Alright, time for the controversial part. The part where some of you are going to get mad at me.

If you aren’t following the topic, there were two articles that precede the current one, I encourage you to read them first:

1. The Time-for-Money Trap: Why Business Ownership Is the Only Path for Building Wealth and Financial Freedom
2. Building Wealth Through Investing: Real Estate and Index Funds

Okay, ready?

Cryptocurrency is not investing. It’s gambling.

I don’t care how many YouTube videos you’ve watched, how many X threads promised you’d “make it,” or how sophisticated the blockchain technology sounds. For the vast majority of people, putting money into crypto is pure speculation at best and getting scammed at worst.

The fundamental principle of investing is that you’re buying an asset with intrinsic value – something that produces cash flow, earnings, or utility.

When you buy stock in Apple, you own a piece of a company that makes products, generates revenue, and distributes profits. When you buy real estate, you own property that can be used or rented for income. There’s underlying economic value.

When you buy a shitcoin, what do you actually own? A string of code that doesn’t produce anything, doesn’t generate cash flow, doesn’t have earnings. Its only value is what the next person is willing to pay you for it.

That’s called the “greater fool theory” – you’re hoping a greater fool than you will buy it at a higher price.

What Buffet And Stats Say

Warren Buffett has been brutally clear about this:

“Cryptocurrencies basically have no value and they don’t produce anything… In terms of value: zero”.

His longtime partner Charlie Munger has called it “rat poison squared” and even compared it to a “venereal disease”. These aren’t just random old guys yelling at clouds – these are literally the most successful investors in human history.

But forget their opinions. Let’s look at the data.

A 2022 study by the Bank for International Settlements analyzed global crypto exchange data and found that 73-81% of retail cryptocurrency investors lost money.

Read that again: three-quarters of people who bought crypto ended up with less money than they started with.

The pattern is predictable: prices surge, media hype builds, new users jump in late to the rally, then the crash comes, and the majority are left holding massive losses.

Another study found that three-quarters of Bitcoin purchasers worldwide have not made a profit. Despite all the hype, most people who bought Bitcoin are underwater.

Let’s Look At The Examples

But wait, what about the people who made millions? Yes, some people did. Just like some people win at the casino. But for every winner, there are multiple losers – because crypto is a zero-sum game (actually negative-sum when you factor in exchange fees and energy costs).

Let me tell you a composite story that represents thousands of real experiences:

“Bitcoin Bob” is a tech-savvy 30-something who sees Bitcoin hitting $60,000+ in late 2021. Everyone’s talking about crypto gains. His friend bought a new car with Ethereum profits. Hello FOMO!

Bob puts $50,000 of his savings into various cryptocurrencies. Initially, his portfolio jumps to $75,000. He feels like a genius. He’s calculating when he’ll become a millionaire.

Then 2022 hits: Bitcoin crashes over 70% from its peak. Most altcoins drop 90%. Some platforms where he held crypto freeze withdrawals – Celsius and Voyager go bankrupt. His $75,000 is now worth $20,000.

Panicked, he sells to cut his losses. He’s effectively gambled away $30,000 of his savings.

This happened to tens of thousands of people.

Compare Bob to “Lucky Lucy” – she bought Dogecoin as a joke with $1,000. It skyrocketed 100x during an Elon Musk-fueled mania. She cashed out $100,000.

Lucy got lucky. That’s it. Her success wasn’t based on analysis, fundamental value, or any repeatable strategy. It was pure timing and luck – like winning a hand at the casino.

If Lucy keeps “investing” in hype coins, eventually she’ll lose. The house always wins in gambling.

Does It Hold Any Value?

Christine Lagarde, president of the European Central Bank, warned in 2022 that crypto assets are “based on nothing” and “worth nothing” in terms of intrinsic value, telling people to be prepared to lose all the money they invest.

Here’s the philosophical problem I have with calling crypto “investing”: you have no certain knowledge that any particular coin will go up. If it goes 10x today, it could crash to zero tomorrow. There’s no rational basis for valuation because there are no earnings, no cash flows, no fundamental metrics to analyze.

