Post/stackingem

Stacking ’em Volume 20 (March 2022)

Posted on by Bitster Money Mustache

Grinding the fiat job for yet another month in order to stack some sats! As per usual, I scoop 500€ from the top to buy more bitcoin and live with the rest. This time the effective price was ~39900€ which means I got around 0.012 BTC added to the stack that stands at approximately 4.03 BTC today.

What a rollercoaster are we in. Invasion crash. Sanctions pump. ATH in rubles, not yet in USD. There’s been so many crashes during the past 12 months it makes me feel like we are literally trying to stay on top of this wild horse / raging bull and every time it kicks and jumps some poor souls are flying to the ground aka capitulating and selling their corn. The traders are obviously going rekt, but also some of the ‘holders’ are getting scared and losing confidence. I’m talking about my friend. One of the only ones I’ve ‘successfully’ orange pilled. Sold the bottom, is looking for a long war, some kind of war bear market, and hoping to buy back lower. Wrong mindset. He’s not gonna make it. Hopefully he didn’t sell all he had, but nevertheless will hold less bitcoin going forward. He has done the same mistake earlier and already holds less than he could have by now. He will do the same mistake again in the future. Learn from his mistakes.

Don’t trade.

Whatever kind of shit hits the fan: pandemic hysteria, Elon Musk tweeting, Russia invading, China banning, traders will always lose their shit and their lines on the chart can’t time these events. Hodlers will always be unaffected. Actually, hodlers will be thanking the traders for their cheap coins. Hodlers will be the ones always holding more bitcoin as the time goes by. Traders will be the ones always holding less bitcoin as the time goes by. Anagram for hodler = He, Lord. Anagram for trader = Retard.

The orange line is my BTC stack, the green line the corresponding fiat net worth. Seems to be bouncing back up. Let’s see how long until new ATH. The dashed black line is the total amount of money put in, about 29k € atm. It sounds like a big amount (and it is) but it’s spent during a long timespan of almost 4.5 years. Consistency is key. I can afford to buy with 500€ per month. You do what you can. And try to get a raise, or a better paying job, or start a side hustle. You can always stack more than you’re currently stacking. But the most important thing is: don’t stop. I was at zero gains (actually -15%) at the time of the Corona crash in March 2020. Could have capitulated and said fuck it, this Bitcoin thing is not gonna work. Some did, I would guess. And they must feel like crap now. Prepare yourself for many setbacks and promise to yourself to give it at least 4 years (one full halving cycle). Reassess after four years, if it was worth it and if you should continue. Also, keep learning. You are not simply investing your money, you are understanding something profound of this world. To understand Bitcoin is to understand life. And one does not capitulate on life.

The bars represent every bitcoin purchase I’ve ever made, once per month starting from October 2017, 54 in total. The best buys are currently more than 1000% in profit, seven purchases are currently at a loss ranging from -1% to -24%. On average, I’ve made +400% with every single purchase. The most recent 12 months are kinda flat as we’ve been more or less sideways since early 2021. Who knows how long its gonna last but make no mistake, its going to end some day. And you and me will look back and wish we could buy again with the current prices. So seize the day, stack ’em while you can.

The last chart is the performance of my BTC savings strategy (orange line) compared to a default savings strategy of buying S&P500 with a similar amount (blue line). BTC has given me +450% gains for the money put in, while S&P would have given me only +40% with a similar fiat input. BTC wins hands down, 10x performance as we speak, 100x some day in the near future. I truly feel sorry for the working men who’ve been busting their asses off while trying to save with the S&P (or god forbid some random bank product) not knowing there is the best savings technology known to man available for everyone who chooses to use it. But of course, you need to know about it to make that decision. You and me know it, let’s make our best effort in using it.

That’s all for now! Back to mining some more fiat, and I’ll be back to stack more sats in April. May your hodl be strong during these volatile times and may your stacking abilities be maximised.

