When people ask about my net worth, I describe it in terms of Bitcoin (BTC 3.53%), not dollars. This decision was an active and conscious psychological shift. As a Canadian, I grew up thinking of value in terms of Canadian dollars. But after being introduced to Bitcoin, I realized that there were tangible benefits for me in thinking of my net worth in terms of this cryptocurrency.
Net worth is not a single number. It is the ratio of your assets to the total amount of money in existence. With this definition in mind, it matters which unit of account (money) you choose to measure your net worth in.
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The problem with dollars as a unit of account
I'll describe the problem from the perspective of the ordinary Canadian dollar. The same thinking also applies to most fiat currencies, including the U.S. dollar.
In order to increase my net worth, I simply need to increase the antecedent (the first number) in the ratio. The problem with measuring my net worth in dollars is that the consequent (the second number) is increasing at the discretion of the central bank. When the supply of money in existence increases, my relative share of assets (net worth) decreases -- unless I increase my holdings faster. Trillions of dollars were created in the past couple of years. Thus, increasing my effective net worth in dollars would be pretty difficult.
Bitcoin's fixed denominator
Bitcoin as a unit of account has a fixed supply of 21 million. The supply will never change. This drastically simplifies measuring and increasing my net worth. In order to increase my net worth, I just need to increase the amount of Bitcoin I hold.
Bitcoin as the world reserve currency
I admit that Bitcoin is not currently the chosen unit of account for the world. That is currently the job of the world reserve currency, the U.S. dollar. Part of my investment thesis is that Bitcoin will one day earn that title and all values will then be expressed in terms of it. Bitcoiners have a term for this event: "hyperbitcoinization." Rather than valuing things in the world against an increasing USD supply, we'll measure against a fixed number (21 million). I'm currently 28 years old, and I believe that this will take place in my lifetime.
This choice increases my focus
As a result of this shift in my thinking, I've noticed something about my work ethic. When it comes to my net worth, I am trying to do one thing: go to bed with more Bitcoin than I woke up with. If I were chasing dollars, I would have to figure out what to invest them in after I received them. I would be distracted by trying to figure out the optimal place to park my dollars in order to defeat inflation.
I think Bitcoin is a reliable long-term store of value . Therefore, I can rest easy knowing that any Bitcoin I have is likely to increase in value over a long period. I don't have to figure out the best place to put it because it's already in the best place.
Saving time with Bitcoin
By decreasing the amount of time I think about investments, I have increased the amount of time I have to spend on everything else. Adopting Bitcoin has allowed me to become more of a long-term thinker. At the end of the day, three things matter most to me. In order of importance, they are time, health, and Bitcoin. If using Bitcoin as a unit of account results in my having more time, then it's a winning strategy.
