How Bitcoin Lowers Time Preference and Allows You To Live a Rich Life

Bitcoin Lowers Your Time Preference

Time preference is a concept in economics that refers to how much someone values consumption in the present versus the future. You’ll often hear Bitcoin advocates exclaim, “buy Bitcoin and lower your time preference.” People with low time preference are more willing to defer consumption in the present for greater rewards in the future. People with high time preference, on the other hand, are more likely to spend their money now, even if it means sacrificing their future financial security.

Let’s dive into how Bitcoin can lower your time preference and make you a richer person!

Lower Time Preference with Scarcity

First, Bitcoin is a scarce asset. There will only ever be 21 million Bitcoins created, and this scarcity makes Bitcoin a more attractive store of value than fiat currencies, which can be printed at will by governments. This means that Bitcoin will retain its value over time, which encourages people to save it rather than spend it.

Every year Bitcoiners celebrate Bitcoin pizza day commemorating the first Bitcoin transaction. On May 22nd 2010, Laszlo Hanyecz paid 10,000 Bitcoins for 2 large pizzas at Papa Johns. While one can’t fault Mr Hanyecz for wanting a great pizza, this serves as an excellent example of how lowering your time preference with Bitcoin can yield great results. Those Pizzas at the current time of writing would be worth approximately $265,000,000.

Lower Time Preference With Decentralization

Second, Bitcoin is a decentralized currency. It is not subject to government or financial institution control, which means that it is not subject to inflation or other forms of currency devaluation. This makes Bitcoin a more reliable store of value than fiat currencies, which can be subject to wild swings in value due to government policies or economic events.

This might not be a big deal in a country like the US or UK where currencies are relatively stable. However, take a trip over to Lebanon and see the black market currency exchanges where everyday prices fluctuate wildly day by day and you’ll quickly see why the decentralized nature of Bitcoin lowers time preferences through the principle of decentralized storing of value.

Lower Time Preference with Efficiency

Third, Bitcoin is a global currency. It can be used to buy and sell goods and services anywhere in the world, which makes it a more convenient and efficient way to store and transfer value than fiat currencies. This convenience and efficiency makes Bitcoin a more attractive option for saving and investing, which can help to lower your time preference.

Overall, Bitcoin can be a powerful tool for lowering your time preference. By providing a scarce, decentralized, and global store of value, Bitcoin can encourage you to save your money rather than spend it. This can help you to build wealth over time and achieve your financial goals.

Personal Finance and Lowering Time Preference

Here are some additional tips for lowering your time preference:

Set financial goals and create a budget. This will help you to track your spending and make sure that you are saving enough money each month.
Invest your money in assets that appreciate in value over time, such as stocks, bonds, and real estate. This will help you to grow your wealth and reach your financial goals sooner.
Dollar cost average over time with your additional funds rather than trying to time the market.
Live below your means. This will free up more money that you can save or invest.
Delay gratification. This means waiting to enjoy the things you want until you can afford them without going into debt.

By following these tips, you can lower your time preference and improve your financial future.

Please read our disclaimer here regarding investment advice and risk. Disclaimer: This should not be construed as or relied upon in any manner as investment, legal, tax, or other advice. Please consult an appropriate tax or financial professional to understand your personal tax and financial circumstances. I may get compensated by some platforms mentioned below (because of referral links). Do your own research.