Crypto 101

How Much BTC Should You Buy to Insure your Wealth in Crypto?

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Bitcoin investment

Since the birth of bitcoin, the crypto community has for long wondered how many bitcoins one should own to insure their wealth in crypto. Different individuals will give varying opinions depending on their views on crypto. Enthusiasts will advocate for going all in on bitcoin while cynics will discourage you from investing in the space altogether.

An attempt to search for an answer on how much BTC you should own provides a lot of answers. However, none of these answers state the specific amount of BTC you should buy. Some explanations suggest that you buy as much bitcoin as you can afford to lose, while others will recommend using legacy investment methods to invest in bitcoin.

However, how much you should stake depends on your investment goals. Most bitcoin traders invest in the sector for speculation purposes. While speculating prices could earn you profits, it has a lot of risks. Moreover, bitcoin’s value comes from its limited supply, not speculation. There are around 17.6 million BTC in supply, and the remaining 3.4 million coins will be mined over the next century. Consequently, long-term investors seeking to insure their wealth through crypto need a more specific answer that details how much BTC they should own.

Kyle Kemper’s B-WIT Formula

According to Kyle Kemper, a crypto and blockchain enthusiast, there is a way to calculate how bitcoin much you should buy. He calls the formula the ‘Bitcoin Wealth Insurance Target’ (B-WIT). He notes that owning more or less bitcoin than B-WIT suggests would mean that you are becoming speculative. Kemper admits that the formula is not perfect and that users can adjust it based on their conclusions. However, he asserts that B-WIT is better than all suggestions the bitcoin community has heard of before.

His formula is,

WEALTH / GLOBAL WEALTH X BTC SUPPLY = B-WIT

This means taking the amount of money you want to insure then dividing it by the global wealth, which was $317 trillion last year. You then multiply the figure you get with bitcoin’s total supply, which is 21 million.

From Kemper’s formula, insuring $1 million would mean buying 0.66 BTC. This amounts to approximately $348 considering BTC is trading at $5,256 at the time of writing.

Based on Tim Draper’s prediction for 2023, which is $250,000, the amount in dollars needed to buy the same amount of BTC could quickly turn to $165,000.

Variables in B-WIT

  • According to Kemper, his formula works based on your input. That is, the amount of wealth you decide you want to insure relates directly to the amount of bitcoin you need to buy.
  • Total global wealth. As the global wealth changes, you have to make changes to the figure you use in your calculations. The global wealth used in this article was obtained from Credit Suisse.
  • Bitcoin’s supply. Although bitcoin’s total supply is 21 million coins, the coins are not all available as people already own around 17.6 million BTC. The remaining 3.4 million BTC will be mined over the next century.

The Takeaway

For individuals trying to insure their wealth through crypto, Kemper’s B-WIT formula is the simplest way to determine just how much BTC they should own. Although Bitcoin has had its fair share of volatile swings, it is still a viable way to hedge funds. Bitcoin’s performance in late-2017 could have been a preview of how high the coin can surge if fiat currencies fluctuate.

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