What is Time Preference?
Recently, I’ve been reading a lot about bitcoin one concept that’s been mentioned in different articles is time preference. There’s high time preference, which means the desire for something immediately, and low time preference, which means the willingness to delay whatever it is you want for later. This ties in with what bitcoin adepts call hodling. To hodl, yes hodl, it to obtain and hold bitcoin for a long time. I’ve read that hodl came from a post on an early bitcoin forum in which the word hold was misspelled. And it stuck. I’ve also heard that hodl is an acronym for hold on for dear life, which would actually be hofdl. This refers to the volatility of bitcoin’s price and the emotional perils of watching your investment evaporate in minutes, or seeing the price shoot to the moon. The temptation to sell in either case is nerve wracking. The concept isn’t new. Instant gratification and saving for a rainy day explain the same sentiments in different, more intuitive words.
Storing Vegetables is Low Time Preference
Storing vegetables for eating during winter is definitely low time preference. I’ve got about 200 pounds of winter squash in boxes under my house that I harvested in October. After three to four months of growing the plants, I harvested squash and pumpkins and let them cure for a few days on the ground. That allows the skin to cure. I’m not sure if it’s true but that’s what I’ve always heard so I do it without question. Then I place them gently into boxes. I don’t want to bruise them or pierce the skin. Then I lug the boxes to the crawl space and place them in their final place to rest in cold, but above freezing repose for the winter.
Saving For A Rainy Day
High time preference is good too. Milkshakes and soufflés come to mind. No delayed gratification is necessary there. But in many cases, low time preference is the way to go. It tempers impulsiveness if you let it. But there are plenty of people with a low time preference who are happy to help others with a high time preference, such as credit card companies. Or fast food makers. Banks pretend to care about low time preference when they encourage you to save or put money into the stock market. This works when the interest you make on your deposits grows more than the rate of inflation. Otherwise you’re just going broke slowly. What it comes down to is this: do you have the ability to save for the future, without your savings losing value at the least, and increasing in value at the most, without having to gamble in someone else’s game?
Practice the Skills of Low Time Preference
The skills you acquire when gardening imply a low time preference. It takes time to learn, prepare and amend soil, start and transplant seedlings, tend, water, fertilize, protect and harvest. Managing the bounty requires some thought. If you use preservation methods to extend the life of the bounty, you are lowering your time preference. I’ve never liked the saying “It’s either feast or famine.” How about a goal of enough for now, some for later, and some to give away? Winter squash and bitcoin both allow for this desired outcome. Cinderella pumpkins and Delicata squash serve well to preserve value for a few months. Bitcoin, as a scarce, immutable, non-perishable product, is the ultimate method to preserve value and store savings over a very long time. I think I’ll serve myself up some of both!