TLDR; Summary

This note introduces FITS (Financially Independent, Time Sovereign), a concept designed for bitcoiners as an evolution of the traditional FIRE (Financially Independent, Retire Early) movement. While FIRE has gained traction for enabling individuals to escape the "rat race" by accumulating wealth and retiring early, FITS redefines this goal under a bitcoin standard, emphasizing not just financial independence but also sovereignty over one's time.

Bitcoin’s unique properties, such as scarcity and resistance to inflation, position it as a superior asset for long-term wealth accumulation. Unlike FIRE, which typically relies on diversified investments in fiat-based assets, FITS leverages bitcoin's deflationary nature to provide a path to financial and time sovereignty. This document contrasts traditional FIRE strategies with the FITS method, detailing how bitcoin’s characteristics can be harnessed to escape fiat dependency and achieve a state where work is a choice rather than a necessity.

The note also provides actionable steps to get started on the FITS journey, covering everything from accumulating bitcoin through strategies like Dollar-Cost Averaging (DCA) to planning for withdrawals in a way that considers bitcoin's inherent volatility. By the end, readers will understand how to transition from merely surviving within the fiat system to thriving in a state of true time sovereignty under a bitcoin standard.

What is FIRE?

FIRE is abbreviated from “Financially Independent, Retired Early”. It’s a financial strategy and lifestyle adopted by many as part of the so-called FIRE-movement, where people aim to escape the rat race created by the fiat system.

At its heart, FIRE advocates for living below one's means by cutting unnecessary expenses and focusing on maximizing savings. Practitioners often strive to save and invest 50-70% of their income, leveraging frugality as a key tool. This disciplined saving is coupled with aggressive investing, primarily in low-cost index funds, to build a portfolio capable of sustaining them through the withdrawal phase. By optimizing both spending and income, FIRE adherents aim to accumulate sufficient wealth to retire decades earlier than the norm, shifting from a life dominated by work to one where personal passions and meaningful activities take precedence - without financial constraints. These concepts and approach to retirement were popularized by influential voices like Mr. Money Mustache.

While FIRE practitioners aim for similar goals as many bitcoiners, their means are not the same, nor are their methods. In both FIRE and traditional employment, work is often reduced to selling time for money—usually fiat currency that cannot preserve the value of one’s time. However, the underlying motivation for many seeking early retirement or bitcoin accumulation is the desire to achieve true time sovereignty, where one's time is no longer dictated by the need to exchange it for depreciating fiat.

Why FIRE?

People adhering to the FIRE movement principles aim to get out of the fiat rat race early. Their ultimate pursuit is to obtain financial independence, i.e. not being dependent on income from third party sources, such as an employer, or possibly even avoiding the need for self-employment.

While these strategies have proven effective for many, the traditional FIRE approach may not fully align with the principles that guide those invested in the bitcoin ecosystem. As we explore further, you'll see how the FITS (Financially Independent, Time Sovereign) method offers a fresh perspective tailored to bitcoiners, where financial independence is just the beginning of a journey toward true time sovereignty.

What is the “rat race” we refer to?

The rat race is the need for any person to stay employed to maintain the ability to pay for their livelihood: food, shelter, healthcare, … and to do so against a backdrop of ever-increasing cost of living and monetary inflation, where the fiat money system offers only a broken money that does not allow one to store their wealth over time. Hence, a race where we are all rats in a wheel, designed to keep us running as long as possible.

For most people, the rat race lasts until legal retirement age, at which point the financial dependency moves from an employment to a (combination of) legal pension, pension plans paid by employers throughout their working careers, and savings or investments. Depending on the country one lives and works in, the balance between these so-called pillars can be vastly different. In some jurisdictions, the legal pension can almost guarantee a reasonable living standard after the legal retirement age, while in other jurisdictions the legal pension is nonexistent. Then, one is entirely dependent on their own ability to save and store their wealth over time, even necessitating continuing the endless drag of working life well past reason. Commonly, inflation will eventually render even reasonable legal pensions a poor income and necessitate minimum savings in order to maintain the same living standard after legal pension age as before.

The rat race pushes us all to keep up with rising costs and inflation as a byproduct of fiat dependence. Both FIRE practitioners and bitcoiners recognize the importance of escaping this cycle, but their methods diverge—FIRE adherents measure wealth in fiat, whereas bitcoiners measure time and value in sats. Accumulating bitcoin is not just a financial strategy but a path to reclaiming time sovereignty—preserving and appreciating time as a scarce resource, free from the constraints of inflation and fiat currency.

With this we conclude the treaty of the first portion of the FIRE moniker: Financial Independence. The FIRE movement aims to reduce the remarked dependency and ensure one can be wholly independent of outside funding sources.

Now let us review the second part of FIRE: ++early retirement++, where financial independence is a clear requirement to retire before the legal retirement age.

What is retirement?

It must be noted that “retirement” as a concept is understood by most people as a withdrawal from the workforce, i.e. no longer selling time for money as part of any (self-)employment. It benefits us here to take a side-step and say a few words about work.

What is work?

We don’t mean the physics definition involving energy expenditure but rather the commonly used meaning in human language. Often work is used to refer to employment, i.e. a job. From Marriam Webster, work is defined as an “activity in which one exerts strength or faculties to do or perform something: … that a person engages in regularly to earn a livelihood”. Without work, no livelihood. We must work! Remember the rat race.

Roughly around adulthood, in most places in the world, one is expected to start contributing to society in two major ways; (1) through employment and spending time for the benefit of others in the community and (2) through taxation, such that government can decide for some pre-allocated percentage of the salary where to allocate this resource for the “common good” - hence the employee automatically losing control over the resulting wages for that percentage of their time spent. Note discussion of the true cost of taxation is outside of the scope of these writings. It does raise the question of work as a productive endeavor.

