# Global Asset Spread

Today I was reading something regarding how the global assets are distributed. The [article](https://www.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-visualization-2020/) is very visual and have easy to understand graphics, which these days always floats my boat. 

<center> ![crypto.JPG](https://files.peakd.com/file/peakd-hive/azircon/IrfV3iHk-crypto.JPG) </center>

[Source](https://www.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-visualization-2020/)

Above is a simple display, that represent the total value of an asset as a single square. So total above ground silver as an asset (~$44B) is a single square block. All crypto assets together is about $244B, or 3 blocks about twice as big as the Silver block. Annual global military spending about 17.5 such blocks (~$1440B) or $1.4T. In the world the total amount of money that is out there in terms of bank-note or coins; something that we can touch, is about $6.6T. World's above ground gold is about $11T. Gobal stock market? About $90T

<center> ![Real_Estate.JPG](https://files.peakd.com/file/peakd-hive/azircon/IAeAHtnX-Real_Estate.JPG) </center>

[Source](https://www.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-visualization-2020/)

Now, here comes the big enchilada; global real estate is valued at about $280T! Majority of that is in residential, about $220T. Most of that is in North America, where I live :) About 22% of it. Yeah, yeah, I know what you are thinking! It is a blessing and curse at the same time! Total Global Wealth is about $360T! See, not much more than total global real estate, funny huh?

<center> ![Derivative.JPG](https://files.peakd.com/file/peakd-hive/azircon/m6F76h1C-Derivative.JPG) </center>
[Source](https://www.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-visualization-2020/)

But here is the Elephant in the Room! The derivatives. It is hard to value the derivatives. But even the conservative estimate values the derivatives at $558T, with high end estimate at $1 Quadrillion! Let's say that again for kicks; $1 Quadrillion!!

# Traders, Guns & Money

That is a convoluted and long winded way of bringing us to the fascinating world of the derivatives. Title of this section is the title of one of my favorite book on the subject of derivative. The author Satyajit Das, is a global expert on the subject, and consulted all major commercial and central banks, all over the world. Arguably he is one of the few people in the world who actually understood the mathematics of the derivative market. Funny as it might sound, some of the people, who invented some of the derivatives which led to the global financial collapse of 2008-09, didn't know how those instruments actually worked, and what ramification they might cause.

> A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset (like a security) or set of assets (like an index). Common underlying instruments include bonds, commodities, currencies, interest rates, market indexes, and stocks.

Perhaps the simplest form of a derivative is an option of a stock. They are incredibly common, an option is essentially a contract that gives the buyer the right (but not the obligation) to purchase a pre-determined amount of stock within a specific time period. So, you immediately see, there are two elements to the contract, one is price, and the other is time. There are complex interactions possible between these two variables. Another element is the leverage. Options are expressed in contracts, for stocks, 1 option contract represent 100 shares of stock, and can be priced in the market at a fraction of the cost. That means, potentially paying say only $1 for an option, a speculator can control 100 share of a stock worth $100/share. That is potentially 10,000 : 1 leverage! Of course I am exaggerating. Such leverage is hard to accomplish. But 100:1, 200:1... are very common numbers. Stocks are just an example, but same concept can be applied to virtually anything that can be traded. Some are liquid enough to be traded in the open market, in the exchanges, while other rare ones can be manufactured by a financial institution for a specific high net worth client, which can only be traded in the secondary market.

# Leverage

The point of all this was to arrive at the concept of Leverage and why many of the people trading BTC futures in BitMex get their account wiped out. Without getting into the details of the leveraged BTC futures trading, what I like to simply point out, that if someone trades BTC at 100:1 leverage; to control 1 BTC, you will need only 0.01 BTC or only 400 hive! Funny thing is many here can spare 400 hive thinking if BTC goes from $9500 to $10,000, he/she will make $500 profit easy, which would be about 2000 hive. Wow! There is a potential to magically make someone hive account 5X! May be in a day or two!!

## Don't do it!
That same leverage cuts both ways. Instead of rising if BTC falls from $9500 to $9400. That single move can wipe your account out. BTC's current ATR (Average True Range, with a 14 day smoothing) is 400. Means, on average BTC moves $400 every day over last 14 days. So tell me, how easy it is for the BTC to move $100 in a day? VERY! Don't do it!

https://files.peakd.com/file/peakd-hive/zord189/Zcxlm2md-azircon.gif