With the S&P 500, you can reasonably expect that over 10-20 years, the economy will likely grow, companies will generate profits, and your investment will probably increase in value. With real estate, you can analyze rental markets, local development, property conditions.

With crypto prices move on sentiment, tweets, momentum, and manipulation. It’s not investing based on fundamentals – it’s speculation based on hoping you can sell to someone else for more.

Be Aware Of Fraud

The crypto world has also been plagued by outright fraud: the Mt. Gox collapse in 2014, the FTX implosion in 2022 where billions disappeared, countless pump-and-dump schemes on small tokens.

I know someone’s going to argue “but blockchain technology is revolutionary” or “Bitcoin is digital gold.” Maybe. Time will tell. But that doesn’t mean it’s a good investment right now for regular people.

Even if blockchain transforms finance someday, that doesn’t mean any current cryptocurrency will be the winner. Betting on crypto is like investing in internet companies in 1999 – sure, the internet was revolutionary, but most of those companies went to zero.

Look, if you want to gamble 1-5% of your portfolio on crypto for fun, fine. Treat it like a lottery ticket. But don’t confuse it with investing, and don’t bet money you can’t afford to lose completely.

The uncomfortable truth is that crypto has become a wealth transfer mechanism from late adopters to early adopters, from retail investors to exchanges and whales, from the hopeful to the ruthless.

The Two Ingredients Your Money Needs to Multiply

Let’s bring this back to the fundamentals of real investing.

Whether you’re talking about index funds or real estate (read the previous article for details), legitimate investing requires two essential ingredients: capital and time.

Capital is obvious – you need money to invest. You can’t buy property or stocks with empty pockets.

But the amount of capital matters enormously.

If you invest $1 in the S&P 500 earning 5% annually, that’s 5 cents per year. Completely meaningless. Even after 50 years of compounding, it won’t materially change your life.

But if you invest $1 million at 5% annually, that’s $50,000 per year. That’s a livable income. You could live on just the dividends without ever touching the principal.

Charlie Munger, Warren Buffett’s business partner, famously said you need to earn your first $100,000 – then your first million – “any way you can,” because after that, investing becomes a completely different game.

Why? Because once you have substantial capital, you have access to real assets:

• Commercial real estate that generates serious cash flow
• Enough stock holdings that your dividends actually matter
• The ability to diversify meaningfully across asset classes
• Financial cushion to ride out market volatility without panic-selling

This is why I emphasized in the first article that business is how you build that initial million. You need entrepreneurship and business ownership to accumulate the capital. Then you use investing to multiply and protect it.

For me personally, earning my first million is my main focus right now. Once I hit that milestone, investing becomes a different game entirely – one where compound returns actually move the needle on my life.

Useful Resources

If you’re interested in business models and startup ideas to build that first million, I highly recommend the podcast “My First Million”. It’s the best business podcast out there – I’ve listened to every episode from beginning to current. They break down different business models and ideas that regular people have used to hit seven figures.

The FIRE (Financial Independence, Retire Early) movement has popularized this concept: earn aggressively through work or business, save an extremely high percentage of your income (often 50-70%), invest it consistently, and reach financial independence much faster than traditional retirement timelines.

For example, the Johnsons (a composite of many real FIRE stories): a dual-income couple in their 30s making a combined $120,000. Instead of lifestyle inflation, they keep expenses low and save 50% of their income. They invest heavily in index funds and buy a couple of rental properties.

By age 45, through consistent investing and compound returns, their portfolio (including home equity, retirement accounts, and rentals) grows to around $1.5 million. Using the “4% safe withdrawal rule,” that’s $60,000 per year – enough to cover their frugal living expenses.

They quit their jobs. Not to sit on a beach forever necessarily, but because they no longer need to work for money. They have the freedom to pursue passion projects, spend time with family, volunteer, or just choose how to spend their days.

They traded consumption in their 20s and 30s (smaller home, older cars, fewer fancy dinners) for total time freedom in their 40s onward.

That’s the power of combining business/career income with disciplined investing over time.

But again: you need both ingredients. Capital without time doesn’t compound enough. Time without sufficient capital doesn’t generate meaningful returns.