We pose that employment is (by design) not intended for the benefit of society; instead, it is for the benefit of the employer. Nobody will pay more than the value that was produced during the employment. There is a profit motive. All value produced is owned by the employer. One could claim that if companies persist, there must be a demand for their products or services. However, we would argue that the incentives do not often align between society and corporations, or their shareholders, either. In fact, many companies can go on - indefinitely on a fiat monetary system - as a so-called “Zombie” company on cheap debt through stock and bond issuance, and credit lines. Such companies should have gone under in a free market, however government intervention (subsidies and taxes, preferential policy, price controls) cause manipulation of demands for goods besides the cheap credit. Shareholders clearly do not profit from bankrupt companies they own, so they rather see these monetary interventions.

Returning to the core position, for the employee, the only material outcome obtained from employment is the monetary reimbursement, not the effective product. This is not to say the job content cannot be (thoroughly) enjoyed by an employee - that would be the best case. The reality is that any job is simply selling time for money - usually, fiat money, unable to store the time and energy expended over time.

For bitcoiners, work is a means to build personal sovereignty rather than merely a way to survive within the fiat system. By focusing on accumulating sats instead of fiat, individuals can align their work with personal values and long-term goals, transforming it from a necessity into a path to freedom. This shift means that work becomes an investment in future time sovereignty, allowing them to eventually choose work as an optional pursuit rather than an obligatory one. This concept is further deepened in The Sovereign Individual. As a result, people could also transition to spending a smaller portion of their time for “work”, which in the rat race is very often not an option. Employees in full-time roles would prefer an improved work-life balance over salary - in other words, if financial obstacles would be removed - see this study by Aviva.

Does the FIRE movement aim to stop working?

While for some FIRE practitioners, the common definition of work and retirement indeed apply, it is our understanding that most FIRE practitioners do not necessarily uphold the same concepts of work and retirement. While indeed the aim is to no longer be occupied in a job, retirement is rather defined as a phase in their lives where they can focus entirely on creative, productive activities from which they stand to benefit themselves: the fruit of their labor, the personal growth obtained, or the satisfaction of seeing a certain task addressed. This is understandable: the goal of FIRE is to retire early, so there is lots of time ahead to spend on such creative, productive activities.

Indeed, often FIRE practitioners are naturally drawn to create value for the local community’s needs they are a part of, when money is no longer required to be on the table as a reward.

So here, then, is the conundrum. If you don’t stop working, are you technically retired? It seems to us the real underlying motivation is to become fully independent of others (sovereign) with regards to time expenditure. Hence, the proposal to drop the FIRE moniker and move over to FITS: financially independent, time sovereign.

Defining Time Sovereignty

It is often said “the only thing scarcer than bitcoin is time”. In other words, a bitcoin standard motivates one to become Time Sovereign, which implies upon retirement one can decide what to do with their time, no longer answering to any employer demanding them to fulfill tasks that do not align with their own benefit.

Hence it is crucial to stress the novelty of this over the traditional FIRE definition of retirement. We escape the rat race with the goal of owning our future time, besides our financial future. On a bitcoin standard, defining that future time as “retirement” is a conceptual gap that this introduction of FITS aims to close.

In other words, when one is Time Sovereign, it doesn’t imply one to retire (early), but rather to choose the work (and the amount of it) that you want to do. "Value" isn't produced without work, even subjective value. People who are actively engaged in producing value after retirement tend to thrive more than those who are passive or have no productive goals.

So, when considering retirement in the context of bitcoin, the human aspect of work is invigorated by recognizing the fulfillment it can bring, especially given the choice to spend time on the work is entirely one’s own, and the outcomes and benefits are for the worker themselves. Thus, the FIRE pursuit of creative, productive activities for one’s own benefit aligns well with a bitcoin standard where time sovereignty is the goal. A common trend among financially independent bitcoiners is the pursuit of endeavors that add value to others, driven by personal motivation rather than directives from an employer.

Having established that bitcoin is suitable for wealth building and obtaining time sovereignty, where this is the true “retirement” goal for bitcoiners, let’s dive into how bitcoin accumulation is the first simple step towards this goal.

Before we move on to the bitcoin standard and how FITS would look on one, let’s dig into the methods used by traditionalist FIRE practitioners to reach their goal.

The FIRE method

The FIRE practitioner will first accumulate wealth in order to live off the wealth during the withdrawal phase. Let’s explore these two phases and the general methods and principles used.

Accumulation phase

Live below your means and fast-track your career

The first important “method” of a FIRE practitioner is to drastically reduce their living expenses. Everything goes onto a budget and all items are critically reviewed for necessity. After scrapping all items not strictly required, items that persist are reviewed for alternatives; from cheaper housing, alternative mobility options, ….

Then, everything left-over is allocated to investments. Typical savings rates of 40-60% are not unheard of. This disciplined saving is coupled with aggressive investing, primarily in low-cost index funds, to build a portfolio capable of sustaining them through the withdrawal phase. As detailed in 'Your Money or Your Life,' this approach encourages individuals to carefully evaluate the trade-offs between time and money, pushing them towards a life less reliant on traditional employment.

This approach is a common topic of discussion in online communities like the FIRE subreddit. While FIRE practitioners typically diversify their investments across multiple asset classes, bitcoiners might view bitcoin itself as the apex store of value. In this way, a bitcoin-focused strategy simplifies wealth accumulation by reducing the need for traditional diversification.

