don’t know too much about Bitcoin yet, or want to learn more insights from a guy who kept sitting on his Bitcoin holdings as early visionary and believer, read on and learn along with me!
1. Who Are You? What is Your Background?
I grew up with the classic dreams to become a firefighter, train driver or astronaut. BIG DREAMS! But as I grew older, I figured the firefighter would have to go into fires and the train driver would be requested to remain on given tracks. Even an astronaut who has the privilege of going into space merely has to accomplish a pre-defined mission.
This realization hit home and led to some form of disillusionment at first.
Personal computers were the solution. Computers allow you to write code, program and create new things, software, solutions.
Anything you could imagine!
Computer science is a highly creative art and that’s why I eventually did a master’s in information science and artificial Intelligence.
I started my career in consulting and later ventured out to build a start-up and work in project management in a bank. Innovation and thinking out of the box remained top priorities throughout my professional journey.
2. When did You Know About Bitcoin for the First Time?
Sadly, I learned about Bitcoin one year too early: During my studies.
At first, I didn’t really comprehend the concept. Only one year later, hearing about Bitcoin from several other sources, I started digging deeper. I felt if all these sources start reporting about it, there got to be something about these Bitcoins. I then saw potential and started buying my first Bitcoins.
3. What was Your Investment Case on Bitcoin?
Right after the great financial crisis I was in a revolution-state-of-mind. The idea was to conquer the world, a new kind of money was needed: Bitcoin seemed to be a good fit as solution.
Somehow it is weird how religion got separated institutionally from the state, but politics and monetary politics are still somehow combined.
With great ideas come great changes. Bitcoin’s that.Cameron Winklevoss
Bitcoin seemed to be a great solution, a neutral unbiased algorithm, a technology-based escrow system, the future seemed to be bright for this one! I bought all my Bitcoins between $9-30. It seemed like a good thing to do with some of my money.
When the internet first launched, you had all these newspapers saying that the internet was only used by bad people, to do bad things and what was the point of it.
But the internet changed everything, just like Bitcoin will…Brock Pierce
4. Did you Mine any Bitcoins as well?
Mining seemed like something you would do if you could access and profit from cheaper electricity prices. Unfortunately they are somewhat higher in Switzerland. Nowadays Bitcoin miners usually take advantage of the otherwise unused float within the power grid and tap into this. Bitcoin mining was never something I got into myself.
5. What was and is Your Best Strategy to Invest in Bitcoin?
Honestly, for me Bitcoin was never something to “trade” or speculate with. For me, Bitcoin is something you got to understand and believe in. It’s internet money, money that can’t be printed or influenced by central banks. At one point in time central banks might want to use it too.
To shut down Bitcoin is to shut down the Internet.Tyler Winklevoss
That’s why I started to focus on buy-and-hold!
It’s that simple.
But not easy.
6. Did you Ever Sell Bitcoins Before?
It was in 2013 when Bitcoin closed in at $1,000 for the first time. I got excited and loaded some BTC onto an exchange on a German server. Then I clicked on “sell at market” to liquidate 100 Bitcoins and got immediately scared as hell to see how I myself pushed down the price to $80 intraday due to low trading volumes before the price climbed back to $300.
Everything went very fast.
It was a valuable lesson!
It was also great that selling these 100 Bitcoin gave me back my initial cash outlay, I crossed break-even so to say. From this moment onwards it was no longer possible for me to lose money on Bitcoin.
7. How Did You Manage to Hold Bitcoin for a Decade: Without Selling?!
Besides getting nervous in 2013 I believe my mostly stoic mindset crossed with a deep understanding of and believe in technology was the enabler for this. Bitcoin is something that worked, something that will be needed. I believed it would become even more valuable eventually. It’s 2021 now and just look how some companies like Western Union still earn way too much money to simply transfer cash…
Somehow my strong believe helped me to forget about my Bitcoins eventually.
