The Bitcoin lottery or hedge (Part 2)

image by Elena Mozhvilo

This is a follow on article, I’d highly recommend that you first read - How do the top 1% stay in the top 1%?

In that article, to summarise, we cover:

• highlevel Credit Suisse global wealth report numbers

• pyramid of 4 global wealth categories

• how the top top category, 1.1% of the population controls 45.8% of the global wealth and top 2 combined - 12.2% of the population controls a staggering 84.9% of all the global wealth

• how the top 1% stay in the top 1% - they hedge for all outcomes

• how many oz of gold are required to remain in the top 1% should we go back to a gold like or sound money standard when our fiat systems fail (why - because they always do fail in the end)

If you missed it - the magic number is 14oz of gold (per adult) to stay in the top 1%.

This got me thinking about Bitcoin, which is often compared to gold as a store of value type asset and I’m sure you will see from previous blogs, post and tweets - both are equally important as a hedge against:

• money printing (or what ever you want to call it - same outcome)

• inflation targeting (policies designed to destroy your wealth over a short period of time)

• negative yielding bonds (more theft and logically it’s nonsensical - no sane person would ever lend money to others and pay them interest too).

So the question I’m going to try and answer here is how many bitcoin (BTC) would you need to stay in (or join) the top 1%?

Obviously the assumption is that neither fiat money or a gold standard survive and we move to a pure bitcoin standard where all the world’s wealth is backed by BTC.

This article is not about getting the exact mix of fiat, gold and bitcoin - its more about what the 100% BTC hedge would look like. At some point in the future, I will do a part 3 to this series with some calculations based on different probabilities i.e. 50/50 mix of gold and BTC or a 33% mix of Fiat, Gold and BTC.

When it comes to gold this is a moving target as more gold is mined each year, however the amounts we are talking about would not be material and when performing the same calculations for BTC, there are important points to factor in:

• not all 21 million coins are available at present (i.e. not all have been mined)

• and some are lost forever (approx 3.7 million) - more of this here if you are interested

So with this in mind we have done the calculations based on 17.3m Bitcoin in total. If you take all the adults in the world (5.23 billion), that comes to only 0.0033 BTC available per adult. If you divide the total world’s wealth ($418 trillion) by 17.3m BTC - that a staggering $24.16million per coin.

To either stay or join the top 1% you will need to own 0.0414 Bitcoin (per adult)

At todays price (~$33.4k) thats about $1383 (1164 Euro or £995) worth of BTC per adult to hedge yourself against FIAT. Put differently, you could see it as a lottery ticket to join the world’s elite. The question for you is if you think its worth taking the hedge or ticket for 0.0414 BTC - I know what I’d do.

DISCLAIMER:

This publication is general in nature and is not intended to constitute any professional advice or an offer or solicitation to buy or sell any financial or investment products. You should seek separate professional advice before taking any action in relation to the matters dealt with in this publication. Please also note our disclosure here

How do the top 1% stay in the top 1%?

image by Geoff Brooks

I recently came across a very good video on YouTube put together by “belangp” titled “How Much Gold do you Need to Protect Your Wealth?”. I have included a link to the video below this article if you are interested.

The video basically explains how the world’s wealth is distributed among the world’s population. The analysis is based on the Credit Suisse global wealth report numbers published in June 2021. Global wealth is split into a pyramid of 4 categories:

• Greater $1m

• Between $100k and $1m

• Between $10k and $100k

• Less $10k

What is amazing is how much wealth is in the top category (45.8% - $191 trillion) and how few people there are in that category (1.1% of population or about 56m adults).

The top 2 categories combined, 12.2% of the global adult population (639m of 5.24b) control a staggering 84.9% of all the global wealth.

Here is a view of the pyramid:

So back to the title of our blog - How do the top 1% stay in the top 1%? The answer is -

“They manage risk better and they cover their bases. In other words they hedge themselves for different outcomes”

The second part of the video explains how the wealthiest people in the world calculate how much gold they would need to stay in the top 1% should fiat currency fail.

I’ll let you watch the video on your own, but based on the total global gold (approx 6 billion oz) it would require ~14oz to stay in the top 1%. At today’s prices (~1800/oz) that’s about $25200 which will be revalued to $1million should we go back to a gold like or sound money standard. The secret is, the top 1% have taken this hedge for themselves and their partners to ensure that should things change, they are perfectly positioned.

DISCLAIMER:

This publication is general in nature and is not intended to constitute any professional advice or an offer or solicitation to buy or sell any financial or investment products. You should seek separate professional advice before taking any action in relation to the matters dealt with in this publication. Please also note our disclosure here

How Much Gold do you Need to Protect Your Wealth?