Admittedly, very high savings rates may be mostly possible for people in lush FIRE circumstances: living with parents, co-housing, house-hacking, DINK, and/or dual-job WFH hacking. Note we do not wish to downplay these as possibly great ideas to accelerate FIRE, while acknowledging these may be severe sacrifices in living conditions not suitable for everyone. Then again, FIRE is not for everyone as it pushes the practitioner to extreme living standards.

Secondly, on the income side, the optimization is similarly made: side-gigs to augment income are common, and there is a general awareness in the community of the necessity for raises and promotions to raise the income pool. It is also common to continuously look for alternative employment options with the goal to raise the income.

In this context, it should be noted that it is not uncommon that the drive for high income will eclipse other items on a typical employee’s motivator wishlist such as meaningful work, recognition, autonomy, work-life balance or flexibility. Hence, it is not uncommon for burn-outs to occur during the FIRE trajectory.

In contrast to the above, those with a bitcoin inclination might instead prioritize accumulating bitcoin as their primary savings vehicle - we will dive in soon. Given bitcoin's unique properties as a deflationary asset, it offers an alternative path to wealth accumulation, potentially requiring less reliance on extreme frugality or career optimization.

Diversification is king in FIRE

The investment portfolio for FIRE is essentially a lazy one: diversify into “the world”. Maybe take 80% world ETFs, 15% emerging-market ETFs, and sprinkle in 5% of picked stocks or CrYpTo if you’re feeling lucky.

Since global markets capture global liquidity, this is not a bad strategy in a fiat world. Money printed inevitably seeks yield, return on investment. Often the so-called “Cantillon effect” furthers this reality: when a government seeks to stimulate a certain part of the economy, it may print money to subsidize a particular industry. When said industry obtains this money they can opt to invest in capital, equipment, people, or do stock buybacks. In any of these cases, the stock value will go up, hence correlating to global liquidity.

Secondly, if people (as opposed to companies) obtain direct hand-outs from government printing action, like stimulus checks, loan forgiveness programs, tax cuts or social programs, significant portions of these direct and indirect measures will also end up in bigger and smaller funds, again taking form as global liquidity and thus equity markets are directly affected.

Diversification is also touted as the way to go for FIRE since it simplifies the investment principle: buy “everything” and hold. Since global liquidity will go up, whether that money goes left or right, your portfolio is going up because you own a small percentage of everything. There is no need to study individual companies besides specific stock picks adopted mostly as a hobby. Diversification furthermore helps to sleep at night: global equities are not very volatile.

The FIRE “world wonders”: yield on yield and exponential returns

Time in the market beats timing the market. This common phrase is studied and applied within the FIRE ecosystem as holders are accumulating over a relatively long time period, typically 10-25 years, and remain invested throughout retirement.

So-called accumulating ETF funds do not pay cash dividends to investors but instead re-invest and further help grow the ETF fund value. This yield-on-yield incentivizes long-term holding.

Second, a percentage increase on a yearly basis translates to an exponential growth trajectory. Eventually, any such trajectory has a “doubling time”, which can be estimated by dividing 72 with the annual growth rate in %. For example, if an investment grows at 7% per year it has a doubling time of 10.3 years. This implies every 10.3 years, the investment would double.

The "point of no return" in the context of an exponentially growing investment refers to the stage where the investment's growth becomes so rapid and significant that the returns start to increase significantly beyond the initial investment. At this point, the compounded returns themselves become the primary source of growth, making the investment less sensitive to short-term market fluctuations or new contributions.

These two effects are often referred to as “world wonders” since for many starting out they are a discovery. Of course, they are nothing new and do require continuous growth to hold true. As the common disclaimer goes: results from the past offer no guarantee for the future.

In the context of a bitcoin standard, one might aim to live off the natural appreciation of bitcoin’s purchasing power instead, maintaining a steady bitcoin balance that continues to appreciate over time reduces the need for frequent selling, or eventually altogether for conversion back to fiat currency.

The principle of "time in the market", then, holds even greater significance. The mindset shifts from merely seeking exponential returns in fiat terms to focusing on the accumulation of bitcoin as a store of time. Stack sats, stack time. By accumulating bitcoin, you’re not just building wealth; you’re also securing more control over your future

Whether through traditional investing or bitcoin accumulation, the goal remains the same: escape the rat race. While FIRE focuses on doing so within the current system, bitcoiners seek a more radical departure by embracing a currency that defies inflationary pressures. For them, accumulating bitcoin is not just a financial strategy but a path to reclaiming time sovereignty, i.e. preserving and appreciating time as a scarce resource, free from the constraints of inflation and fiat currency. While FIRE adherents might still measure their wealth in fiat, subject to inflation, bitcoiners instead measure their wealth in sats and increase their purchasing power over time thanks to the power of absolute scarcity. This fundamental difference underscores the divergent approaches to achieving and maintaining financial independence.

Withdrawal phase

A variety of retirement goals exist for FIRE retirees. First and typical,the retiree would like to be able to live until their death without being forced to go back to work. Second, an estate target is often defined, where the retiree wants to leave something to children, family, non-profit organizations, or personal philanthropic goals.

In the modern FIRE movement, various "flavors" have emerged, each catering to different retirement goals and lifestyle preferences. Among the most well-known are LeanFIRE, CoastFIRE, and FatFIRE. These variations primarily reflect (1) the desired living standard after early retirement—FatFIRE, for instance, targets a more luxurious lifestyle, necessitating a significantly larger accumulation of wealth; and (2) the approach to transitioning into retirement. CoastFIRE, sometimes humorously referred to as "BaristaFIRE," involves gradually easing into retirement by maintaining part-time work, such as a barista job, while allowing investments to grow over time until they can fully support retirement. While we won't delve into all these variations in detail here, a good resource for exploring the more common ones is the blog post "Types of FIRE”.

Let’s now consider some typical risks that may occur during the FIRE withdrawal phase.