Patience is absolutely essential. Anyone promising 1000% returns quickly is selling you gambling or fraud, not investing.

Freedom Isn’t Just Money – It’s Buying Back Your Time

Let me wrap this up by bringing everything together.

Real wealth isn’t about having fancy things or impressive bank account numbers. Real wealth is control over your time.

Morgan Housel, author of “The Psychology of Money,” nailed it:

“The highest form of wealth is the ability to wake up every morning and say, ‘I can do whatever I want today’”.

That’s what all of this is actually about. That’s why we’re talking about business ownership and investing in the first place.

The progression looks like this:

1. Business builds your initial capital (that first hundred thousand, then first million)
2. Investing multiplies that capital and generates “passive” income
3. When “passive” income exceeds your expenses, you achieve financial independence
4. Financial independence means you’ve bought back your time – work becomes optional

Financial independence doesn’t mean you stop working necessarily. Many people who reach it continue working because they love what they do. The difference is choice.

If you’re financially free, you might still work hard on something you care about, but it’s on your terms, not because you’ll default on rent without next week’s paycheck.

Naval Ravikant calls “ownership of your time” the real status symbol. Not the car you drive or the watch you wear, but whether you control your own schedule.

A 2021 study found that well-being continues to rise with income, but it also showed that time stress diminishes happiness. The study found that people who spend money to save time (like outsourcing chores) report higher life satisfaction than those who have money but no time.

Another study showed that beyond a certain comfortable income level, additional money has diminishing returns for happiness – but having more control over your schedule increases life satisfaction substantially.

The Most Valuable Asset Of Yours

This is why I keep hammering on the time-for-money trap. Your time is literally the most valuable, non-renewable resource you have. Every hour you trade for money is an hour of your life you’ll never get back.

There’s no single magical path that works for everyone. Some people build businesses, some climb corporate ladders while investing aggressively, some focus on real estate, some do combinations of all three.

But here’s the common thread among people who achieve financial freedom: they build assets that generate income without requiring their constant effort.

They don’t rely solely on active income – trading hours for dollars. They create or acquire assets (businesses, stock portfolios, rental properties) that work for them even while they sleep.

The balanced strategy most self-made wealthy people use:

1. Earn income (through business or high-value career)
2. Live significantly below their means
3. Invest the surplus consistently
4. Build multiple income streams over time
5. Eventually passive income exceeds expenses
6. Time freedom achieved

One more crucial point: there’s a huge difference between calculated risks and foolish risks.

• Calculated risks: Starting a well-researched business, investing in diversified index funds, buying rental property in a growing area – these have positive expected value based on historical data and fundamental analysis.
• Foolish risks: Dumping your savings into a random shitcoin because someone on X said it’ll “moon,” day trading without experience, investing in things you don’t understand – these are gambling.

Warren Buffett’s first rule of investing: “Never lose money.” His second rule: “Never forget rule number one”.

That doesn’t mean avoid all risk – it means understand the difference between investing based on fundamentals versus speculation based on hope and hype.

Choose Your Path

Remember Ronald Read, the janitor who died with $8 million? He didn’t have a high income, or special insider knowledge, but he just invested consistently in solid companies and waited.

Remember the crypto investors? 73-81% lost money chasing quick gains.

One group was patient and disciplined. The other was impatient and speculative.

Look, I get it. Index funds returning 7% annually sounds boring compared to crypto promising 10x gains. Real estate taking 20-30 years to build serious wealth sounds slow.

But boring and slow is what actually works. Exciting and fast is usually how you lose everything.

Your time is the ultimate non-renewable resource. Every year you spend trapped in the time-for-money cycle is a year of your life you’ll never get back.

But the path exists.

• Business ownership to build capital.
• Smart investing to multiply it.
• Patience to let compound returns work their magic.

Eventually, passive income exceeds expenses, and you’ve bought back your time.

No lottery ticket required, no inheritance needed. Just intentional choices, discipline, and patience.

Stop renting out your time. Start buying it back.

The S&P 500 has been there for 70 years, quietly compounding at 10% annually. Real estate has created countless millionaires through rental income and appreciation. These aren’t secrets – they’re just not exciting enough for social media.

