In his brilliant book, “The Bitcoin Standard”, Dr. Saifedean Ammous discusses the differences and importance of high vs. low time preference. Someone with a high time preference is focused on their wishes and desires in the present and the immediate future, while someone with a low time preference places a higher value on items such as goods, services, or assets to be received in the future.
For example, a high time preference individual who is hungry will eat the first available food they can find. Many people can relate to a situation at a restaurant that serves chips and salsa. If you have a high time preference, and you are hungry, you are likely to eat as many chips as you can until you feel satiated, even if this means that when your meal eventually arrives, you are already “full”. Someone with a low time preference will resist the urge to eat too many chips before their more nutritious and healthier food arrives, as they would rather feed themselves something more beneficial than fried corn chips.
High time preference and low time preference are present in so many aspects of our lives, and Bitcoin is no exception. Individuals with a low time preference tend to be savers and invest in their future. Alternatively, someone with a high time preference would be more likely to put that money into a car or boat that may bring them immediate gratification. Bitcoiners and long-term investors tend to have a lower time preference, but they also tend to have a serious weakness on the ultimate low time preference action and decision.
The ultimate low time preference behavior is focusing on the passing along of your estate to your heirs when you pass away. There is a great deal of focus within the Bitcoin community on saving and securing a better future for yourself. Unfortunately, these same future-focused minds tend to neglect what happens to their family and heirs after they are deceased. This is not unique to Bitcoin. Many people simply assume that they will not die prematurely or unexpectedly, and therefore do not plan accordingly. However, owners of Bitcoin (and other digital assets) have a greater need for a robust inheritance plan due to the private and sovereign nature of these assets.
When you have children, your priorities change drastically – from whatever they were, to providing for and protecting your family. There is no bigger purpose nor obligation you will have other than providing for and protecting your family. These two functions take many shapes, and there is not a need to detail them all here, but the irony of the situation is that your family will often need you more when you are no longer alive than when you are still living.
When you pass away, your surviving family will no longer be able to ask you for assistance, guidance, or wisdom. You will no longer be there to keep a watchful eye over them to guide them and protect them from harm. Therefore, it is imperative that you implement a strong inheritance plan. Once you have done this, you should also make sure to review, maintain and, if necessary, update it at least annually. This will ensure that when you can no longer physically be here to provide for and protect your family, they can still receive benefit from you. After all, the energy and work that you put into securing the future of your loved ones should be able to do just that.
A strong inheritance plan ensures that your family and heirs will not only have access to the assets you worked for and accumulated during your lifetime, but that they will be distributed appropriately to your heirs. The addition of Bitcoin and other digital assets complicates the inheritance planning process and the design of your individual inheritance plan. Your marital status is also a critical factor. If you are single or divorced, you will need one type of plan. If you are married, you must make sure that your plan accounts for the simultaneous death of you and your spouse.
Bitcoin and other digital assets need to be stored in the most secure manner possible. However, you must make sure that your storage plan also meets your other objectives and goals. One key factor is the proper balance of convenience and security in your storage plan. For example, a complex multi-signature wallet with multiple keys that are geographically dispersed and locked away may provide great security, but will it be accessible without you around? You have to provide your heirs with a detailed roadmap that they are able to follow to gain access to your assets. Therefore, your Bitcoin storage plan is an integral part of your inheritance plan.
When you take a step back and look at the situation, the ultimate low time preference activity is preparing your assets to never actually be used by you specifically. In fact, many people with a low time preference will end up using only a small percentage of their Bitcoin and other digital assets while they are alive.
Every year, a certain amount of Bitcoin will be lost to poor security procedures such as forgotten passwords, lost or damaged wallets and other mishaps. Additionally, well intended people will lose their Bitcoin and other digital assets due to poor inheritance planning. Sadly, this also means that some families will not only lose a loved one, but also much of their net worth.
You must prepare and plan for the ultimate low time preference action. Make sure to securely store your digital assets and have an inheritance plan in place that is fortified against single points of failure so that when you die, your Bitcoin doesn’t die with you.
Bitcoin Butlers can help you design and implement a strong inheritance plan as well as a secure storage plan for you and your family. For more help on this, please click here.