1. Cash flow
What is most important in investment? Different people have different answers , but for me, the most important thing in investing is to have a constant cash flow.
To invest, you need to deal with volatility and uncertainty. To deal with volatility and uncertainty, you need to find ways to minimize that uncertainty and minimize the risk of volatility.
The most straightforward way to understand this is that you need to counter uncertainty with certainty. When you provide the certainty that covers the uncertainty of the market, your chances of winning the investment are high, and you can start to enjoy the benefits of volatility.
What is certainty that you can control? In addition to your knowledge, your patience, what really matters is your ability to generate a steady stream of cash flow, which is the most important certainty in investing.
Just because your investment horizon is important, though, doesn't mean that you don't have to take these systemic risks from market fluctuations just because you have a good horizon. For example, even if you buy Bitcoin, you need to bear the risk of a 50% drop in a single day, you also need to hold the currency for two or three years or more, and you also need to bear the risk of a 90% drop over a long period of time.
For example , Buy at the bottom is very difficult. So is there any way to get to the lowest point? Yes! As long as you have a steady stream of cash flow, the market every drop of 1% you will buy a little, or interval, every drop of 5% you will buy a little, you can always end up buying the lowest point, even if not the lowest, from the nearest is not a few percentage points of that kind.
So Buy at the bottom is not a question of whether you can get to the bottom, but whether your cash flow is long enough. As long as your cash flow is long enough, then the bottoming out will be a sure thing from an uncertain thing, which is the typical use of certainty against uncertainty.
2. Coin flow (or Token flow)
Now we understand the importance of cash flow for investing, but it doesn't seem to help because there's no cash flow in the blockchain industry.
In the blockchain industry, like it or not, this is a basic fact: currently, there is no cash flow present in the entire blockchain industry.
Not only is there no cash flow, there is no cash at all.
The blockchain industry is still in the fuzzy zone for the time being, fiat currency has not yet intervened, and a lot of the current business within the blockchain industry is coin-based, even contract trading, options trading, these things are also settled in coin-based, all coins, no cash, how can we do this?
Although there is no cash flow in the blockchain, it has something very similar to cash flow, that is, Staking, coin hoarding, collateral itself can generate interest, this interest is issued in the form of coins, as long as you keep collateral, then the interest of this coin is also generated continuously, we give it a foreign name, called: Coin flow.
Regarding Staking, I've written before about some problems with its own design.
For example, Staking's proceeds come from the issuance of additional coins, and when the time span is larger, this issuance becomes much, much larger in terms of quantity, and can seriously eat up the value of a single coin, which means that Staking's model ensures that the vast majority of projects do not have long-term investment value. And Staking matching lock-up model, equivalent to the proceeds of the issuance of additional distribution to the lock-ups, thus diluting the value of the unlocked holdings of the coin, which is considered to be the loss of most people, in exchange for the gains of a small number of people, in short, there are some problems.
On the one hand Staking this model does have some problems, but on the other hand it is an objective existence, a model that is currently common in the industry and is expected to remain so for a long time to come. Therefore, we can only accept the current situation, and then we can think further on this basis, and build our investment theory and strategy.
3. the conversion of cash flow and Coin flow
Given that one needs to generate a constant stream of cash and one can generate a constant stream of currency, what is the relationship between the two?
The relationship is really quite simple, sell the coin at the prevailing price and it becomes cash, isn't it? Wouldn't buying cash at the prevailing price make it money?
So, Coin flow and cash flow are convertible under certain circumstances, if expressed in a formula that is.
Coin Flow * Realized Price = Cash Flow
A constant stream of Coin, multiplied by a realized price, equals a constant stream of cash flow.
With this formula, it is equivalent to creating a channel between Coin flow and cash flow, making it possible to transform the two into each other.
Generally speaking, your total amount of Coins is finite, and the interest rate to generate new Coins is stable, so the cash flow depends entirely on your realisation price. If the realized price stays the same, then Coin flow and cash flow are equivalent, but the point is that Coins in the blockchain industry are too volatile in price.
If the price of Coin is rising all the way up, then the Coin flow is significantly better than the cash flow at that point.
If the price of Coin is falling all the way down, then the cash flow at that point is going to be significantly better than the Coin flow.
It would naturally be best if anyone could accurately judge the buy and sell points to achieve high buy and low sell, but that's impossible because it involves judging the price, and judging the short-term price is a very, very difficult thing to do. So in reality, there's a big difference between the two.
For example, in reality, miners face this problem: they put in cash and get a constant stream of coins, or Coin streams.
How to handle these coins at this time is a test of the miners' skills. At present, most miners deal with this by selling some of their coins immediately after mining to balance their daily costs and preserve the necessary cash reserves for the future, then stockpiling the remaining coins and hedging them with good financial means. In practice, this is a good way to balance risk and reward.
For the current blockchain industry, I don't think it's time to think entirely in terms of the coin standard or Coin flow yet, because it's not enough to protect against the risk of high volatility in the coin world, as it's inherently equivalent to self leverage.
I think there is still a need to should be a cash flow focus and should treat Coin Streams as assets. Or a two-legged approach where you have a constant stream of cash flow channels on the one hand, and a constant stream of Coin flow channels on the other, and at the same time open up the two to convert each other. This way, no matter the price is high or low, you can take it in stride, in the low time you have enough money to bottom, not afraid of the price plunge, so that you have enough patience, only enough time to grow with the whole industry.
4. based on USDT cash flow
Of course, it's not exactly true to say that the blockchain industry has no cash and cash flow, but USDT, for example, can function as a stablecoin and cash.
USDT itself is both cash and a digital currency, and both at the same time. If the future blockchain business is based on USDT construction, if its business dividends, interest payments or other derivative business are based on USDT or other stable coins, then the blockchain industry can actually produce "cash flow", then the industry's cash flow gap can be supplemented, the It is only when there is a chance for coexistence between Coin flow and cash flow.
Only, there are still few similar businesses at this stage, making the blockchain industry's cash flow is far from enough. I believe that there will be more and more similar businesses in the blockchain industry in the future, and by then there will be more choices for investors in the blockchain industry.