How To Live on Bitcoin - #106

TL;DR: How I set myself up to live on a Bitcoin standard for one whole year. It's simple, and people should at least try it out for themselves to really know what it's like.

Dear Reader,

A year ago, I set a challenge to myself: To live on a personal Bitcoin standard for one entire year.

Everyone says that Bitcoin is the soundest money on Earth, that its superior to Fiat currency and is the best payment network known to man. That its freedom money. Well, I wanted to test this out for myself and see if any of this is really true.

It is.

As of September 1, 2022; I can say from personal experience that living on Bitcoin has been a game changer for me.

Living on a Bitcoin standard will challenge your understanding about money, currency and how we conduct our lives in this fiat society.

Going on a Bitcoin standard isn’t as difficult as it appears, and I think EVERYONE should at least try this out for themselves.

Here’s how I did it…

Set a goal

My goal was simple: live on Bitcoin for one year.

I wasn’t just going to spend Bitcoin. I was going to earn and save in Bitcoin as well. To make Bitcoin my base money and currency.

Of course, if you don’t know how to swim, you don’t jump into the deep end of the pool. You’ve got to learn to float.

What I did was setup smaller achievable goals in order to get to that point.

My strategy:

1. Save enough Bitcoin to feel comfortable spending.

2. Start paying expenses, slowly and gradually, in Bitcoin.

3. Take 100% of my net wages in Bitcoin.

It doesn’t have to be the greatest plan in the world, but just knowing where you’re going will help you know when you’ve gotten to your destination.

Note:
If you’re flying solo, this might be easier than if you’re flying in pairs. Communication with your partner is definitely a must.

Create a plan

First thing I did was gather up all my expenses and then look to see which would accept Bitcoin payments directly and which ones didn’t.

The plan:

• Pay as much as you can directly with Bitcoin.

• If no direct payment was available, use services such as Bitrefill.

• If no services are available, ask friends or family membesr to trade.

• If no one is interested/available for trade sell Bitcoin for fiat.

• As a last resort, use a crypto debit card.

We followed a 50/30/20 budget where:

• 50% set for expenses

• 30% for savings

• 20% for misc. spending

We also set up a 3 Bank System using the following:

• Sparrow Wallet (Cache)

• Muun, Phoenix, Blue and Cash app as Lightning Wallets (Spendl)

• Spare laptops with Bitcoin Core node, Raspberry Pi and USB stick as hardware wallets (Hodl)

Backup plan just in case SHTF*:

• Cash reserves in physical precious metals

• 1 years worth of emergency food and provisions

Luckily for us, we don’t have a lot of expenses, but the majority of our expenses that we do have accept Bitcoin payments via BitPay which now offers Lightning Network payments making this part of the process smooth and frictionless.

For the bills and expenses that we couldn’t pay directly with Bitcoin, we needed to find work arounds. However, since services such as The Bitcoin Company and PayWithMoon have arrived on the scene, this has taken us to a near 90% of our expenses being paid in Bitcoin.

The one expense that we haven’t been able to get around is a bill which requires an ACH transfer. For this, we simply sell Bitcoin and ACH out via Cash App.

To track spending, we made a spreadsheet to track and give to our CPA at the end of each month. It’s free to download. Just make sure you’re saving it locally to your desktop and using an offline spreadsheet app.

*We’re talking worse-case-grid-down-scenario…

Take action

Ideas and plans without action are worthless. The only thing to it is to do it, and it’s usually the first step that’s the hardest to overcome. So how it all worked in practice for me (will break this down into quarters).

Quarter 1 (Sep/Oct/Nov)

• Started off with buying groceries.

  • We used Bitrefill as the work around.

• Found services for our utilities and other expenses which would accept Bitcoin payments directly (BitPay).

• Receiving 50% of my net wages in Bitcoin and using it to build operating capital.

• Tried out a crypto debit card.

Quarter 2 (Dec/Jan/Feb)

• Switched to services accepting Bitcoin payments and ending services with those that didn’t.

  • With the exception of one ACH payment which we used Cash App for.

• Requested 100% of my net wage in Bitcoin.

• Setting up a 3BS.

• Began promoting Bitcoin adoption to local merchants and vendors.

Quarter 3 (Mar/Apr/May)

• Discovered PayWithMoon.

• Closed my personal bank account.

• Cashed out of all my stock positions and closed trading accounts.

• Ended my 401K.

• Selling unused items and goods for Bitcoin.

Quarter 4 (Jun/Jul/Aug/Sept)

• Living entirely on a Bitcoin standard.

As you can see, I took small incremental steps along the way. As I become more comfortable and confident, I continued to increase my exposure to Bitcoin.

The reason I chose to do it this way is because my intent is to completely get out of fiat entirely and so I wanted to approach it in such a manner as to build long term habits and tolerance over time.

My takeaways

The bull / bear cycles

During bull markets, everyone is amp’ed to get on the Bitcoin train as greed takes hold. Promoting Bitcoin adoption to local vendors and merchants is easy as they can see the promise of future fiat profits a head, but once the bear comes in, Bitcoin becomes radioactive.

For me, the drops in Bitcoin while affecting the older coins, didn’t really affect the new coins earned. I would find myself hoping for market sell offs and crashes, especially as it came closer to payday as it meant I’d be earning more Bitcoin in the process. People would mock and say that I lost 70% of my purchasing power, but they don’t stop to think that you can also see a 70% increase in purchasing power too.

When Bitcoin dropped to 17,000 USD, and then rose to 22,000 USD the following week; you’ve gained nearly 50% in purchasing power… So, I’ll just leave that there.