But they work. Proven, reliable, boring, and effective.

Meanwhile, cryptocurrency continues to transfer wealth from the hopeful to the early adopters, from retail investors to exchanges, from those seeking freedom to those already free.

Choose your path wisely. Your future self is depending on the decisions you make today.

The Three Doors to Wealth (And Why Two of Them Are Locked)

There are really only a few ways you can make money in our current economic system. And most of them are complete garbage.

You can win the lottery. You can be born into a wealthy family where every need is covered before you even think about it. Congratulations if that’s you – seriously, use that advantage. But for the rest of us it’s not that simple. We’re stuck figuring it out ourselves.

Most people default to the same path without even questioning it: get a job, trade your time for money, work 8-12 hours a day (sometimes more), and hope that somehow, someday, this will lead to freedom and wealth.

Spoiler: it won’t.

I’ve said this before and I’ll keep saying it – business ownership is the only viable path I see to real freedom and wealth in today’s world. The math simply doesn’t work any other way.

According to recent research, approximately 88% of millionaires are business owners. Let that sink in for a second. If you want to join the millionaire club, the overwhelming probability is that you need to own a business, not work for one.

Here’s an even crazier stat: entrepreneurs make up only about 8.7% of households in the United States, yet they hold roughly 39% of total wealth. Think about that ratio. Less than 9% of people control nearly 40% of the money. That’s not a coincidence.

Warren Buffett, one of the richest humans on the planet, put it:

“If you don’t find a way to make money while you sleep, you will work until you die”.

So let’s break down why your job – no matter how good it seems – is probably a cage you don’t even realize you’re in.

Why Your Paycheck Has a Ceiling (And Your Boss’s Doesn’t)

Here’s the fundamental problem with employment: you’re exchanging your time for money. Sounds obvious, right? But most people never really think through what this means.

You have 24 hours in a day. You can realistically work maybe 8-12 of those hours. That’s your absolute ceiling. You literally cannot sell more time than exists.

Now, let’s say you’re making $25 an hour. You work 40 hours a week. That’s $1,000 per week, roughly $52,000 per year. Want to double that? You have exactly two options:

1. Work 80 hours a week (good luck maintaining that without destroying your health)
2. Somehow double your hourly rate, which might take years of promotions, skill development, or job-hopping

There’s no third option. Your income is fundamentally capped by the hours you can physically work and the rate someone is willing to pay you.

Compare this to business ownership. If your business doubles its sales, your profit can double – or even more than double if you’ve built good margins. You’re not limited by your personal hours because you’re leveraging other people’s time, other people’s money, and systems that work without you.

Naval Ravikant, a legendary angel investor, nailed it:

“You’re not going to get rich renting out your time. You must own equity – a piece of a business – to gain your financial freedom”.

But here’s what really gets me. When you work a job, you’re not just capped by time. You’re also getting a fraction of the value you create.

Companies don’t hire people out of charity. They hire you because you generate more value than they pay you. That’s literally how business works. If you bring in $200,000 worth of value to the company, they might pay you $70,000. The rest is the profit that goes to the business owner.

Business Owners Have More Leverage

I’m not saying this is evil or wrong – it’s just reality. But you need to understand which side of the equation you’re on.

Research by finance professor Vincenzo Quadrini found that entrepreneurs don’t just earn more income than employees – they also tend to save and reinvest a much larger fraction of their earnings, which accelerates wealth accumulation even further.

And let’s talk about taxes for a second. Your salary gets hammered with ordinary income tax – the highest tax rate for most people. Business owners can structure their income as dividends, capital gains, and business expenses, often paying significantly less in taxes on the same amount of money.

Even the highest-paid employees – specialist physicians making around $230,000 in the US – are making an order of magnitude less than what successful entrepreneurs can earn if their businesses grow. And those doctors are trapped in the same time-for-money cycle. They stop working, the money stops flowing.

There’s also the autonomy factor that nobody talks about enough. Even if you’re a highly-paid employee, you still have a boss. You still need to show up when they tell you to. You can still get fired. The Kaufman Foundation surveyed entrepreneurs and found that “being your own boss” and “pursuing your own idea” were the top reasons people chose to start businesses.