Sequence of return risk

Sequence of return risk denotes the risk that returns of the assets chosen for the portfolio are often not the same as the yearly average, that is, returns may be up one month, down the next, down another, before moving up again. If one downward move is exceptionally strong, you may have to withdraw much more than anticipated, leading to significant drop in future returns for that portion of the portfolio.

In case such volatile asset price actions are not part of your estimates, withdrawal periods may be significantly reduced and the retiree may face the consequences. We will revisit this topic later on a bitcoin standard, since, for bitcoiners, volatility is a way of life—as measured in fiat terms.

One-More-Year

A common pitfall is the uncertainty of when to start withdrawing from your portfolio and when to keep contributing to the portfolio. There are several reasons this could happen.

It could be due to poor planning (not actually meeting your target at planned date), perceived market downturn coming (bad time to start withdrawing), work addiction (remember we are pushing the career, step by step) or not having a plan for life after work (similar problem, different reason to stay on the grind).

As a result, FIRE participants often delay retirement well after the date they planned for. Some reasons are more valid than others. Good planning—with margin—and healthy work-life balance towards leaving the workforce are key to follow through on the plan.

Forced back-to-work

When already withdrawing, being forced back to work due to the risk of funds running out is devastating, and can occur when the withdrawal rate was chosen on the edge of “safe” in order to go faster.

Often, retirees at this point lack motivation, skills, and energy and may find their respective past companies or industry has moved on and they can no longer become active in their past employment without extra training. In this case, there is even the risk of having to take a lower-paying job and having to stay at it for significantly longer times until the portfolio value is safe from running out again.

This can happen when early in the withdrawal phase there is a significant market downturn or significant inflation that dilutes the value of retirement savings. Since FIRE supposes significant year-over-year real growth of the portfolio assets during the withdrawal phase as well, and where the “hockey-stick” yield-on-yield phase may have barely started depending on how fast people are pushing for early retirement, the first withdrawals are the most significant.

Unexpected future changes

Unexpected life events are problematic to plan for, because—well—they are unexpected. In case of, for example, family size increases, serious disease, and creeping increases in spending patterns over time, the risk exists that the portfolio may run out early.

For these listed reasons, from sequence of returns to unexpected changes, it is paramount to plan in a significant margin. A second general recommendation is to keep partial income during the start of retirement, for example a part-time gig or a job that is really engaging but doesn’t earn as much as the FIRE-accelerating high-earning job. Such a period can also allow the retiree to get used to being out of the rat race and adjust.

An alternative: the bitcoin FITS method

Introduction to FITS: FIRE on a bitcoin standard

First things first—why would a bitcoiner be interested in FIRE? Isn’t this all about separating money from the state and their ability to print more?

Well yes, of course. However, bitcoin remains a “number-go-up” technology and not only in $ terms but in purchasing power. Hence, whether “early retirement” of some sort or another is of interest, financial independence may inevitably dawn on your portfolio as time passes naturally. It is a race against the clock (another type of rat race?) to figure out what to do with your time once you reach time sovereignty.

Would the concept of retirement laid out earlier, as in non-work, be suitable on a bitcoin standard?

Specifically, in bitcoin, proof of work is a core concept, deeply ingrained as a value: do the work and prove you spent the energy before it will be valued. The same principle applies on a mathematical basis to the way bitcoin itself operates: compute the hash with a random number until you satisfy the difficulty requirement. If the network spends sufficient energy and time, the block subsidy and fees are awarded to the miner who shows the proof of work first. So would it be acceptable to just stop working a job?

It can be argued that this is a truly harsh and cold definition of work, where the human component is entirely removed and work is reduced to repetitive energy expenditure—very close if not purely aligned to the physics definition of work. As we have seen, a job could lead to fulfillment but is essentially selling time for money.

FITS accumulation strategy: building wealth with bitcoin

In the FITS strategy, the accumulation phase centers around bitcoin. Here’s why bitcoin is uniquely suited for this approach and how you can effectively accumulate it.

There are several reasons why bitcoin and bitcoiners are suited for FIRE and would be naturally drawn to the mindset.

First of all, bitcoin is NGU technology by design: as long as governments print fiat, bitcoin will appreciate in fiat terms. It is easy to appreciate that bitcoin could be a vehicle to become financially independent. It has outperformed all other asset classes in the past 15 years, and its fixed-supply property of 21 quadrillion satoshi (21M bitcoin) is mathematically set for infinite appreciation. This deflationary nature underpins the FITS strategy, eliminating the need for diversification and focusing on time sovereignty through bitcoin accumulation.

Second, we pose that as a money alternative, bitcoin has exquisite properties for true financial independence: it is a decentralized and permissionless currency that is censorship resistant. It is true property, a bearer asset that can’t be seized or blocked. It is available in any country its holder would travel to without jurisdictional interference. This is true independence; no brokers, no banks, no governments.

Unlike fiat currencies, which are subject to inflationary pressures and government control, bitcoin offers a fundamentally different paradigm. In a world where value is measured in sats, bitcoin’s growing acceptance as digital gold and its decentralized, censorship-resistant properties provide a compelling case for why it stands apart as the ultimate store of value.

Finally, bitcoin is money for the long haul. Bitcoin is known for the ability to “transport energy over time and space”, where the time aspect is especially important in FIRE. Each satoshi saved today represents time and freedom gained tomorrow, underscoring the belief that in a world of finite bitcoin, time sovereignty is within reach for those who choose to stack and hold.

Isn’t bitcoin completely contrary to the diversification principle?

Absolutely. Michael Saylor was famously quoted to have said “Diversification is selling the best chair you have to buy some chairs that aren't as good.” You only need one chair!