In bull markets, you don’t mind spending a little more as you’ve gained in purchasing power and in bear markets you adjust to living a little leaner in order to preserve more Bitcoin.

Getting paid in Bitcoin is a default dollar-cost-averaging play.

That’s essentially it.

Every time you get paid your wage in Bitcoin, you are by default, dollar-cost-averaging. As the fiat price of Bitcoin fluctuates, you’re earning and spending more or less Bitcoin over time.

It also makes it simpler to save in Bitcoin as its the money you earn directly.

Paying taxes

Taxation is theft.

That being said, when it comes to Bitcoin and taxation, people often fear the notion of having to pay capital gains taxes. Here’s the deal… If you end up having to pay a capital gain, that means you’ve gained in purchasing power. That’s a good thing.

Likewise, you also have capital losses too.

In my experience, the gains and losses netted out to a point where they nearly washed each other out.

Capital gains is simply the price of doing good business.

In the end, the tax is just another bill to be paid.

It also showed me how unethical, immoral and destructive usury can be to people.

I do not subscribe to the idea of using credit cards or loans as a means of financing ones life. Maybe I’m bias because I’ve never taken on credit or loans outside of a student loan (which was paid off), but seeing friends and family who live and die by the credit and the severe punishment dealt to them by the lenders over the simplest of mistakes doesn’t seem like a sound and sustainable path in the long run.

It exposes the fiat system for the predatory system that it is as the idea of obtaining interest and yield on your fiat requires debasement of the currency and the financial bondage of others. You cannot have interest and yield without those two points.

The people who could stand to benefit from a Bitcoin standard the most, can’t due to the fact that they’re drowning in debt with the chains of fiat wrapped around their necks. They cannot afford a slight 0.01% drop in the fiat value of their Bitcoin if it results in not being able to pay the lender who then deals a cruel punishment of credit/social score penalties and additional interest on top of their already swelling debt.

For me, to truly be on a sound money standard means using the money you have, not the money you will (probably) have.

Using Bitcoin is more like using physical cash

Many new comers get tripped up in this area because there’s an unspoken expectation that using Bitcoin will be exactly like using their own fiat bank cards.

For many people, they keep their entire fiat net-worth within their fiat bank, and the fiat bank issues a bank card which they carry around with them all the time. They rarely if ever look at their balances until there’s an issue with the card only to realize they have insufficient funds, and overdraft charge and some hidden expenses being withdrawn daily, weekly, and monthly.

When used appropriately, Bitcoin is more like physical cash in your wallet or at home in a safe.

People, in modern times, aren’t accustomed to the idea of carrying and using physical cash much, and so therein lies a lesson.

A bitcoin standard will teach you quick

In a truly capitalistic economy good ideas and financial behaviors are rewarded handsomely while poor ideas and bad financial habits are punished just as equally.

Technology is an accelerator to either the up or downside. It’s a magnifying glass which exposes the user for what it is, not what it will be.

If you’re practicing good financial management, taking responsibility for your actions, a Bitcoin standard will reward your actions by seeing an increase in your savings and purchasing power and ultimately more Bitcoin in your wallet.

If you’re practicing poor financial management, not taking responsibility for your actions; a Bitcoin standard will expose your faults and teach you in the most strictest of ways. Many people would stand to benefit from this.

Using Bitcoin is a good thing

“Bitcoin is too valuable to be used as money.” That its value is going to go up and to the right forever and that I’ll regret having spent it.

But here’s another thought… If you don’t use it you lose it.

There’s a lot of sound money charlatans out there who want to boast their financial wisdom and expertise, yet swipe their plastic card at every turn when there is a perfectly good alternative that’s available to everyone everywhere right now.

While I do think precious metals are a better alternative to fiat, the issue that befell precious metals is the lack of circulation.

Currency is meant to circulate.

To circulate means there’s demand. When there’s demand, people will produce goods and services in order to receive the currency, and we start the process all over again.

Savings is one thing, but to “achieve adoption” the Bitcoin economy needs to circulate.

Adoption is already here

If there’s one thing that I hope people are able to take from this is the understanding that adoption is already here.

Someone that’s able to live entirely on Bitcoin, for one whole calendar year, without the need for a bank account, who is able to pay for goods and services using Bitcoin… If that doesn’t scream that adoption is here, I don’t know what will.

There’s plenty of merchants, vendors, businesses and individuals who accept and use Bitcoin daily. It’s not a some day… It’s right now.

It’s already here.

Conclusion

Now there’s been a few people who would say “you’re not really using Bitcoin because you’re having to sell it for fiat…” or that “unless it’s priced in Bitcoin, you’re not really living on Bitcoin…” “Bitcoin isn’t a good inflation hedge…” These are all idealistic semantic arguments. If you used Bitcoin to make a purchase of a good or service and the payment was accepted, you’ve used Bitcoin. When it comes to inflation, people are ultimately talking about price increases, not monetary inflation¹. There’s a difference.

Obviously, the world is not on a Bitcoin standard. Chances are, it might or it might not ever be. Who knows?

What I do know is that by having gone on a personal Bitcoin standard, I feel more secure about my financial wellbeing right now and in the future. I sleep better at night knowing what I have is my own and I can use it in anyway that I see fit without having to beg for permission.

It’s a life changing experience and I don’t think I’ll be going back to a fiat standard any time soon. If ever.

Try it

If you’re interested in getting on a Bitcoin standard, then challenge yourself to try it out. Maybe you do it for a day or a week. Gather your resources and make a plan, then set a goal to see what it’s like to go on a personal Bitcoin standard.

I’d love to know how it turns out!

Until next time!

1. https://www.hoover.org/research/inflation-and-monetary-policy