Freedom isn’t just about money, but also about controlling your time and decisions.

You’re Building Someone Else’s Fortune

Let me make this really concrete for you.

When you work for a company, you create value. Let’s say you’re a software developer and you build a feature that helps the company close $500,000 in new sales. The company pays you your $100,000 salary. They pocket the remaining $400,000 (minus other costs, sure, but you get the point).

You worked for that $100,000. The owner made money off your work without doing the actual coding.

Now flip the equation. What if you owned the business? What if those $400,000 in profits went to you instead?

This is why the richest person in any company is almost always the owner or major shareholder – not the hardest worker, not the most talented employee. The owner.

Robert Kiyosaki, love him or hate him, said something that stuck with me:

“The poor and the middle class work for money. The rich have money work for them”.

When you own a business, you’re no longer in the time-for-money trap. You can hire 10 employees, effectively harnessing 10 person-hours for every one hour you work. You can build systems and products that generate income whether you’re at your desk or on a beach.

An employee working one hour can only leverage that one hour of time. Unless you’re managing a team – but even then, your compensation is still not proportional to the total output of your team. Your boss is taking that cut.

From Wall Street VP to World’s Richest: The Jeff Bezos Story

In 1994, Jeff Bezos was a senior vice president at D.E. Shaw, a Wall Street investment firm. This wasn’t some entry-level job – he was making serious money. The kind of salary most people would kill for. Stable income, prestigious position, clear career trajectory.

And he quit.

He walked away from that comfortable, high-paying job to start an online bookstore in his garage. People thought he was insane. Why would you leave a VP position to sell books on this new “internet” thing?

Here’s the thing though – Bezos understood something that most employees never figure out. He understood that his upside was capped at D.E. Shaw. Sure, he might make partner, might get bonuses, might climb to the very top. But he’d always be an employee. His wealth would always be limited by the salary structure and his personal hours worked.

By starting Amazon, he switched sides of the equation. He went from being the person who makes money for the company to being the person who owns the company.

Within a few years, Amazon’s success made Bezos one of the richest people on Earth – with a net worth that eventually exceeded $100 billion (and many more today).

Could he have ever approached that wealth by staying an employee, even a very well-paid one? Absolutely not. Not even close.

Maybe He Is an Exception?

This isn’t just a Bezos thing. Look at the Forbes billionaire list – it’s dominated by founders of companies. Tech entrepreneurs, industrialists, people who built businesses. You don’t see many career employees on that list, no matter how high they climbed in someone else’s company.

Even high-level executives who make millions in salary rarely accumulate the wealth that top entrepreneurs do – unless they have significant equity stakes, which again, is business ownership.

Ownership of equity scales exponentially. Salaries scale linearly, if they scale at all.

According to IRS data in the United States, for the top 0.1% of earners, the majority of their income comes from investments and business ownership, not from salaries. Meanwhile, the bottom 90% rely mostly on wages.

This is the game we’re all playing. Most people just don’t realize they’re playing it on the losing side.

The Two Types of Business (And Why One Still Traps You)

Okay, so you’re convinced that business ownership is the path. But here’s where it gets nuanced, and this is something a lot of people miss.

Not all business ownership is created equal.

I want to make a distinction here between entrepreneurship and business. Yes, technically any business owner is an entrepreneur. But hear me out, because this difference matters.

Entrepreneurship

Entrepreneurship means you’re actively, directly involved in the day-to-day work of your business. You’re still trading your time for money, just in a different package.

Examples:

• You’re a freelancer selling your coding skills. You stop coding, you stop making money.
• You run an agency, but you’re personally managing every client relationship and sale. You take a vacation, sales pipeline dries up.
• You’re a consultant, and every dollar you earn requires you to show up and deliver the consulting yourself.

This is better than traditional employment in a lot of ways – you have more freedom from a boss, you control your rates, you choose your clients. But you’re still fundamentally limited by your personal time and energy.

I know this personally because this is how I’ve operated my web development studio. I sell my system analysis and development skills. Good money, yes. But if I’m not working, the business isn’t generating revenue. That’s entrepreneurship, not business.