Alternatively, the key view that bitcoiners add to the portfolio strategy perspective is that globally the FIRE practitioners are solely trying to save money and using global equities as a vehicle for liquidity absorption to achieve this end goal. However, equities, real estate, land, bonds, and gold all have been monetized: some percentage of their capitalization has no bearing to the underlying value of the assets besides having no better place for people to store wealth. Thus, wealth flows to all these assets (including global markets) because there is no better alternative in the views of these investors.

Bitcoiners beg to differ: bitcoin is money. We no longer need to circumvent the issue of broken money and can instead rely on bitcoin as our single chair savings vehicle. Eventually, bitcoiners expect that bitcoin will demonetize all other assets; equities will fall back to their base value and appreciation rates not based on monetary inflation and government market meddling but instead good or bad business practices. Real estate can once again become buildings for people to live in, business to operate in, and communities to come together. Land can once again be owned by farmers to grow crops needed by locals, or locals could opt to own more land for this purpose at its marginal cost of utility. Bitcoin is the ultimate store of value, the single chair we only need one of. Eventually, when fiat dies, bitcoin can further be adopted as a medium of exchange alternative and grow into its third monetary role: unit of account.

If this sounds like utopia, it may be. It does not matter if bitcoiners are right eventually as long as we are directionally right. However, can a bitcoin-only portfolio withstand the test of time? What about volatility? Let’s dive in.

Handling bitcoin’s volatility

DCA for bitcoin accumulation

When it comes to accumulating bitcoin, especially within the FITS framework, adopting a DCA strategy can be an incredibly effective approach. Not only does it align with the low time preference mindset that is central to both the FITS philosophy and Austrian economics, but it also mitigates the psychological traps that bitcoin's inherent volatility can set.

Why DCA?

Dollar-Cost Averaging is a strategy where you invest a fixed amount of money into bitcoin at regular intervals, regardless of the price. This consistent investment approach reduces the impact of market volatility by smoothing out the purchase price over time. Instead of trying to predict market highs and lows—a nearly impossible task even for seasoned investors—DCA allows you to accumulate bitcoin steadily, capitalizing on both the highs and the lows.

Low time preference and DCA

The concept of low time preference is at the heart of the FITS strategy. In economic terms, low time preference means prioritizing long-term benefits over short-term gains. In the context of bitcoin, it means valuing the accumulation of satoshis over time rather than seeking immediate profits from speculative trades.

DCA is the perfect embodiment of low time preference. By consistently purchasing bitcoin, regardless of its current market value, you focus on the long-term accumulation of wealth rather than the short-term fluctuations in price. Over time, this strategy tends to yield a more substantial bitcoin stack, as it takes advantage of the market's natural ups and downs without the emotional stress of timing the market.

Volatility and the gambler's trap

Bitcoin's notorious volatility can draw out the gambler's nature in people, enticing them to try and "buy the dip" or sell during a peak. While these actions might occasionally pay off, they are more often fraught with risk. The temptation to time the market can lead to missed opportunities and significant losses, especially in a market as unpredictable as bitcoin’s.

DCA helps neutralize this gambler’s mindset by setting a disciplined approach to buying bitcoin. You remove the emotional component of decision-making, thereby reducing the risk of making poor investment choices based on short-term price movements. Instead of trying to outsmart the market, you let the market work for you by consistently investing over time.

Time in the market beats timing the market

The traditional investment adage, "time in the market beats timing the market," applies as much to bitcoin as it does to traditional assets. The longer you stay invested, the more likely you are to benefit from bitcoin's long-term appreciation, driven by its fixed supply and increasing global adoption.

DCA ensures that you're always in the market, steadily building your position regardless of what the price is doing on any given day. Over the long term, this strategy has historically proven to be more effective than trying to time the market. As bitcoin's price continues to rise over the years, your consistent investments made during periods of both high and low prices will average out, providing you with a robust and growing stack of sats.

In conclusion, DCA is not just a strategy; it’s a philosophy that aligns perfectly with the principles of FITS. It enables you to maintain a low time preference, avoid the pitfalls of market volatility, and focus on the long-term accumulation of bitcoin. By embracing this approach, you're not just securing your financial future—you're also moving closer to true time sovereignty. Remember, in the world of bitcoin, the key is not to time the market but to spend time in the market, steadily stacking sats as you go.

Why is volatility important to include in withdrawal projections?

Sequence of return risk is the risk an investor takes when withdrawing from their portfolio in sequential steps, where the price adjustments between one withdrawal and the next affect the purchasing power variations of the asset. When projecting a withdrawal strategy that does not include volatility, it assumes the appreciation between point A and point B follows a mathematical equation, while real markets move irregularly. This is especially true for bitcoin, where the scarcity is absolute and it should be expected significant supply or demand shocks continue to dominate the market.

Since sequence of return risks exist, a significant deviation in outcome or funding requirements can exist between a model that takes volatility into account and one that does not include volatility.

Usually an under-appreciated point, but sequence of returns can also affect the accumulation phase of somebody who wishes to execute a FIRE strategy, as usually a DCA-type strategy is targeted, which in this case also implies less purchasing power can be stored in bitcoin from one purchase to the next.

Bitcoin's volatility, while often seen as a risk, is embraced by many bitcoiners as the price of sovereignty. This willingness to accept short-term fluctuations for long-term gains aligns with the low time preference mindset that underpins both the FITS strategy in general and bitcoin's deflationary nature established earlier (Fidelity Digital Assets, 2020).

Will bitcoin become less volatile over time?

Bitcoin is absolutely scarce unlike any other asset, and it should be expected that significant supply or demand shocks continue to dominate the market.