Bitcoin represents the first major breakthrough in economics and finance since double-entry bookkeeping was invented in 1494, and activists need to embrace its power.Max Keiser
During the past years I somehow managed to actively NOT THINK about my holdings. If you manage to stop thinking about it all the time, you won’t be stressed about not wanting to do something about or with your holdings. This approach got also backed by my love for disruptive technologies and my strong believe in a better future, which again meant that I took Bitcoins more serious as compared to others.
I also have to say it helped tremendously that my immediate family members didn’t influence me on any of this and simply trusted my judgement.
8. How Did You Keep Your Cool When Bitcoin Dipped in 2018?
In late 2017 I started to dream and believe we are close to achieving financial independence. It was not easy and that was also the time we connected the first time. I wanted to sell some Bitcoins in early 2018 but missed the window of opportunity as the anti-money-laundering compliance procedures of traditional banks took way too long.
I saw Bitcoin as an actual market opportunity:
As a trillion-dollar marketplace with long-term potential.Adam Draper
Eventually I didn’t sell anything in 2018. Luckily I’m a stoic and having my other pillars doing fairly well helped me to stay patient. The new goal was to wait for the next supply halving-event three years down the road.
Eventually this was a good exercise as warm-up for early 2021!
9. What was Your Endgame Plan for Your Bitcoin Holdings?
Achieving financial independence has always been a very important goal for me: Have a career, build pillars of freedom, start-ups, investments, Bitcoin, then allow some time for it all to develop! If one pillar wouldn’t work out as planned, there would be others that might. In a way Bitcoin was simply one of my pillars that worked out with a multifold payout and eventually paid extremely well. It has always been my goal to let go of some Bitcoin if it meant I’d have achieved financial independence.
On the other hand, and thanks to my multi-pillar plan, it would have been okay if Bitcoin dropped to zero.
I’d simply have had other pillars to count on as well.
10. Why Were You so Bullish on Bitcoin? How Do you Value Bitcoin?
While it’s impossible to attribute a “fair value” of some kind to Bitcoin, the math of just getting an idea of how valuable it could become is rather simple. The eventual overall supply of Bitcoins is finite.
The Bitcoin algorithm will only ever allow to create a total of 21,000,000 Bitcoins by the year 2140. Every few minute new Bitcoins are introduced to the supply at a pre-fixed rate of blocks. Every four years the amount of newly released Bitcoins is reduced by 50%, this will stop in 2140 when all Bitcoins that will ever be are mined. Currently more than 18.5 million Bitcoins have already been mined, leaving less than 3 million that have yet to be introduced into circulation.
Now, fun fact: There are more than 21,000,000 millionaires on this planet. What would happen if each and every one of them might want to hold just 1 simple Bitcoin?
If the world’s using Bitcoin, governments won’t be able to fund wars through inflation like they do today.Roger Ver
In the past years we have witnessed how Bitcoin started to play an increasingly important role in the world of money. It has turned into a recognized asset class and some institutional investors have started investing as well. If just a few more enter this market the price will skyrocket even more.
Bitcoin will eventually become more extensively used. While I don’t know if it will replace companies such as Western Union – they might actually adapt and use the blockchain themselves – it is currently being discussed to be used by Visa (!) and might even enter the world of central banks.
Think of Bitcoin as a bank account in the cloud, and it’s completely decentralized: Not the Swiss government, not the American government. It’s all the participants in the network enforcing.Naval Ravikant
Imagine: If some banks include the Bitcoin blockchain into their set of tools! A Western Union or any bank offering international money transfers can simply to the following:
Local Currency > Bitcoin …then at the country of destination: Bitcoin > Foreign Currency
This could be happening on a Sunday afternoon, which is not possible nowadays, within seconds, fully automated and with super low fees! There won’t be a currency risk as the transaction will happen almost instantaneously. This might be one new application for Bitcoin which would require much more “liquidity”.
Bitcoin is amazingly transformative because it’s the first time in the entire history of the world in which anybody can now send or receive any amount of money, with anyone else, anywhere on the planet, without having to ask permission from any bank or government.Roger Ver
The more widely used it gets, the more it will play an important role in this world, the more it will replace global monetary supply and ultimately the laws have to be built for Bitcoin.