Twitter: @RetireEarlyBTC

Affiliate links:

Buy Bitcoin here: Swan Bitcoin

Buy Bitcoin gear here: Coinkite

Post

How to lose your Bitcoin

Posted on by Bitster Money Mustache

This is not a comprehensive guide (yet). However, I plan to update it constantly (feel free to reach out with more ways to lose Bitcoin!). Someday, it may include all the different things you can do to lose your corn. Then, all you need to do is avoid all these mistakes! Let’s get started:

Trading

Can mean a few things. Some people feel the urge to sell their Bitcoin after a price pump. They wanna buy back with a lower price and end up with more Bitcoin. The problem is, you sell after a pump and the pump continues, leaving you forever waiting for lower prices that will never come. Or you sell ‘successfully’ but fail to buy back lower because you wanna wait for *even lower* prices and are left holding fiat. Or you can do all this ‘successfully’ one time, two times or even a few times, but then a time will come when you fail spectacularly and this one fail will set you back more than all your previous gains. Also, you record taxable events selling regularly. Also, you are not the only one who wants to have more Bitcoin. Everybody does. You are up against people with more resources than you. 99% of traders are losing Bitcoin. Most likely, you will not be in the 1%. Just don’t trade.

Another form of trading is taking a loan against your Bitcoin holdings and buying more Bitcoin with the loan – this is called a leveraged long position. Some people think they know Bitcoin won’t drop another, for example, 25% (depending on the amount of leverage) from a certain price. They then take this loan and buy more Bitcoin. They then wait for an increase in price and get more of the upside. However, they need to keep paying for the interest on loan until they eventually pay back the loan. And more importantly, *they all will be liquidated* in an event like we just had. An ‘unexpected’ price drop and now your borrowed Bitcoin plus your original Bitcoin will be worth just as much as the loan+interest you need to pay back. You will automatically be liquidated. You will be left holding zero.

Another form of trading is the buying of altcoins. Every day you see some coin getting more gains than Bitcoin. It’s a different coin everytime but nevertheless makes you feel its kinda easy to get some ‘cheap’ alts and wait for the gains to arrive at your coin of choice. But the thing is, you never pick the ‘right’ one. There are literally thousands of shitcoins and the ones that have pumped already are not going to pump again, and you have no idea what’s gonna pump next. Whatever you choose, it will be the wrong one and you will see other alts pump next to you. Also, immediately after you buy an altcoin it will start to bleed and your holdings btc-value will start to drop. You either hang on and wait for the pump (which may never come, or may not be enough to rise you above all the bleeding) or you take the loss and switch to another one. If you are very lucky and get a pump to your altcoin you will need to sell. If you sell too fast and the pump continues you will feel like shit. If you have the top but don’t manage to sell you will also feel like shit and possibly hold for the inevitable bleeding waiting for the top again to finally sell, but it will never come. Also, understand that you are not the genius making money buying hot alts. There are people on the inside of every single altcoin, that have gotten their coins with zero cost (premine beneficiaries). They have 1000x or 100000x the amount you have and at any price they will be on profit. They are the winners, not you. They will dump on you and everybody else. It’s just a matter of time. The HODL meme does not apply to altcoins. They are a hot potato and everybody needs to get rid. Stay away.

Seed phrase / backup

Seed is 12 or 24 words that you write down when setting up (most of the) wallets. If for whatever reason you lose access to this wallet you can use the seed phrase to regain access. Therein also lies the threat – so can anyone else. You type your seed phrase into your computer – a bad idea. You use a printer to print out your seed on paper – a bad idea. You take a photo/screenshot of the words – a bad idea. Someday when you least expect, after one of the aforementioned events your seed phrase will get into someone else’s contiousness and he will use it to empty your wallet. Always use a pen and paper (or a dedicated product) to write down your seed phrase.

But even then, if someone else (a visitor, your sons drunken friend, etc.) finds this paper you’re screwed. If someone throws away this paper (your wife, during moving, during cleaning, etc.) you’re screwed. You need to carefully think where to place it (so nobody but you can find it), and make multiple copies of it (so if one of the copies was accidentally destroyed, you’re not immediately screwed).

If you use Bitcoin core, you won’t have a seed but you will have a backup (copy of your wallet.dat file). Few things to take into account. First, you wanna have your wallet encrypted so that the file on itself is not enough to get access to your Bitcoin, you will also need a strong password (brute force safe). Be sure not to forget this password because that is a sure way to lose your Bitcoin. I recommend you try to regain access a few times as if you needed the backup. This will make the process memorable for you and help you in a time of need. Second thing: Have more backups than one. What if your USB-stick breaks down? What if your apartment burns in a fire? You don’t want to also lose your Bitcoin in such a situation. Have more backups than one and keep them in separate physical locations.

