What is the "Buy, Borrow, Die" Bitcoin strategy?

*** Let me explain it in this short, but complete essay.

Introduction

The "Buy, Borrow, Die" (BBD) strategy, popularized in the realm of traditional finance, is now being adopted by long-term Bitcoin (BTC) holders ("Bitcoiners") as a means to maximize and transfer wealth.

This strategy leverages Bitcoin's historical appreciation in value to access liquidity without triggering taxable events from selling, ultimately allowing the asset to be passed on to future generations.

Understanding the "Buy, Borrow, Die" steps

1. Buy and Hold ("HODL") Bitcoin:

The foundational principle of the BBD strategy is to acquire Bitcoin and commit to holding it for the long term.
Bitcoiners believe that, despite its characteristic volatility and significant price fluctuations, Bitcoin's long-term trend points towards consistent growth and profitability.
They believe that holding through market cycles, even during sharp downturns of 60-80%, will eventually lead to a profitable position for investors.

2. Borrow Against Appreciated Bitcoin:

Instead of selling Bitcoin to generate cash, the BBD strategy advocates for borrowing against its appreciating value.
As Bitcoin's price rises, the holder's equity in the asset increases.
This accumulated equity can then serve as collateral for loans, providing access to funds without triggering capital gains taxes associated with selling.
This mechanism allows holders to tap into their Bitcoin wealth without incurring a taxable event.

3. Pass On Bitcoin at Death:

The final component of the BBD strategy is the transfer of the Bitcoin holdings upon death.
Because the holder has consistently borrowed against the asset rather than selling it, the Bitcoin position remains intact.
Upon the owner's death, these holdings can then be transferred to their heirs, who inherit the assets at their fair market value at the time of inheritance (stepped-up basis), potentially mitigating a large portion of capital gains taxes on the appreciated value accumulated during the original holder's lifetime.
This allows the accumulated wealth to be passed down through generations while minimizing tax burdens.
Important considerations and risks

Devils Advocate looks at this BBD Strategy

While the "Buy, Borrow, Die" strategy offers potential advantages, especially for long-term investors, it's crucial to acknowledge the associated risks and considerations:

Market Volatility:

Bitcoin's inherent price volatility exposes borrowers to liquidation risk.
If the value of the collateral (Bitcoin) significantly drops, a borrower might face a margin call, potentially leading to forced liquidation of their Bitcoin to cover the loan.

Counterparty Risk:

Utilizing lending platforms or exchanges to facilitate borrowing against Bitcoin introduces counterparty risk.
If these platforms face financial instability or security breaches, the lender's collateral (the Bitcoin used as collateral) could be at risk.

Regulatory Uncertainty:

The evolving regulatory landscape surrounding cryptocurrency, including Bitcoin, can introduce complexities and potential changes to the viability and implications of the BBD strategy in the future.

Estate Planning:

Effective estate planning is paramount to ensure smooth and secure transfer of Bitcoin to beneficiaries, addressing issues like access to wallets and private keys, as well as navigating any jurisdictional specific legal and tax implications.

Interest Rates and Loan Terms:

It's important to carefully consider the interest rates and terms associated with loans collateralized by Bitcoin, as these can affect the overall profitability of the strategy.

Last words

The Bitcoin "Buy, Borrow, Die" strategy, based on the principle of long-term holding and leveraging appreciated assets, offers a potential avenue for wealth accumulation and intergenerational transfer.
It's very important to understand and mitigate the inherent risks, particularly those related to volatility and counterparty exposure, are critical for a successful implementation of this approach.

The End

written by my hand

That's it in a short essay, reread it until you remember each detail and understand them.
This maybe the last financial plan you need to learn. All you need to know is work, buy Bitcoin, work Buy Bitcoin, and when you have enough start borrowing small amounts like 10-20% of your equity and then live off it or buy more Bitcoin.

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Bitcoin B.B.D. means Bitcoin Buy, Borrow, Die.