Many years ago, I worked at a company that helped advise people as to where to invest their money, and how to protect their assets against market failure, business downturn and or personal issues that can lead to loss. One of my supervisors, a very enigmatic and eccentric gentleman known as "The Doc", used to always tell us to make sure we built fire escapes for ourselves and for our clients. It always stood out as an odd expression, and that gave it the most value as it became one of the most important things to keep in mind during volatile periods.
A fire escape is quite literally a way to escape in case of fire. It gives you a path to safety, and it gives you a sense of reassurance knowing that if all goes wrong, you still have a way to get out that doesn't involve you having to rush deeper into an inferno. They exist so frequently in our lives that we don't even register them most of the time, and hopefully we'll never need them, but having them around is incredibly important, as you'd obviously rather have them and not need, than be stuck in a fiery blaze and have no way out. But how does this relate to finance and specifically cryptocurrency?
Well, in 2015, there was a mini crash in some local markets where we were working that caused many people to lose significant amounts of money. On paper, this even bankrupted some of them, and it was devastating for some local businesses which failed due to not having back up plans or sound financial advise to operate on. However, all of our clients were safe, because we had built fire escapes for all of them. When we invested their money for them and told them where it would be based, we also told them we had back up plans, that should the funds drop to a certain level in terms of percentage, we would immediately shift funds around to protect their money in trusts that were essentially assured profits, and engaged in legal lending so as to protect against loss. We set up automated systems, the first of their kind in our market, so that we could automatically move money around at any given moment and ensure profits, however marginal they were, and protected against any kind of loss. It was revolutionary for the smaller market, and now these automated systems are almost everywhere in small finance operations to ensure there's no total wipeouts, and this is the kind of fire escape you want.
In crypto, it's easy to get complacent after seeing consistent gains, and not think to move our money around into safer alternatives. Many of us who lost big in 2017 will remember considering cashing out, converting to less volatile assets or locking our funds into protected programs, but we either missed the moment to do so, or allowed greed to cloud our judgement. But now, more than ever, you need your fire escape. With increased volatility, increased attention and therefore increased subterfuge and scamming, we need to be ever more careful about our precious funds. Having a fire escape, a plan of how to handle our money in case of disaster, is essential. For example, I have automated scripts set up so that if BTC drops below a certain value or moves in too volatile a way for my liking, a set amount will automatically convert to a stablecoin and deposit into a high interest account. When BTC drops further, it buys back. Obviously, if BTC rapidly rises I miss out on an opportunity, but I've protected my profits and kept some skin in the game so I can continue to gain.
Fire escapes aren't always pretty, they don't always make you feel great, but they're extremely important and can be the difference between life and death. You don't want to die in this market, you want to live and grow and accumulate for yourself and for your families, so grab your tools, do your research, and build that fire escape!