Download wrong software

If you like to use Bitcoin core (like I do) you wanna make sure the files are actually what you think they are and not malware that will steal you Bitcoin. Make sure to verify PGP signatures and SHA hash of the file with the help of this guide:

If you use a hardware wallet, you might get notifications to update your firmware. The thing is, sometimes the notification is fake and a scammer has found out your e-mail and that you have a hardware wallet. You then unsuspiciously download a new ‘firmware’ and the scammer steals your Bitcoin. Try to verify from multiple places that there indeed is a new version for the firmware and be very careful about where you download such a thing.

Be attacked in person

If you tell publicly (Facebook, Twitter, etc.) about your Bitcoin holdings, identity and location, there’s a chance someone will target you, break into your house and force you to drain your wallets. It might be rare, but it has happened. I struggle with this one slightly because what about the public figureheads then? The podcasters, the early Bitcoiners that go by their real name, the Bitcoin evangelists that surely hold significant amounts of Bitcoin. I guess they have taken their chances but for you and me, there is no reason to tell everyone you know and don’t know that you hold a lot of Bitcoin.

Worth mentioning is that certain hardware wallet producers gather and store name, location and Bitcoin amount data from their users. This data has leaked historically so be careful about what services you use requiring you to disclose your holdings / personal info.

Exchange hack

If you don’t take self custody all it means is someone else is trying to figure out the best way to store your Bitcoin. It might be convenient but you have zero control about what is gonna happen. It’s not once or twice an exchange has been hacked and all the user funds have been gone. It doesn’t even need to be a real hack. Maybe the exchange is operating at fractional reserves? There’s not enough Bitcoin for every customer and when you decide to withdraw, you will get an endless list of documents and verifications to send and perform. Then you will land at the end of their withdraw request line and need to wait for months to get anything at all. Maybe the exchange lets you withdraw only a certain amount and you will basically need to keep withdrawing many years to get your bitcoin out. Maybe your government makes a crazy new law and the exchange decides to be loyal to your government instead of you, the customer. With self-custody you have none of these problems, but of course, you yourself have the responsibility to not lose your bitcoin.

Giveaway scams

There used to be a lot of giveaway Twitter scams in the form of comments. A popular account tweets something and in the comments section somebody looking like the original tweeter comments like this: “send 0.1 BTC to this address and I will send you double amount back!”. Then, there will be many comments below praising and giving thanks. It worked, hallelujah and so on. These kinda comments are *always* scams. Nobody will give you their bitcoin. Everyone will want to have your bitcoin. Even, if the giveaway account actually is the president of US. Even then, you’re not gonna get any bitcoin back. All it means is the popular account has been hacked.

Nowadays, these scams are more in the direct messages and less in the comments. If somebody sends you DMs and tells you he can make your bitcoin grow on a trading plan, he is a scammer. Even if he ‘is’ your friend. Many people have been scammed by their so called friends with similar profile and name. In reality, a scammer. Hell, maybe he actually IS your friend but dumb enough to believe such trading strategy and wants to double your bitcoin with his ‘contact’.

Whatever the occasion, and person, nobody is going to give you more bitcoin. Everybody is looking to get your bitcoin. Everyone is a scammer.

To be continued..

-Mr. ERB

Twitter: @RetireEarlyBTC

Post/stackingem

Stacking ’em Volume 19 (February 2022)

Posted on by Bitster Money Mustache

Another month goes by, another salary hits the bank account, another bitcoin purchase! As per usual, I immediately put aside 500 euro bucks from my salary and market buy sats with all of it. The price this time was ~34700 €/BTC which means I got another ~0.014 BTC added to the stack that stands at ~4.02 BTC today. Already a good start towards the next .1 BTC taking into account it felt like ages (8 months) going from 3.9 to four full coins which finally happened only last month. I like to emphasise the amount of 0.1 right now because I feel like it is a realistic target for anyone starting to stack right now or who has recently started. Do whatever it takes to stack that 0.1 BTC, it will be a life changing amount and it is only gonna be the start for you. If you feel like you don’t have enough income to stack sats, you can always up your frugality, negotiate a salary increase, or even better find a new better paying job. Anyone can do this. There’s nothing special about your current job. You can also start a side hustle. Whatever it takes to stack them sats 😉

Weird price action recently. Well, I guess it’s nothing weird if you think we’re in a bear market. I, on the other hand, think we’re still in a bull market (though I always do, so don’t count on it). But actually, you could say it’s been a 1 year long sideways market: First from 30k to 60k (~1 year ago), then back to 30k (summer), then back to 60k (autumn). And now it was almost 30k again. What to make of it all? Stack sats, buy bits, compound corn, etc. You will look back to these times many years from now, the corn will be six figures, maybe seven and you think to yourself – why oh why did I not stack more when bitcoin was only 30k dollars? I know the feeling, I was there during 3k bitcoin and right now it feels like I should have done more. And before me, people were there during 300 $ bitcoin missing their chances thinking they were late. What I’m trying to say is

Everybody *feels* they’re late. Nobody actually *is* late.