11. Why Did You Sell Bitcoin Now?
As Bitcoin pushed through my target level of $21,000 during the Christmas holidays of 2020, I started to activate my selling plan! I was lucky that they compliance guys at the bank and at Bitcoin Suisse knew me already as legitimate client. The receiving bank required an external confirmation by an independent lawyer before accepting potential Bitcoin selling proceeds of a larger sum. Thanks to all these procedures I didn’t sell at $21,000, or $25,000 or $30,000 but ended up exchanging some (!) of my Bitcoins at $37,500 eventually.
Did I sell all my holdings?
I may have kept some. I still believe Bitcoin will be increasingly valuable going forward. Bitcoin’s technology is unique, there’s no company or government behind it, it’s truly open, limited and decentralized.
And lastly: Why did I sell now? Because my Bitcoins pushed me into the Financial Independent zone and I could sell just as many as necessary to activate my FIRE (Financial Independence/ Retire Early) plan.
The time has come where I no longer need to work.
Time and freedom are more important than money!
12. What Would be Your Second Choice to Invest if There Was no Bitcoin?
If there would not be any Bitcoin, no comparable crypto currency and none of all this technology available, the second choice for me to invest would be start-ups and building my own company.
13. What are You Investing in Now?
Truly, very boring stuff. Broadly diversified and concept proven index equity funds, ETFs! Why? I’d love to turn 100 years old, live-off my nest-egg till then and still have something left in the end.
14. What Advice Would You Give to New Bitcoin Investors?
The key point is to understand what you invest in. If you take Bitcoin as an example, truly do your homework, understand what Bitcoin is about, what the original programmers want to achieve with it, and how it works.
Never ever invest in something that you don’t understand!
15. How Dou You Feel About Crypto FOMO?
It’s understandable, human emotions are always influencing investments. However, with Bitcoin their impact is more extreme! Every once in a while, a huge sell-off happens and investors who don’t understand the long-term prospects of the Bitcoin solution run away. Usually, such events are simply followed by yet another new Bitcoin rally. The price swings are clearly larger as with other investments. The media, with their attention-grabbing headlines, and the herding effect play a large role here.
Crypto-FOMO and human emotions are short term.
Bitcoin is here to stay.
16. Do You Think Investing in Crypto Currencies is Like Playing the Lottery?
I think like anything else that you don’t understand, it could truly be like playing the lottery indeed. It depends on the individual investor. If you put your money into stuff you have no clue about, you shouldn’t be surprised if you lose money!
Since you’re asking about crypto currencies in general, I would like to add that some folks are constantly on the run to find the next Bitcoin simply to ride the next wave up. I’d like to highlight a few things here:
Bitcoin may be the first “next generation currency” and therefore has a tremendous “early mover advantage”. Just think back to Betamax vs. VHS. Yes, Betamax might have been better and technologically advanced, but somehow VHS dominated the market. The same applies to technologies on which the internet is built on. As soon as a technology gets “good enough”, is established and widely accepted by a critical mass of users, it gets extremely hard to replace it. Often, it’s not the best technology that wins, but the one that is “good enough” and manages to get established first.
There might be newer crypto currencies nowadays that are truly better than Bitcoin, but Bitcoin is “good enough”. Bitcoin is not a constant thing at all! Bitcoin is not “stagnating”. It is being improved and it keeps adapting. The lightning network is coming, so are transactions at zero costs…
It’s getting increasingly more difficult to find the “next Bitcoin” simply as Bitcoin is still here.
It’s not getting replaced or outdated.
It’s not dead.
Think about the internet itself! Did you know the whole web is built on sending data-packs of 64Kb around the world? That has been like this at the beginnings of the internet, and it is still the case today! 64Kb is nothing! Hence, a few years ago one could think it’s impossible to stream videos in real time, have Zoom calls, or even stream 4K movies on Netflix… using the very same internet! Innovation happens and somehow, we found a way to use the same technology sending 64Kb packs of data to do exactly all these things! Imagine.
Now this is exactly what I believe will happen in the crypto space. The existing infrastructure and technology is good enough and widely spread. New additions and innovation will improve it on the go.
