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- 🪴 Time is on your side
🪴 Time is on your side
Everyone wants you to get caught up in the agitation of war, inflation, and shortages. Don't take the bait.
Dave Birnbaum & Joe Lupo
March 22, 2022
Welcome to Bitcoin Roundup #4.
In times of uncertainty, sound money serves as a bridge to the future. This is illustrated by time preference, which refers to how much we value the present over the future. To better understand time preference, let's consider two fishermen alone on an island.
Facing the choice between catching fish or going hungry, Joe wastes no time and fishes with his bare hands. He consistently catches more than enough fish to feed himself for a single day.
The second fisherman, Satoshi, decides to spend half the day fishing with his hands and the other half constructing a fishing pole. Although Satoshi catches enough fish to survive, he doesn't catch as many as Joe... at least not at first.
Two weeks later, Satoshi has finished his pole, and he easily overtakes Joe's output. Satoshi now has time for other things. He uses this extra time to build a canoe, allowing him to catch even more fish in deeper water.
The lesson: By delaying immediate gratification and investing in the future, Satoshi's standard of living increases at an accelerating pace. This is known as having low time preference. Low time preference is the key to a happy life and a healthy society. People who HODL bitcoin put this value into practice.
NEWS
Fed raises interest rates 🍋
The Federal Reserve increased interest rates by 0.25% in a first attempt to curb inflation. Officials have stated that interest rates will increase throughout 2022, however they disagree as to how much. The Fed is faced with two bad choices: Allow inflation to continue unabated or risk causing a recession by making debt more expensive.
Self-custody continues to rise 💎🙌
The bitcoin supply available on exchanges dropped significantly. With nearly 14% less bitcoin available on exchanges than just 60 days ago, exchange supply has dropped to only 10% of the total bitcoin supply. This comes soon after Kraken founder Jesse Powell recommended that his users self custody, despite this advice seeming to cut against his company's financial interest. These developments are positive for bitcoin's decentralization and resilience.
Billionaire's biggest mistake? "Not buying bitcoin" 🎻
Billionaire venture capitalist Peter Thiel said that "The biggest mistake I made in the last decade was getting too late and too little into bitcoin." The entrepreneur has been outspoken about bitcoin and its value, last year describing it as "the last honest market we have."
Bitcoin adoption continues worldwide 🌍
As crypto donations flood in to Ukraine, the Ukrainian government enacted a law that officially legalizes bitcoin. Also, Texas Congressman Pete Sessions proclaimed strong support for bitcoin, stating "bitcoin aligns with American values and will strengthen the dollar."
Tom Brady helps unlucky fan with bitcoin 🧡
Last week, a fan purchased Tom Brady's "last" touchdown ball for a cool $500,000. The only problem? Brady announced his comeback less than a day later! In a classy move, the legendary QB caught wind of the story and gave the fan a full bitcoin, as well as a second bitcoin donated to a charity of the fan's choice.
HOW BITCOIN WORKS
Learn one key idea about bitcoin each week. This week:
Bitcoin is faith in the future.
The price of pretty much everything is increasing. Inflation incentivizes us to spend, rather than save, because our dollars will buy more now than they will buy in the future.
This logic of immediate consumption discourages people from investing in the future. Unfortunately, 70% of Americans live paycheck to paycheck, covering this month's bills and then spending a little bit on cheap fun while they can get it, rather than saving for the long-term.
The dollar being an inflationary currency encourages high time preference, which undermines delayed gratification and long-term thinking.
Conversely, a society built on low time preference delays consumption in order to save and invest in the future.
So how does this relate to bitcoin?
Bitcoin is a deflationary money whose spending power increases over time. This motivates people to think carefully about what they need to consume today, because they know that whenever they defer consumption, they win more spending power for their future selves.
This concept can be seen in many aspects of life: work out now, become fit later; read now, become more knowledgeable in the future; invest today become wealthier tomorrow.
Similar to Satoshi in the fishing example, sound money allows us to accumulate in the present to build for a better future.
Ready to get started with bitcoin? Coinbits is the best option. It's fast, safe, and free to create your account.
COIN CHECK
What is the meaning of bitcoin’s block height?
The amount of bitcoin in a given block on the blockchain
The amount of hash power used to mine a specific block
The number of blocks mined since the beginning of the blockchain
The number of blocks mined since the most recent halving
Hint: Coinbits was founded at block height: 504571
Check your answer at the end of the page.
ANSWER
3. The number of blocks mined since the beginning of the blockchain
That’s all for this week, folks! When you signed up for this newsletter, we promised to act as your personal guide and help you understand what’s happening in the world of bitcoin. What did you think of today’s newsletter? Reply to this email and let us know what you’d like to see more of.
Until next week!
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