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You finally did it, after a long life of accumilating lots of digital currency, you finally have all the proverbial hotdogs.
Then it happens.
The value of your portfolio goes from 250,000$ down to 2,500$ and all the hotdogs you've fought so hard for are now dead.
What in the world happened? Well, you essentially were flash panning , aka "Solely investing in a volatile non-liquid foundation." A better way to put this is that you converted your money to casino in house chips only, and you gained a ton of casino chips, but never converted them back into cash. Since the chips were only applicable to that casino, when the casino shut down, your chips had no value! Sounds pretty common sense though right? No, not really. Flash Panning is incredibly common nowadays in digital investment, and in general investment as well. Let's take a look at normal investment before tying everything together.
Normal Investment keywords:
Volatilty: This is a spectrum of Variability in Exchange rate and value ranging from "Metamorphic to Adamant" [0-100]
Liquidity: This is a spectrum of ease of exchangeability ranging from "Pure Liquid to Adamantite." [0-100]
Form: VL 50,50--> The value changes occasionally, and the ease of exchange is moderate.
There are variations in this, and a good investor knows to build their portfolio in multiple things as not to ruin their lifelong value.
Example:
George Gallant has a portfolio of VL 60, 5 Assets (USD) in a Checking Account worth 10,000$ and in a savings account that returns 2% per year worth 20,000$; Gallant also has invested in a VL 70,30 asset of Gold Bullion worth 12,000$, and also a VL 80-50 property investment worth 250,000$. His total portfolio is worth 292,000$.
Gus Goofus has a portfolio of VL 60,5 Assets (RUP) in a Checking Account worth 250,000$ and also has invested in a VL 10,80 of digital video game items worth 42,000$. His total portfolio is worth 292,000$.
Now what is the difference between Gallant and Goofus? Well; it all revolves around the Volality and Liquidity of their total assets. There are risks with Instruments of Exchange, the more liquid something is, the more likely it is to be Volatile to outside forces. Take for instance Government Issued Currency Notes: The USD Dollar is seen a less risky compared to other global notes as its value is denoted by its general worldwide acceptence; however a revolt in acceptence could drive the worth of that currency down. Compiled with internal issues such as debt and Cost of Living, a government note can skyrocket up or down, (prominent examples; The Zimbabwae Dollar, The Soviet Ruble, The Iranian Dinar). To combat the volatity of value, investors will seek out more solid assets, that still have a relative ease of exchange, such as investing in precious metals, stones, property, trusts, and bonds. While there is always some form of flucuation in value in these assets, (as there is no true Adamant assets) a happy mix of easy exchanged assets, compiled with solid value assets that grow over time is the golden ring to strive for.
Essentially: Gallant has a means to easily exchange assets with his Checking Account, while also letting a side sum grow in value over time. Even if worse came to worse with inflation/government note worth over time, he has a backup investment in Bullion, and if he takes care of his property, can sell the property for greater than its current worth.
Goofus has put all his trust in a government note that does not grow upon itself in the future, and his backup is in a temporary market that can be altered at the drop of a hat, which also does not have an easy way to liquidate into cash in hand.
Now that we've taken a look at Normal Investment; how does this apply to Digital Investment?
Well, digital currency itself is alot like the Stock Market; It is Volatile, and can be difficult to Liquidate to those who are not in the know.
There are multiple digital currencies to invest in, Bitcoin, Etherium, BAT, Lumen, etc; and their prices change hourly, we can give the whole sum of Digital Currency a Volality rating of 10. (Highly Metamorphic)
The Liquidity of these assets is variable depending on your knowledge and ease of "Pulling the asset". If you use a portfolio investment website such as Coinbase, the Liquidity is essentially 5, (Extremely Liquid) because with the click of three/four buttons, you can translate your portfolio to Liquid Cash. However; if you have alternate means of "Pulling" (Such as the Brave Browser) You have to go through additional steps to pull your asset. We'll mark this at 20, since it is not difficult. However; if you are invested in digital item markets (Such as Steam) the ability to turn an item into pure liquid cash into your own hands is much more difficult, due to the additional steps not built into the market. (You put 5 dollars into Steam, buy an item. It's value goes up to 10$, you sell it for 10$, however that is still within Steam and not in your own hands, to get the 5$ profit in your hands, you have to use a third party negotiation site [which often has fees] or set up your own private sale via paypal [frowned upon] We'll mark that as an 80.
So, now that we've gotten all that out in the open; "How do I maintain my asset worth in a digital market?"
Well, its simple.
"Invest in what you will as per digital currency is concerned, find a good time to buy/sell, translate these into Liquid Cash, and translate the Liquid Cash either into a Savings Account or into a Solid Asset that is less likely to lose value over time.
Essentially "Don't horde your assets into an extremely metamorphic market, ESPECIALLY when its Liquidity is greater than 30."
You'd think it common sense, but again, I see this mistake being done constantly, and likewisewould be investors finding themselves poorer in the process.
To fully utilize the digital market, keep an eye on government regulations/policies, market trends/rumours, and always know that a market can shut down instantly if the noses that be deem that they aren't winning.
Good luck on all investment endeavors, and I hope I don't see any of you jumping from windows when your portfolio goes to shit, and that you have backups in solid assets.
