[edited out]
With most of the friends that I have talked to, this is the kind of narrative and explanation that they always throw at me. They have to wait for bitcoin to double its price so that they can also have double their money.
Of course, if you double your money based on price appreciation, then if you take out 50%, then you have taken out the totality of your whole investment, and so whatever is remaining in bitcoin is "house money," yet I am not sure if that is a good way to invest, especially in bitcoin.
There have been so many folks who have gone through several doublings, so then those doublings add up to quite exponential growths.
I outlined the power of compounding in one of my earlier posts, and so surely we can find that continuing to allow doublings and even 9 doublings would end up in 256x in profits.. so it becomes quite a great value to be able to have enough patience to experience several doublings.
The power of compounding.
There surely is a certain power to compounding. Let's imagine a hypothetical purchase of 20 BTC starting out with $5k invested in 2015... **(so that is about an average of $250 per BTC). It would just take a few of the compounding events to really start to feel the power of the compounding.. Even if you were to start to cash out 20% of your BTC stash after 10 or 11 compounding events, you would not deplete your BTC by cashing out in such a manner.
**this example was inspired by
my earlier post on the topic.
1) $250 to $500 = $10k (early 2015 to mid-2016)
2) $500 to $1,000 = $20k (mid-2016 to late 2016)
3) $1,000 to $2,000 = $40k (late 2016 to mid-2017)
4) $2,000 to $4,000 = $80k (mid -2017 to early 2020)
5) $4,000 to $8,000 = $160k (late-2017 to late 2020)
6) $8,000 to $16,000 = $320k (late 2017 to late 2022)
7) $16,000 to $32,000 = $640k (late 2017 to late 2024?)
8 ) $32,000 to $64,000 = $1.28 million (early 2021 to ?)
9) $64,000 to $128,000 = $2.56 million (Early 2021 to ?)
10) $128,000 to $256,000 = $5.12 million (?)
11) $256,000 to $512,000 = $10.24 million (?) (20 BTC) (otherwise if spending 20% reduced to about $8.192 million with a remaining stash of 16 BTC)
12) $512,000 to $1.24 million = $20.48 million (?) (20 BTC) (otherwise if spending 20% reduced to about $15.872 million with a remaining stash of 12.8 BTC)
13) $1.24 million to $2.48 million = $40.96 million (?) (20 BTC) (otherwise if spending 20% reduced to about $25.3952 million with a remaining stash of 10.24 BTC)
So think about it, if the BTC price gets to $500k, then this hypothetical holder starts cashing out 20% of his stash each time the BTC price doubles, he still is allowing the stash to grown more than the amount that he is cashing out. You can work out the raking numbers with a
spreadsheet that I developed and discussed in another thread which
fillippone has also linked a google spreadsheet to it so that you can plug in your own numbers to see how the compounding and raking works out with various numbers plugged therein.
Here is an excerpt / example of a similar but later posted description of compounding (For clarity, I edited the below post)
So, let's look at the historical numbers and the timeline from 2015 to present again.
0) $250 (2015) 1X
1) $500 (2015-2016) 2X
2) $1,000 (2016-2017) 2X * 2 = 4X
3) $2,000 (2017) 4X * 2 = 8X
4) $4,000 (2017-2020) 8X * 2 = 16X
5) $8,000 (2017-2020) 16X * 2 = 32X
6) $16,000 (2017-2022) 32X * 2 = 64X
7) $32,000 (2021-2023?) 64X * 2 = 128X
8 ) $64,000 (2021-?) 128X * 2 = 256X
9) $128,000 (?) 256X * 2 = 512X
You can likely see that if you are shaving off profits at the earlier stages, then you are going to eat into the compounding (and/or exponential) component in regards to how your value would have had grown through that period of time.
So in this particular factual example the guys who bought in 2015 and had a base of $250 per BTC and who did not sell any of their BTC, they would have had experienced 8 doublings that would have brought their holdings up to 256x for a short period of time during the period that BTC was priced at more than $64k, and so then their amount of value would have come back down to 6 doublings when the BTC price dropped back down to around $16k (which would have been around 64x) and then now they are currently in the supra 7 doublings that would have been 128x when the BTC prices were at $32k, and they will be back to 256x once (or if) the BTC price gets back to supra $64k, and then if the BTC price goes above $128k, then they will get into the supra 512x territory..
I've said they're right but I get it when they're trying to win an argument over this thing because they're up for the altcoins.
Yep.. some guys are distracted into trading and others are distracted into shitcoins. I cannot proclaim to know, even though I tend to suggest to limit trading and shitcoining to less than 10% of the value of your bitcoin holdings (without cheating), and you are likely to outperform shitcoiners and/or traders, especially after a couple of cycles of investing into bitcoin.
I've explained to them that it's real with altcoins but they're more volatile than Bitcoin and they might not see that altcoin they are so optimistic with in the next bull run.
Personally, I've told them that investing in Bitcoin requires patience and treat it as their savings. Instead of saving in the bank and making the bank win, they should be the bank themselves and take that win. The limited of supply of Bitcoin wasn't hard to explain to them but I hope that they have realized that or even the newbies nowadays.
I agree that Bitcoin is a long term investment despite that I have saved some, I am continuing it and putting money where my mouth is trying to prove it because it works.
It takes a long time to build wealth, and so hopefully for your own good, you can stay focused... and hopefully you can persuade some of your friends to stay focused, yet you cannot really change people in terms of their inclinations, so many times I just suggest to try to lead by example, and maybe some of them might become persuaded to go down an investor and bitcoiner route rather than trading and/or getting into shitcoins, yet if they are at least able to limit their exposure to trading and/or shitcoins to less than 10% the size of their bitcoin investment then at least they can at least limit their damage in the event that they cannot resist the temptation to shitcoin and/or to trade.