Gijs Heerkens

Digital scarcity 💰

Gijs Heerkens

Bitcoin was invented in 2008 and launched in 2009 by a pseudonym called Satoshi Nakamoto. I have followed its developments from the sidelines, even before I started investing in stocks to retire early.

Back in 2019 I wrote about FIRE (Financial Independence Retire Early), a strategy of extreme savings and investments that allows you to retire early in life.

The FIRE movement mainly focuses on investing in stocks and especially index funds, assuming an average annual return of ~7%. The premise is that your investment portfolio should be worth 25 times your annual expenses, so you can live solely off small withdrawals from your returns.

I’m following this strategy ever since and made 16% returns in almost two years, keeping me on track to retire early at the age of 54.

But in the meanwhile, Bitcoin has become so bullish that I started a parallel strategy I like to call AFIRE (Accelerated Financial Independence Retire Early).

With Bitcoin I expect to reach financial independence in a few years. For this, there is no need to own as much Bitcoin as you might think.

I joined the bandwagon with Bitcoin’s price surge in 2017. It’s a classic mistake to buy high and sell low but in retrospective it wasn’t that bad.

Bitcoin is too volatile for many people, but when you zoom out you’ll see it steadily grows in the long run. Always think long term.

My fellow Dutchman Plan B created the Bitcoin Stock-to-Flow (S2F) model where he uses scarcity to quantify its future value. This model works like clockwork.

Bitcoin has an average annual return of 200% since its launch in 2009.

It’s the first scarce digital asset ever. By design, only 21 million Bitcoin will ever be mined and most of these already have been.

Every four years the number of Bitcoin produced by mining halves, boosting stock-2-flow. This keeps on driving up the price.

That becomes even clearer when you look at the S2F chart on a linear scale:

We are still at the beginning. If you think you’ve missed the boat by now, look at the chart again.

In addition, there are Bitcoin wallets that offer generous interest rates. At BlockFi, I get 6% interest on it at the moment. This paves the way for AFIRE, living solely off small withdrawals from returns on my Bitcoin.

When I need €600k of fuck you money, like in the example I used before, I’ll become AFIRE in ~5 years by owning as little as 0,1 BTC. I own more than that, so I expect to retire before.

I don’t think there is a need to aim for owning more than 1 Bitcoin though. 1 Bitcoin is enough to be able to live generously off small withdrawals from my annual returns until eternity, as this asset will be worth millions of dollars.

I think aiming for more is being greedy at this moment. Let’s leave those coins available for others, there will be only 21.000.000 created eventually so let’s share the success. I’ll invest the rest in other assets such as real estate, gold and stocks.

My objective is not to give you financial advice or convince you of bitcoin, just to share my own strategy.

If you want to investigate if Bitcoin is for you, I’d advice to start reading the following sources:

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