Then it happens.
The value of your portfolio goes from 250,000$ down to 2,500$ and all the hotdogs you've fought so hard for are now dead.
What in the world happened? Well, you essentially were flash panning , aka "Solely investing in a volatile non-liquid foundation." A better way to put this is that you converted your money to casino in house chips only, and you gained a ton of casino chips, but never converted them back into cash. Since the chips were only applicable to that casino, when the casino shut down, your chips had no value! Sounds pretty common sense though right? No, not really. Flash Panning is incredibly common nowadays in digital investment, and in general investment as well. Let's take a look at normal investment before tying everything together.
Normal Investment keywords:
Volatilty: This is a spectrum of Variability in Exchange rate and value ranging from "Metamorphic to Adamant" [0-100]
Liquidity: This is a spectrum of ease of exchangeability ranging from "Pure Liquid to Adamantite." [0-100]
Form: VL 50,50--> The value changes occasionally, and the ease of exchange is moderate.
There are variations in this, and a good investor knows to build their portfolio in multiple things as not to ruin their lifelong value.
Example:
George Gallant has a portfolio of VL 60, 5 Assets (USD) in a Checking Account worth 10,000$ and in a savings account that returns 2% per year worth 20,000$; Gallant also has invested in a VL 70,30 asset of Gold Bullion worth 12,000$, and also a VL 80-50 property investment worth 250,000$. His total portfolio is worth 292,000$.
Gus Goofus has a portfolio of VL 60,5 Assets (RUP) in a Checking Account worth 250,000$ and also has invested in a VL 10,80 of digital video game items worth 42,000$. His total portfolio is worth 292,000$.
Now what is the difference between Gallant and Goofus? Well; it all revolves around the Volality and Liquidity of their total assets. There are risks with Instruments of Exchange, the more liquid something is, the more likely it is to be Volatile to outside forces. Take for instance Government Issued Currency Notes: The USD Dollar is seen a less risky compared to other global notes as its value is denoted by its general worldwide acceptence; however a revolt in acceptence could drive the worth of that currency down. Compiled with internal issues such as debt and Cost of Living, a government note can skyrocket up or down, (prominent examples; The Zimbabwae Dollar, The Soviet Ruble, The Iranian Dinar). To combat the volatity of value, investors will seek out more solid assets, that still have a relative ease of exchange, such as investing in precious metals, stones, property, trusts, and bonds. While there is always some form of flucuation in value in these assets, (as there is no true Adamant assets) a happy mix of easy exchanged assets, compiled with solid value assets that grow over time is the golden ring to strive for.
Essentially: Gallant has a means to easily exchange assets with his Checking Account, while also letting a side sum grow in value over time. Even if worse came to worse with inflation/government note worth over time, he has a backup investment in Bullion, and if he takes care of his property, can sell the property for greater than its current worth.
Goofus has put all his trust in a government note that does not grow upon itself in the future, and his backup is in a temporary market that can be altered at the drop of a hat, which also does not have an easy way to liquidate into cash in hand.
Now that we've taken a look at Normal Investment; how does this apply to Digital Investment?
Well, digital currency itself is alot like the Stock Market; It is Volatile, and can be difficult to Liquidate to those who are not in the know.
There are multiple digital currencies to invest in, Bitcoin, Etherium, BAT, Lumen, etc; and their prices change hourly, we can give the whole sum of Digital Currency a Volality rating of 10. (Highly Metamorphic)
The Liquidity of these assets is variable depending on your knowledge and ease of "Pulling the asset". If you use a portfolio investment website such as Coinbase, the Liquidity is essentially 5, (Extremely Liquid) because with the click of three/four buttons, you can translate your portfolio to Liquid Cash. However; if you have alternate means of "Pulling" (Such as the Brave Browser) You have to go through additional steps to pull your asset. We'll mark this at 20, since it is not difficult. However; if you are invested in digital item markets (Such as Steam) the ability to turn an item into pure liquid cash into your own hands is much more difficult, due to the additional steps not built into the market. (You put 5 dollars into Steam, buy an item. It's value goes up to 10$, you sell it for 10$, however that is still within Steam and not in your own hands, to get the 5$ profit in your hands, you have to use a third party negotiation site [which often has fees] or set up your own private sale via paypal [frowned upon] We'll mark that as an 80.
So, now that we've gotten all that out in the open; "How do I maintain my asset worth in a digital market?"
Well, its simple.
"Invest in what you will as per digital currency is concerned, find a good time to buy/sell, translate these into Liquid Cash, and translate the Liquid Cash either into a Savings Account or into a Solid Asset that is less likely to lose value over time.
Essentially "Don't horde your assets into an extremely metamorphic market, ESPECIALLY when its Liquidity is greater than 30."
You'd think it common sense, but again, I see this mistake being done constantly, and likewisewould be investors finding themselves poorer in the process.
To fully utilize the digital market, keep an eye on government regulations/policies, market trends/rumours, and always know that a market can shut down instantly if the noses that be deem that they aren't winning.
Good luck on all investment endeavors, and I hope I don't see any of you jumping from windows when your portfolio goes to shit, and that you have backups in solid assets.
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