This Part 4 of a 7 step series applying teachings from the famous book “The Richest Man in Babylon” to Bitcoin as a revolutionary savings technology.
Warren Buffett is known for a having plenty of folksy investment takes. His most famous rule is as follows:
1. Don’t lose money. 2. Don’t forget Rule No. 1.
Warren is speaking about speculating on common stocks, but we can easily apply his words to Bitcoin.
In fact, we should absorb his words fully into our mushy little skull and repeat them over and over until we are sick of it:
DON’T LOSE MONEY
And by money, of course we’re talking about Bitcoin. The cool thing is, if you educate yourself and treat Bitcoin conservatively, you should never lose a single Satoshi!
Learn to Store Your Bitcoin - Not Your Keys, Not Your Coins
Bitcoin is unique in that you can take possession of your keys and have ZERO counterparty risk.
So, if you properly learn how to save money in Bitcoin, and store it off of an exchange, you should never lose a single Satoshi. While exchange hacks have been cleared up for the most part, today’s problem can be the risky behavior of those in charge of the exchanges!
Last year, multiple platforms including FTX, Celsius and Block Fi all got rekt, and in the process many customers, including those holding Bitcoin were among the victims.
Some may in time be able to claw back a portion of their holdings, but its an unknown.
All could have been prevented however, if they simply accepted some personal responsibility and held their own Bitcoin.
Nobody will ever look after your money like YOU will!
Learn study and practice how to hold your own keys, it will empower you like no other feeling, and more importantly you will be following the rule to “protect thy principal.”
Never Look For “Yield” On Bitcoin
Many caught up the the greedy scandals of 2022 were trying to earn “yield” on their Bitcoin, treating the hardest money ever created like they were dollars.
This game is different. Pound that fact into your head, no matter what it takes. Bitcoin is designed to be the base layer of money, not some leveraged, derivative laden Dollar ponzi clusterf*ck…
All of these companies trying to financialize Bitcoin are learning the hard way. The old rules of money do not apply to Bitcoin. Bailouts are not available, because you cannot print Bitcoin!
Instead, those caught up in greedy schemes end up losing a portion or all of their accumulated stack, all in a futile effort to earn a few points in yield.
Never, Ever Trade Bitcoin
Finally, resist the temptation to trade in and out of Bitcoin. Time in the market always beats those who try to time the market.
Name the first 5 day-trading Billionaires that come to mind.
You probably came up with exactly zero, because there aren’t any out there! But you can name a few investing billionaires without much trouble.
Now there are certainly some day traders out there that probably make a nice living. But they don’t reach the status of the big boys for an important reason:
They don’t allow the compounding of gains to continue over multi-decade periods.
This is the only way to make the big money, don’t interrupt or short circuit the process.
“The first rule of compounding: Never interrupt it unnecessarily.”
- Charlie Munger.
Most of us aren’t going to be starting with a huge amount of capital. Many are starting from zero in 2023 and dollar cost averaging in for the next decade. By making one decision (to buy and HODL Bitcoin) you don’t have to decide every day, or week, or month if you should be long or short.
The message is simple: Protect your Bitcoin
Get it off an exchange.
Hold your own keys.
Don’t interrupt the compounding effect that is inevitable with Hard Bitcoin Money.