As the issuance of bitcoin will grow asymptotically to reach 21M coins, a fixed number of coins will represent ever more purchasing power. Therefore, it is also expected that large holdings will gradually dissipate and be distributed over more smaller holders naturally, since holders of large coin quantities will capitulate to the progression of time: either coins are sold (taking profit in terms of purchasing power), passed on to weaker hands that will sell before their time (e.g. inheritance or gifts), or lost at the holder’s death without an inheritance plan.

For the latter case, it is important to note that lost coins are another unique aspect of bitcoin’s absolute scarcity; these coins can never be recovered, even over many hundreds of years. Lost coins effectively represent a purchasing power appreciation to all holders, unlike inflation in fiat where supply issuance represents purchasing power depreciation to all holders.

FITS withdrawal phase and modeling

Let us now review the withdrawal phase for FITS, on a bitcoin standard. First of all, in both FIRE and FITS, a variety of withdrawal strategies for Financial Independence exist:

A simple fixed withdrawal rate:

• This is a simple strategy that relies on Monte-Carlo modeling of historical stock market trajectories. The “safe withdrawal rate” or SWR is often quoted as the rate that “can’t go wrong”, as in, all Monte-Carlo iterations pass the requirements. Fixed withdrawals can be taken weekly, monthly, yearly… This is up to the retiree. Like Dollar-Cost Averaging (DCA) being a good idea for asset purchasing, DCA is also a good idea for withdrawing, as it takes emotion out of the equation and helps with peace of mind.
• Variable rate, adjusted based on actual market returns: This requires flexibility and the ability to reduce spending in critical market down-turns. It may allow for reduced average withdrawal over lifetime and may reduce risk of running out of funds early.
• Specific planned withdrawals for life events: As part of specific retirement goals, retirees could withdraw to enable life events, such as children’s weddings, education programs, or involvement in philanthropic activity.

It is hard, if not impossible, to predict exactly when the fiat system will fully cease to exist. Therefore, modeling bitcoin in fiat terms is key in order to understand when “enough bitcoin is enough” in the real time domain.

For the reasons outlined above, supply and demand shocks are expected to continue to dominate market behavior, and it seems a sound approach to model volatility, even—or maybe especially—when projecting for very long time windows (>30 years) over which withdrawal will take place.

Is volatility modeling possible?

Modeling volatility in bitcoin is not only possible but necessary for those following the FITS strategy. Unlike traditional assets, where volatility is often smoothed out over time through diversification, bitcoin's price movements can be extreme, driven by its fixed supply and speculative demand.

For FITS practitioners, embracing volatility is part of the plan, but it doesn’t mean flying blind. We have developed tools that can simulate many potential price paths for bitcoin, including statistical volatility, providing a range of possible outcomes that can help in planning withdrawals and understanding risk. These tools will be introduced in a later article.

Moreover, volatility should be seen as a double-edged sword—it can both drastically increase wealth and pose significant risks. Understanding how to model and anticipate these swings will empower bitcoiners to make more informed decisions about when and how to convert their bitcoin into other assets or spend it directly. We converge on the concept of "Stack sats, stack time," using time and volatility to one's advantage.

Statistical analysis in the context of FITS

In the FITS strategy, statistical analysis plays a crucial role in making informed financial decisions. Unlike traditional FIRE approaches that rely on the relatively stable growth of diversified portfolios, FITS must account for the unique and often unpredictable nature of bitcoin.

Key statistical tools include moving averages, regression analysis, and more sophisticated econometric models. Moving averages, for instance, can help in identifying long-term trends in bitcoin's price, providing insights into when it might be advantageous to hold or convert. Regression analysis can be used to understand the relationship between bitcoin's price and various macroeconomic factors, such as inflation rates or global money supply.

These tools, while rooted in traditional finance, take on new significance in the FITS strategy. The goal isn't just to maximize returns but to navigate the inherent volatility of bitcoin with a steady hand, ensuring that wealth accumulation aligns with the ultimate goal of time sovereignty. By using these methods, FITS practitioners can refine their strategies, making more data-driven decisions in a landscape that is as challenging as it is promising.

Withdrawal strategy based on borrowing against bitcoin versus selling bitcoin

Bitcoin’s properties enable it to be pristine collateral for bitcoin-backed loans. As the rich of the ages have known: don’t sell your assets but borrow against them.

This withdrawal strategy is not often discussed in FIRE, we believe mostly because it is not immediately available to retail investors to engage in lending practices with their common stock and world funds. Bitcoin, however, has seen a growing interest in institutional and peer-to-peer lending operations. Its instantaneous settlement, multi-signature control mechanism and transparent storage offers trust in both lender and borrower.

When planning for financial independence through the FITS strategy, one of the most critical decisions you'll make is how to approach withdrawals during retirement. Traditional FIRE adherents often rely on a systematic withdrawal of their diversified portfolio, typically selling off assets to generate income. However, the unique properties of bitcoin open up a compelling alternative: borrowing against your bitcoin holdings rather than selling them.

The power of bitcoin as collateral

Bitcoin, by its very nature, is designed to be pristine collateral. It is a bearer asset—like gold or cash—that requires no intermediary to verify its value. Its digital and decentralized structure ensures that bitcoin can be held securely in a way that is verifiable by anyone, at any time, and from anywhere in the world. This makes it ideal for use in collateralized loans, where the borrower puts up bitcoin as security for a loan and, in exchange, receives liquidity without having to sell their bitcoin.

This approach has several advantages:

1. Avoiding capital gains taxes: By borrowing against your bitcoin rather than selling it, you can avoid triggering capital gains taxes. This is particularly advantageous if your bitcoin has appreciated significantly since you acquired it. In many jurisdictions, selling an appreciated asset incurs a tax liability that can significantly reduce your net worth. Borrowing, however, is not considered a taxable event.

