The Value of Your Salary

With the value of your bitcoin stack going through the roof, possibly up or down more than your whole years salary in a single day, the true value of your job and what your doing with your days becomes a bewildering question. The bitcoiners conventional wisdom has been "don't quit your day job" but what are the numbers around it? As more and more OG bitcoiners fall victim to derangement syndrome we best find out how to tamper the psychological effects of rapid wealth increase with math.

The value of time is important for this calculation. Normally people use the interest rate to define this, you could generously use 3% at the moment. A simple calculation would be your salary / the interest rate ie 100k/0.03= 3.3 million.  Basically you would need this much money in the bank to collect the same amount annually as you would working.

A job is a little more than this though as the contract often doesn't end at the end of the year and you might realistically expect for the wage to be increase by the rate of inflation each year. If you do a good job you can reasonably expect to be able to hold onto your job for 20years or for the rest of your working life. The new calculation would be calculated like that of an annuity

"P = PMT x ((1 – (1 / (1 + r) ^ -n)) / r)". 

• P = the present value of annuity
• PMT = the amount in each annuity payment (in dollars)
• R= the interest or discount rate
• n= the number of payments left to receive

Lets also add in Inflation as discussed above and r = R-I

• i= the government inflation number

The present value equals the annual salary times the compounding sum of future payment divided by the interest rate minus the inflation rate. 

Here we get 

100k x ((1-((1/1(1+(0.03-0.058)))^-(65- age))/(0.03- 0.058)

= $2 million bucks

This is with generous interest and inflation numbers, they should actually be closer to zero. No wonder people are feeling a little bit trapped, because you would need this much spare cash to get out of the rate race. This figure goes up even further when inflation increases and the interest rate decreases and I would argue that it is a mechanism of modern slavery. As a bitcoiner however, you can begin to think about this differently. You may want to swap the interest rate number for the average appreciation of bitcoin versus the dollar. 

At 200% all of the sudden your job is worth a lot less. This brings the figure to $50k ie the value of a job is worth about 6 months of savings! 

If you want to be conservative you can change the return to 20% you get $496k something that is far more attainable. 6.05 bitcoin or just a little bit more than you need to gain genetic immortality. If you bought bitcoin years ago and held that could be just a slice of pizza. $6k USD at the all time high of 2013.

Any way we calculate it we can see that the value of your job, your regular salary, is reduced significantly once you hodling bitcoin. But what about stacking sats? If you don't have a job how do you stack more sats? These calculations ignore the value of your savings and assumes your sitting on a stack of coins and selling them as you need. Well that's another post altogether. Try putting 20-200% returns into your retirement calculator. It's parabolic.

$15k worth of bitcoin saved every year for the next 30 years comes with the 10 year historic bitcoin appreciation rate of 200% net you a cool bunch of zeros which will not even fit on the calculator. There is a number after quadrillion called quintillion. 

Even with 20% it comes to 17.8million

For those who are feeling deranged, converting your salary to savings in bitcoin can help keep the focus. In the words of Matt Odell, "stay humble, stack sats". It makes it more worthwhile to work.