Assets Above Liabilities
By: Dawdu M. Amantanah
When jumping into the cryptocurrency arena, every investor should know some financial ground rules about economics. Once you study these two fundamental principles, your journey to making money while sleeping will be much easier. What is the difference between assets and liabilities? Let’s break down how being aware of where you spend your money can lead to financial success or failure.
What is an asset?
An asset is a property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies. Assets are investable items such as real estate, cash, stocks, cryptocurrency, precious metals, and art. In 2009, Bitcoin ushered in and created a new category called digital assets. Bitcoin has been dubbed the best asset of the past decade due to its 200% annualized returns. The most wealthy people in their world have assets above liabilities. Elon Musk does not own a home but has a net worth of $261 billion; most of that wealth concentrates in Telsa stock. Buying and owning Apple stock is an asset purchasing the new iPhone is not. Get it.
What is a liability?
A liability is something a person or company owes, usually a sum of money. Recorded on the right side of the balance sheet, liabilities include loans, accounts payable, mortgages, deferred revenues, bonds, warranties, and accrued expenses. Liabilities take money away from your bottom line, and assets are tangible items that bring you money. Buying a car is a liability. Once you drive off the lot, the car loses value. Owning a car means you will have to pay for car insurance, and you have to pay to maintain a car and fuel it. That is money leaving your pocket every month to say you have a nice car to take you from point A to point B.
Turning knowledge into wealth
The key to wealth is acquiring as many assets as possible and limiting your liabilities in life. Many cryptocurrencies are becoming digital safe havens for younger investors. Staking teaches you delayed gratification because time is more valuable than money. Educating yourself on cryptocurrency via Crypto Tutors helps focus on providing value where it’s needed, so you don’t have to chase the money it will pursue you. Put in the work to build multiple income streams, and sooner than later, you will unlock the key to wealth.
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About The Author
Dawdu M. Amantanah is a technical writer and contributing editor for Bitcoin Magazine , BlackBitcoinBillionaire and Senior Editor for Satoshi’s Journal. He is passionate about cryptocurrency, economics, radical entrepreneurship, and whatever else he finds attractive at the time.