So, seize the day and thank yourself later. Let’s take a look at the charts:

The orange line is my BTC stack (left axis), always increasing since there is no selling, only buying. The green line (right axis) is the corresponding fiat net worth in euros, in the long run going up, big volatility during the recent year. It’s noteworthy that even though right now it looks like the early stacking (2018 – 2020) was low volatility base building and only recently I’m ‘suffering’ from volatility, it was actually always the case and the volatility is nothing new. It’s the same effect as in the BTC price chart. The history is flat and then there’s a big recent hockey stick / crash. The dashed black line is the total amount of money put in, approximately 29k euros at the moment.

I added a red circle to show the ‘corona crash’ of March 2020. During that time I had already stacked 2.5 years, bought bitcoin every month, the total amount invested was more than 15k euros (biggest amount of money I’ve ever seen or had) and I was at a loss (-15%) for the total money put in. In hindsight, it doesn’t feel too dramatic of a situation but just think of starting to stack right now. You buy bitcoin every month for the next 2.5 years. It’s the summer of 2024 and you are now -15% for the money put in. How do you feel? Are you committed to continue stacking through this ‘failure’?

I’m not saying it will happen like this, but prepare yourself mentally for something similar. Bitcoin is going to test your faith. Just the way it is. Nobody gets a free ride.

The bars represent every bitcoin purchase I’ve ever made. Once per month starting from October 2017, 53 in total. The best buys were made during the bear market in early 2019 but I can say that I didn’t catch the bottom, meaning all of these purchases have been at a loss at some point in time. Also, there were many TA ‘specialists’ (Murad for example) calling for another -50% from these prices. There will always be people calling for lower and lower prices. And many people will listen to them leaving themselves on the sidelines and finally buying with 2x – 10x prices compared to what they could have. So, don’t try to time your buys, focus on earning money and your ability to keep buying with whatever the price is going to be.

The orange line is the performance (gains for the money put in) of my bitcoin savings strategy. The blue line is the standard (and poor) savings strategy of putting it all into S&P500. I wanted to make this comparison because I used to read a lot of early retirement / financial independence blogs (MMM for example) and those guys always only buy S&P because it’s the best way to get nice hassle-free performance for your savings. I felt like I had found a better savings technology and wanted to find out just how much better it is. The latest numbers show my Bitcoin savings strategy has given me ~390% gains for the money put in whereas S&P strategy would have given me only 44% gains for the money put in. So roughly a 10x difference, which is going to be even more for bitcoins advantage as the time goes on. Choose your savings strategy wisely.

The last chart is a comparison between MSTR stock and GBTC. I started to track these prices at the time when MicroStrategy first announced that they had bought almost 40k bitcoins. I thought their stock would start to perform basically in tandem with the bitcoin price. During that time the most popular way to get Bitcoin exposure for traditional stock accounts was via GBTC so I started to compare the two with a hypothesis that MSTR might be the better bet. Now, ~18 months later they are basically at an identical point (gains wise) though MSTR had many periods where it was at substantially higher gains. I’m not sure if I’m gonna continue with this comparison since it seems they indeed are making very similar performances. Though its’ kinda funny that MSTR now holds 3x the amount of bitcoin than they used to at the start of this chart. It’s not visible, should I say, at all in the chart.

That’s all for now! Hope your 2022 has started on the right tracks and I hope your year will end with more sats than you currently have.

-ERB

Twitter: @RetireEarlyBTC

Ps. Every time I post somebody asks me where I buy my Bitcoin. I can say that I will not disclose it as I don’t wanna endorse the (local) company that used to be Bitcoin only but now also sells shitcoins. However, if you’re gonna buy from somewhere I can at least try to direct you to a great Bitcoin only exchange.

Referral link: Swan Bitcoin