According to Money Magazine, 70% of wealthy families have typically lost their wealth by the second generation, and 90% have lost their wealth by the third generation.

Furthermore, 78% of wealthy families feel their next generation isn’t financially responsible enough to handle inheritance.

Full article here

Will wealth retention be higher, lower, or the same among Bitcoiners in a few generations?

Will Bitcoiners feel differently than today’s wealthy families about trusting their kids to manage their wealth?

There are a lot of contributors that could raise or lower these numbers including inheritance taxes, custody solutions, privacy solutions, and more…


To a first approximation it will probably be pretty similar.

However, I think because Bitcoiners tend to have low time preference, and that's a heritable trait, future generations are less likely to squander it.

21 sats \ 4 replies \ @krOP 26 May

is low-time preference really a heritable trait?

Heritability can be either genetic or learned, and there is good evidence for a genetic component.

21 sats \ 0 replies \ @krOP 26 May

that’s fascinating, thanks for sharing that link!

I would suspect that it is mostly learned, but can be taught to children who are reared the right way. My parents and their parents were both low time preference, and they have passed that on to me through their teaching.

That's in line with the study. It found about a quarter attributable to genetics.

This is perhaps a really cynical way to look at it, but if families keep their wealth in bitcoin, they should retain wealth better through the generations simply because they can avoid government interference through taxes. The most obvious would be capital gains taxes and inheritance taxes, but wealth taxes can't be too far down the road. There are two obvious methods of avoiding these taxes:

  1. Boating accident
  2. Relocating to nations with more favorable tax policies
81 sats \ 3 replies \ @krOP 26 May

yeah i believe inheritance taxes are a big reason for the big wealth retention losses.

however, bitcoiners have a unique issue to worry about in key management.

poor planning there could take a family’s wealth to zero in an instant.

Are you thinking about something like Liana wallet? It makes sense. I haven't taken the time to consider all this stuff. No grandkids yet. Maybe after next halving I'll get motivated when the number goes crazy. For now I'm just thinking about stacking.

i mean that many bitcoiners may be single points of failure for passing btc along to their kids… and that’s something that people with wealth stored in other asset classes don’t think much about.

I guess you're right. I imagine that rich families have always had a safe somewhere in the house where they kept their gold. I just assume they'll squeeze in one or two of those steel seed holders.

  1. Be a sovereign individual, wherever you are/live and say to any taxman FUCK OFF.

Then again there is always this approach 🙂

With Bitcoin you can program your wealth to be locked for as many years as you want using a Timelock.

You could say for example that the next 4 generations (over say a 100 years total) will each receive a part of your current stack.

And of course Bitcoin will appreciate a lot over the years so you could unlock 50% of your stack for your children, 25% for your grand children, 12.5% for your grand grand children...

There’s an old Chinese saying, 富不過三代, which means wealth do not pass more than three generations. Its origin is from the longer saying:

Passing on morals in the family, lasts over ten generations; passing on farming and education lasts shorter; passing on poetry and literature lasts even shorter; passing on wealth, does not last more than three generations.

I think this aligns with the four turnings theory (aka Strauss-Howe generation theory) where it’s summarized as:

Bad times create strong men Strong men create good times Good time create weak men Weak men create bad times

I believe this to be a human nature problem and cannot be solved with a sound money like bitcoin. We as humans are very adaptable. When things are tough, we also become tough and strong; but when things are easy and comfortable, we become soft and weak.

I don’t believe human beings have yet to figure out a way to solve this problem. That is why every empire in history have fallen, and every future empire probably will also fall.

And maybe that’s not a bad thing, because it allows for redistribution of wealth towards where it can be most efficiently used. Let wealth be redistributed to those who are hungry and strong.

I tend to agree with this. Of course there are notable exceptions through history: The Medici, the Rothschilds, the Rockefellers. Some would stick the Kennedys in that group, but I wouldn't.

These families also bear truth to the adage that every great fortune begins with a crime!

The three generations thing is probably more of an observation over time and definitely not a golden rule. There are of course exceptions to this observation as you pointed out.

That said, as observed through history, an empire eventually falls no matter how great it was or long it was in power. The Zhou Dynasty in Ancient China lasted almost 800 years, the Roman Empire lasted over 1000 years, Ancient Greece lasted about 1200-1300 years, but eventually they all fell.

Very true. One of my hobbies is collecting ancient Roman coins, and I find it fascinating to watch the decline of the Roman Empire marked by the gradual reduction in the amount of silver included in the common denarious coins.

I speculate that many people will lose their bitcoin out of misplaced arrogance, and that this process will gradually distribute bitcoin to the hands of families that learn humility and are able to preserve their wealth. This process might slow down the so-called "fixing everything" process as I write about here:

Another thing to remember is if you go a dozen generations deep, you can have millions of descendants, so that alone can thin out the stack across an ever-widening family.

I would argue that it would be a higher retention level as long as bitcoiners teach their kids about economics and at least the fundamental level of bitcoin. This would be a given in most cases, as I feel the majority of bitcoiners would do this anyway. But it comes down to the same thing it always has: the education and discipline has to come with the assets. It's just that we now have the best financial asset ever conceptualized by mankind in the toolbox to build generational wealth with.

I think we will as we’re moving into different times, low time preference may become part of the culture and our kids with good education will be less likely to squander their wealth.

I guess it would depend on how you raise your kids, and how they raise theirs.

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