Get On Zero (fiat): 2024 Edition

 

 

 

 

 

Theory:


The #GetOnZero movement advocates transitioning entirely to Bitcoin, abandoning holding fiat currency in daily life. The goal is to maintain maximal exposure to Bitcoin while minimizing exposure to traditional fiat currencies. Proponents of #GetOnZero believe that by converting all their money into Bitcoin, they not only commit fully to the Bitcoin ecosystem but also protect themselves against inflation and other potential issues with fiat money.

 

While I wouldn't say there is much debate on exactly what qualifies as being "OnZero", there are definitely a number of different interpretations. Some may argue that truly being "OnZero" requires completely opting out of fiat rails, and finding ways to directly pay in bitcoin for all expenses. Personally, I take a slightly more relaxed view, simply pushing for the avoidance of fiat currencies and instruments as savings and investment vehicles, and keeping all our stored value in bitcoin.

 

While the value of being completely "OnZero" is apparent during periods of significant price appreciation against the dollar, I will be the first to acknowledge the potential losses that could result from holding to this strategy during periods of significant negative price action. To this end, I have created a 3-tiered system of strategies, with each strategy tailored to specific market conditions. I understand that the most zealous lazer-eyed #GetOnZero proponents, the strategies below may not align with their personal philosophy on what the strategy is supposed to represent.

 

Take what you will from the strategies laid out below, it is my intent to provide a systematic list of actions to be taken in different market conditions, in an attempt to make things more approachable to the average reader.
 


#GetOnZero Strategies:

 

Bull Strategy: Expenses on credit, income to Sats, sell once monthly to pay Fiat bills

 

Description: This approach involves using credit cards or lines of credit for all expenses throughout the month. Meanwhile, income is converted immediately into bitcoin (sats). At the end of the month, a portion of Bitcoin is sold to cover the credit card bill and any other fiat-denominated obligations.

 

  • Pros:
    • Maximizes bitcoin holdings throughout the month, allowing for potential price appreciation.
    • Credit cards can offer rewards that can further offset expenses or even be converted into sats.
  • Cons:
    • Requires a disciplined approach to avoid accumulating debt.
    • May expose you to volatility risk if bitcoin's value drops before the end-of-month payment.

 

 

Crab Strategy: Expenses on credit, reserve Fiat until EOM, pay bills, stack difference

 

Description: In this method, income is initially held in fiat. Expenses are paid using credit, but instead of immediately converting fiat to bitcoin, it is done at the end of the month, once all bills are paid. The remaining balance (after paying bills) is then converted to bitcoin.

 

  • Pros:
    • Provides a safety net against bitcoin price volatility during the month.
    • Ensures that all fiat obligations are covered before committing to bitcoin.

  • Cons:

    • May reduce bitcoin exposure if the price appreciates during the month.
    • Requires discipline to consistently allocate remaining fiat to bitcoin.

 

 

Bear Strategy: Fiat Buffer (aka: NotOnZero...)


Description: This approach involves maintaining a fiat buffer to handle any unexpected expenses or market volatility. While income is mostly converted to bitcoin, a portion remains in fiat to provide liquidity and flexibility.

 

  • When to use: This strategy may be appropriate in times of severe market uncertainty or for those transitioning gradually to the #GetOnZero lifestyle.
  • Pros:
    • Offers a cushion for unexpected fiat expenses, reducing the need to sell bitcoin unexpectedly.
    • Can be adjusted based on individual risk tolerance and liquidity needs.

  • Cons:

    • Reduces total exposure to bitcoin, potentially missing out on gains.
    • May require active management to maintain the buffer and adjust it according to changing circumstances.

 

 

Liquidity Considerations:

 

Bitcoin’s high correlation with global liquidity makes it a reliable barometer for macroeconomic conditions. According to recent analysis by Lyn Alden and Sam Callahan, bitcoin's price aligns with global liquidity trends in 83% of 12-month periods, demonstrating its sensitivity to central bank policies and money supply changes.​ (Bitcoin: A Global Liquidity Barometer)

 

Given bitcoin’s responsiveness, different #GetOnZero strategies may be effective depending on liquidity environments:

 

 

  • The Bull Strategy is ideal in increasing liquidity environments, where bitcoin's value is more likely to rise, and the individual can benefit from holding sats longer before converting.

  • The Crab Strategy is suitable for flat or slightly decreasing liquidity environments, as it provides a way to manage fiat expenses and avoid forced bitcoin sales during short-term downturns.

  • The Bear Strategy is a possible strategy for periods of sharp reductions in liquidity which have historically accompanied bear markets in bitcoin. It is specifically not being "On Zero", but that doesn't mean there might not be times where that itself is a good strategy.

 

The paper emphasizes that while bitcoin’s long-term price direction generally follows liquidity changes, short-term deviations can occur due to idiosyncratic events or internal market dynamics. Savers could monitor bitcoin-specific metrics like the Market Value to Realized Value (MVRV) Z-score to gauge potential overvaluation or undervaluation periods. This, combined with global liquidity trends, allows for more informed strategy adjustments​.

 

 

Pup's #GetOnZero Workflow:

 

So how do I live my life "OnZero"? Let's dig into it.

 

At present, my workflow most matches the "Bull Strategy", and I use Fold to make this an easy process.

 

Fold, (who is not sponsoring this), allows me to direct deposit my fiat paychecks and have them auto-converted to bitcoin. Within the app, I have 3 balances, A cash balance (Sutton Bank), a bitcoin balance (BitGo), and a reward balance.

 

 

I use credit for all my spending throughout the month, matching fiat expenses to various cards that allow me to get the most rewards for using them. My paychecks are direct-deposited to Fold and auto-converted to bitcoin where it is held until the end of the month when my fiat bills are due. At the end of the month, I utilize Fold's "Push to Card" feature to sell the exact amount needed to make my fiat payments where it then appears ~10 minutes later in my cash balance. 

 


From there, its just a matter of paying my fiat bills via ACH, at which time Fold actually gives me sats back as rewards!

Additionally, Fold has partnerships with a number of companies and offers sats back on giftcard purchases. I will take advantage of these deals on occasion when the rewards exceed what I would earn from putting expenses on a credit card and paying it via ACH.

 

This section has ended up sounding way more like an advertisement than I intended, but I really can't recommend their services enough if they are available where you live. Fold greatly simplifies my Bitcoin life by bridging the worlds of fiat and bitcoin.

 

I know some may take issue with holding sats with a custodian, personally I just keep about a month of expenses there. I wholly recommend keeping your bitcoin in cold storage, but I can accept some risk on a small portion of my sats for the convenience it brings to my life. Between the option of keeping 1 month of expenses with a custodian in fiat, or in bitcoin, I'll happily choose the latter, but these are risks and tradeoffs that I have chosen to accept after doing my own research, and I would implore you to do your own research as well.

 

To bring this all to a close, I hope you have found this article informative, or at least entertaining. Feel free to reach out if you have any questions about anything I have discussed here!

 

 

Block 866568 - MSK 1458

 

 

Digging Deeper:

 

Hey there, I hope you enjoyed this read! If you did, and would like to read more of my barks, follow the links below!

 

External Resources:

 

 

...Woof!