2. Maintaining bitcoin exposure: Selling bitcoin means losing exposure to its potential future appreciation. Given bitcoin's historical performance and its deflationary nature, holding onto your bitcoin could mean that it continues to appreciate over time. By borrowing against your bitcoin, you maintain your position and continue to benefit from any price increases while still gaining access to the liquidity you need.

3. Flexibility in repayment: Bitcoin-backed loans often come with flexible repayment terms, allowing borrowers to pay back the loan over a longer period or at their convenience, depending on the terms agreed upon. This flexibility can be particularly useful in retirement when income sources might be varied or irregular.

4. Leveraging low interest rates: As bitcoin-backed loans become more common, interest rates on these loans can be quite competitive, especially in a low-interest environment. Borrowers can take advantage of these low rates to access liquidity without depleting their bitcoin holdings. The loan’s interest may even be tax-deductible in some cases, adding another layer of financial efficiency.

5. Preserving wealth across generations: By holding onto your bitcoin and using it as collateral rather than selling it, you can more easily pass on your bitcoin to future generations. Bitcoin’s ability to be securely stored for long periods makes it an excellent asset for wealth preservation. Borrowing against it rather than selling ensures that your heirs can inherit the full amount of bitcoin, potentially benefiting from its continued appreciation.

Unlike traditional assets like stocks or bonds, which require complex brokerage services or custodial agreements to be used as collateral, bitcoin’s decentralized nature makes it inherently easier to lend against. The bitcoin lending market has grown rapidly, with a variety of options now available to retail investors.

Risks and considerations

While borrowing against bitcoin offers significant advantages, it’s important to be aware of the risks:

1. Margin calls: If the value of bitcoin drops significantly, you may face a margin call, where the lender requires you to either repay part of the loan or provide additional collateral to maintain the loan-to-value (LTV) ratio. This can be particularly challenging during periods of high volatility.

2. Interest costs: While borrowing can be more tax-efficient than selling, it still incurs interest costs. Over time, these costs can add up, particularly if the loan is not repaid quickly.

3. Counterparty risk: Borrowing through centralized platforms introduces counterparty risk—the risk that the platform could become insolvent, be hacked, or otherwise fail to fulfill its obligations. Decentralized platforms, while offering more transparency, also carry risks related to smart contract vulnerabilities or governance issues.

4. Regulatory uncertainty: The regulatory environment for bitcoin and related financial products is still evolving. Changes in regulations could impact the availability, terms, or tax treatment of bitcoin-backed loans.

For FITS practitioners, borrowing against bitcoin rather than selling it aligns perfectly with the philosophy of preserving time and wealth. By retaining exposure to bitcoin’s long-term appreciation, avoiding unnecessary tax liabilities, and leveraging the growing bitcoin lending market, you can maintain financial independence while preserving your hard-earned satoshis for the future.

This strategy, however, requires careful planning and a clear understanding of the risks involved. As with any financial decision, it’s crucial to assess your risk tolerance, conduct thorough research, and consider consulting with a financial advisor who understands both bitcoin and the FITS philosophy. When done correctly, borrowing against bitcoin can be a powerful tool in your journey toward time sovereignty and financial independence.

The future of bitcoin as a medium of exchange and unit of account

When bitcoin replaces the dollar, are price models useless?

As bitcoiners anticipate a future where bitcoin becomes the global standard of value—a scenario often referred to as "hyperbitcoinization"—the relevance of traditional price models can be questioned. If bitcoin becomes the dominant unit of account, what happens to the conventional methods of measuring wealth, particularly those anchored in fiat currencies?

In the FITS paradigm, the shift away from fiat-centric models is not just a possibility but an inevitability. Traditional price models, which assume a stable purchasing power of the dollar, become less useful as bitcoin ascends. Instead, the focus shifts to models that account for bitcoin's inherent properties: its fixed supply, absolute scarcity, and deflationary nature.

In a bitcoin-dominated world, new models will emerge, likely centered around the purchasing power of bitcoin relative to goods and services, rather than its price relative to fiat. These models will need to account for the steady increase in bitcoin’s value over time as it demonetized other assets. For FITS practitioners, this means that the ultimate goal is not just financial independence in fiat terms but a deep understanding of bitcoin’s role in a new financial order, where wealth is measured in time and sats, not dollars.

Driven by the principle that "1 BTC = 1 BTC," simplicity reigns: maintaining and growing one's stack of bitcoin rather than constantly comparing it to a depreciating fiat currency. This shift further cements the FITS philosophy, where the true measure of wealth is time sovereignty, not fluctuating fiat values.

Bitcoin as the global medium of exchange

As bitcoin transitions from a store of value to a global medium of exchange, its role as a unit of account will solidify. This transition is a natural progression in the adoption of bitcoin, reflecting its increasing acceptance in everyday transactions and its growing use as a means of exchange. Over time, as more goods and services are priced in bitcoin, the need for fiat conversions will diminish, and bitcoin will naturally become the reference point for value.

We are already seeing significant signs of this transition. A first country has adopted bitcoin as legal tender, while multiple countries are publicly creating a sovereign wealth fund or bitcoin treasury. Some first-world pension funds have started accumulating bitcoin—even if done through centralized institutions and ETF vehicles. A few companies are following in the footsteps of Microstrategy towards a bitcoin standard and are issuing equity with the sole purpose of strengthening the bitcoin treasury and expanding the amount of bitcoin each share represents, recognizing implicitly the true share value denominated in bitcoin is the true unit of account.

Several grassroots adoption areas exist in the world where bitcoin is effectively used as the medium of exchange, unit of account, and store of value: Bitcoin Beach, Bitcoin Jungle, and other enclaves.