We can code wills, escrows, trusts, notaries, revokable charge backs, proof of contracts, intellectual property enforcement. What Wall Street does can be done in code by Bitcoin.Naval Ravikant
Given the above line of thought I believe “shitcoins” are generally a waste of time and resources. “Investing” in those is truly more like playing the lottery indeed.
I will keep investing – yes – investing – more into Bitcoin again from my earned passive income if not used-up going forward.
Let’s say this again, it’s important: I only invest what I understand!
17. What is the Future Landscape of Currencies?
Central banks truly got an interesting problem: Bitcoin is getting more and more widespread and accepted globally. It will get increasingly difficult to simply announce one fine day it would be forbidden. At the same time it’s getting also harder to talk bad about Bitcoin as it’s gaining more followers and believers, and that’s exactly what makes it stronger and more valuable again.
Now just assume one day a central bank of any country would announce, they’d like to hold just 1% in Bitcoin… or what if even a government of a country chooses to accept Bitcoin as official currency.
What if some country decides to favor Bitcoin, maybe simply to piss-off the US system?
I believe that Bitcoin holds value as a form of “good money” that is superior to any previously discovered or developed form of money.Jeremy Allaire
In Europe and the West, we are spoiled with stable currencies. There are countries such as Venezuela or some states in Africa where the use of Bitcoin is currently increasing fast!
The future currency landscape will look different and there’s an increasing chance Bitcoin will play a role in one form or another.
18. What do You Think of Digital RMB/ Libra other Projects?
I always like to think how these “feel” from the end-users’ point of view. How does a dependent and central bank controlled digital currency feel? Think about the digital renminbi, think about other ideas floating around. Think about negative interest rates. If cash would be scheduled to disappear one day, people will be looking for alternatives.
Bitcoins are like gold bars with wings. That’s why I, and so many others, view Bitcoin and its network as “Gold 2.0”.Tyler Winklevoss
19. What Sources Would You Recommend to Readers Who Like To Learn More about Bitcoin?
If you’re interested to learn more about Bitcoin, start right at the source! Take some time to read and understand the original Bitcoin Whitepaper! As I mentioned earlier, understand the thinking and intentions behind it. What better source of information to do this could there be than the original Whitepaper by Satoshi Nakamoto!?
Second, Andreas Antonopoulos has a wonderful Youtube channel you should check-out, he offers great value!
Later, do join internet forums [by Bitcoin developers] and discussions on the topic on Reddit.
This will get you a good basic understanding of Bitcoin!
20. What’s Next For You?
First, I’ll take some time – maybe 1 year – to think about what comes next for me. I enjoy reflecting about the meaning of life first. Top of the list are topics as how I could help society, maybe doing some charity work and eventually getting myself into a start-up.
But before this all starts, I’m still employed for a few more weeks before I FIRE!
The good thing is we’re currently all working from home, so the transition won’t be too dramatic.
First and foremost: Hats off and a lot of respect for what you have achieved!!!
It may sound simple but it’s definitely NOT easy to stay the course for a decade, holding on to a highly volatile assets, like you did. I know a handful of people who are able to do so only… it’s impressive.
On behalf of my readers: Thank you so much for sharing Your time and information!
Please do let us know every once in a while, how your new life on FIRE works out!
Maybe we can invite you back for an update about your new life some day in the future?
In the meantime I invite all readers to leave your comments or questions below or feel free to email me!
For us to close, I found this a great reminder for everyone who benefited from the Bitcoin or stock market bull run of the past year:
Concentration is how you get rich,
diversification is how you stay rich.
Keep in mind, your time and energy are the most valuable currencies in your life.
Put them into things that truly matter to you! Find your Ikigai!
You vote with your time.
You vote with your money.
You vote with your energy.
Whatever you invest, this post is in no way a purchasing or investment recommendation but merely sharing of personal opinions, do your own research!
Thanks for reading and I shall keep adding more articles about the future of money, negative interest rates, going forward. If you didn’t subscribe to Financial Imagineer yet, consider subscribing by email in the box below, like my Facebook page or follow Financial Imagineer on Twitter.
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