Business

Business, on the other hand, is a system that works without you. Your participation isn’t required for it to generate income – or at least, your participation is minimal and strategic rather than operational.

Examples:

• A software product that customers pay for monthly, and a team handles support
• Rental properties that generate income whether you’re involved or not
• A company with a CEO and team running operations while you make quarterly strategic decisions

The difference is leverage and freedom.

Paul Graham once pointed out that you can’t get wealthy by “renting out your time” because there’s a cap on what others will pay per hour, and you can’t get rich “while you sleep” unless you break that direct time-income connection.

This is the difference between residual income and active income. As an employee or active entrepreneur, when you stop working, income stops. There’s usually no residual benefit from past effort – you get paid for the hour or the project, then it’s done.

But when you own assets – a company that runs systematically, properties that generate rent, products that sell automatically – those continue producing income even when you’re not personally present.

Naval Ravikant defined wealth perfectly:

“Wealth is having assets that earn while you sleep. Money is how we transfer time and wealth”.

By that definition, a salary isn’t wealth – it’s a temporary transfer of your time for money. Real wealth is what keeps generating after you stop working.

Your First Million Won’t Come From a Timecard

Let me bring this all together.

The employment model is fundamentally broken if your goal is wealth and freedom. You’re trading the most valuable non-renewable resource you have – your time – for a capped income that someone else controls.

Even the best employment situations – six-figure salaries, great benefits, interesting work – still trap you in the time-for-money cycle. You stop showing up, the money stops coming. That’s not freedom, that’s just a nicer-looking cage.

Business ownership offers something completely different:

• Scalability: Your income isn’t limited by your hours
• Leverage: You use other people’s time, skills, and capital
• Equity growth: The value of what you own can multiply exponentially
• Autonomy: You make the decisions about your time and direction

Now, I’m not going to lie to you and say business is risk-free. It’s not. Tons of businesses fail. Plenty of entrepreneurs go bankrupt. The risk is real.

But here’s the risk-reward calculation that makes sense to me: If you invest $10,000 into starting a business, the worst case is you lose $10,000. In the best case you could make 10x, 100x, or even more. The upside is disproportionately huge compared to the downside.

Compare that to employment: Your upside is basically capped at your salary plus maybe bonuses. Your downside is job loss, but you’re not risking capital – just your time and opportunity cost.

Independence Matters

Charlie Munger, Warren Buffett’s longtime business partner, put it simply:

“I did not intend to get rich. I just wanted to get independent”.

That’s what this is really about. Independence. The ability to wake up and decide how you’ll spend your day based on what matters to you, not what your boss needs from you.

Can you achieve some level of financial security through a job? Sure. Some people do. They earn good salaries, live below their means, invest the difference, and eventually build wealth. I respect that path.

But if you want to build serious wealth – the kind that buys back your time, that gives you real freedom – business ownership is the most proven, most reliable path.

The math is simple: 88% of millionaires own businesses. The wealthiest people in any company are the owners, not the employees. Entrepreneurs holding just 9% of households control 39% of total wealth.

You can keep trading your time for money, hoping that someday it adds up to freedom. Or you can flip the equation and start building something that generates value beyond your personal hours.

Beyond The Business Side

Building your first million through business is just the beginning. Because once you have capital, a whole new game opens up – one where your money works for you instead of you working for money.

That’s where investing comes in. Real investing, not gambling. The difference between putting your money into assets that compound over decades versus throwing it at speculative bets that evaporate overnight.

In the next article, we’ll break down the three main paths for making your money multiply:

1. index funds like the S&P 500 that have returned 10% annually for 70 years,
2. real estate that’s made more millionaires than any other asset class,
3. and cryptocurrency – which I’m going to argue isn’t investing at all, but pure gambling dressed up in tech language.

We’ll look at the janitor who died with $8 million in his portfolio, the exact strategies that 95% of millionaires use with real estate, and the data showing why three-quarters of crypto investors lost money.

Your time is the ultimate non-renewable resource.

Stop renting it out.

Start buying it back.