References from prominent bitcoin thinkers like Saifedean Ammous, in The Bitcoin Standard, highlight how this shift mirrors historical transitions from one monetary standard to another. Much like the shift from gold to fiat currencies in the 20th century, the move to a bitcoin standard will redefine how we understand money and value.

Simplicity in a bitcoin world

This shift further cements the FITS philosophy, where the true measure of wealth is time sovereignty, not fluctuating fiat values. The simplicity of bitcoin’s fixed supply and its role as a universal unit of account allows individuals to focus on what truly matters: accumulating and preserving wealth in a form that is immune to inflation and political manipulation.

In a world where bitcoin is the standard, financial models will be simpler, more intuitive, and directly aligned with the reality of a deflationary currency. As bitcoin demonetizes other assets, the need for complex diversification strategies diminishes. The focus will shift to a straightforward accumulation of bitcoin, with the understanding that it represents not just financial security but sovereignty over one’s time and future.

A possible FITS journey and Getting Started

Your journey to true time sovereignty starts now. Every satoshi you accumulate today brings you closer to financial freedom and a future where your time is truly your own. Ready to take control?

In our case, we rolled straight from FIRE into bitcoin, read many materials on the matter and developed a strong conviction that stack sats, stack time is the way forward. It did not become immediately obvious that we were essentially correcting for some of fiat’s weaknesses using bitcoin, while coming to similar objectives—and being able to redefine those for what really matters. This is one example of a journey through FITS, although not intentionally planned. We are also not there yet. At least with this clear-headed understanding we can purposefully proceed on our journey.

What if you’re new to FIRE or bitcoin or both and you read this article—what can you do?

First of all, we recommend you take a step back and a deep breath: there is a lot ahead. Study FIRE and its principles, pull out the FIRE calculators, study bitcoin, and consider how much you are initially able to allocate to bitcoin—or whether you are all-in on the strategy and are ready to move away from diversified portfolios altogether.

Presumably the most important first step on the FITS journey is to start accumulating bitcoin. There is no bad answer; everything is better than holding fiat. A second step is to ensure you review what time sovereignty means for your day-to-day: what would your life look like and how would you decide to spend your time without anyone telling you what to do? Does that change your financial needs?

Then the long, hard, and arduous “hodler” phase begins, where you stack. There will be no lack of “FUD”---fear, uncertainty, doubt—public opinion that aims to create the volatility bitcoin is well known for. At the end of this, remember, you were not “lucky”, this was acrobatics. However, as you slowly begin to understand bitcoin more and more, you will be less and less looking at price with the same perspective: on a FITS standard. You will care about the purchasing power your stack gives you, not the fiat value of it. And you will use tools to project the value of the stack in the future—possibly ours. As mentioned, we will detail them in a later article.

Once the hodler inevitably reaches a stage where his stack is enough to be Financially Independent, Time Sovereign, he should have a good view of the withdrawal strategy and financial needs that must be fulfilled to support his sovereignty. At that point we will follow the FIRE tradition: “Congratulations, and fuck you!”

Remember, FITS is not about quick gains. It's about securing your future and achieving true sovereignty over your time. Stay patient, keep learning, and steadily stack sats.

In summary:

Step 1: Educate Yourself

Start by deepening your understanding of both FIRE and bitcoin. Read foundational texts like 'The Bitcoin Standard' and 'Your Money or Your Life' to get a solid grasp of the principles behind each movement.

Step 2: Set Up a Bitcoin Wallet

If you haven’t already, choose a secure bitcoin wallet. Research the best options for your needs, whether it’s a hardware wallet for long-term storage or a mobile wallet for everyday transactions.

Start with a basic bitcoin wallet to get comfortable with the technology. As you grow more confident, consider upgrading to a multi-signature wallet setup for enhanced security.

We recommend that you eventually graduate to a multi-signature wallet set-up, using advanced wallet set-up like Sparrow Wallet, using stateless signing devices such as SeedSigner, and having metal back-ups of every seed phrase, at least using something like Cryptosteel. Or for comprehensive multi-signature-QR-on-metal back-up, go to SeedHammer. However this is all up to your own level of confidence. Have a look at BTC Sessions on YouTube to see if he can help you out.

Step 3: Begin Dollar-Cost Averaging (DCA)

Initiate a DCA strategy by setting up regular, automated bitcoin purchases. Start with an amount you’re comfortable with and gradually increase as your confidence grows.

Ensure you back-up your private keys and you take the bitcoin off the exchange or platform where you buy bitcoin. Consider having each individual UTXO sized at least to 1 million satoshis under your control in order to ensure you can always transact on-chain even if on-chain fees rise significantly over time. Think of it as making sure your money is in large enough bills to be useful no matter when you will need it.

Keep some bitcoin in a lightning wallet so you can become acquainted with the technology and difference between lightning and on-chain bitcoin. BTC Sessions on YouTube is your friend once again.

Step 4: Track Your Progress

Use tools like the ones we’re building (more details will follow in a later article) to monitor your bitcoin accumulation and project future purchasing power. Stay informed about market trends, but remember to focus on the long-term goal of time sovereignty.

Step 5: Reflect on Time Sovereignty

Take time to visualize what true time sovereignty means for you. How would you spend your days if you no longer needed to work for fiat? This reflection will guide your financial planning and keep you motivated.

Worried about market volatility or not knowing enough about bitcoin? Remember, FITS is a journey, not a sprint. Start small, educate yourself continuously, and connect with communities that share your vision. You’re not alone on this path—there’s a growing network of like-minded individuals who believe in stacking sats and time.

Good luck on your journey: Stack sats, stack time!

More information

• Website: bitcoin.fits.money
• Community: