In this segment we explore what are the key ratios of DirtiCoin and why they are important.
Key ratios of DirtiCoin are the percentages of the Ledger invested in real estate or in cash equivalents.
When investing DirtiCoin into real estate, DirtiCoinMinting targets certain key asset ratios for the asset mix backing the value of DirtiCoin. Our targets are 65% real estate and 35% cash. We allow a variance of 15% up or down. This means a “balanced” Ledger has real estate and cash ranging from 50/50 to 80/20, respectively.
The Liquidity Crunch
Real estate is a notoriously illiquid asset. When you store your wealth in real estate, it may not come out again for months, years, or even decades. This is the natural flow of real estate deals.
If you suddenly pull your money out real estate it can take weeks or months to get it out. Worse, it may cause you substantial losses when you take it out ahead of schedule. When you are desperate, the weeks or months it takes to liquidate a real estate investment might be too slow.
Key Ratios – Haste Makes Waste (wastes your wealth)
The fastest liquidation is when someone buys your investment from you. You often have to sell your investment at a discount to sell it fast. This means you lose a substantial portion of your wealth.
The slowest liquidation is when you have to sell the real estate to someone else before you can get your money. Real estate sales take weeks or months to close. If you want to rush the sale you have to sell at a discount. Again, you give up a chunk of your wealth.
Your desperate need for quick cash is likely to force a loss. This is great for the buyer. It is very bad for your wealth. Because you need to move fast, the buyer usually gets the asset at a substantial discount from its real value. That may not seem fair, but it is the way investing in real estate works. The adage is true, “haste makes waste.” Rapidly withdrawing from real estate assets wastes capital.
Opportunity Costs
Opportunity costs are another problem you have when all your wealth is in real estate. This means that, when a great opportunity comes along you have limited choices.
- Give up and Let the deal go
- Beg, borrow, or steal the money for the new deal
- Sell something fast as use the cash for the new deal
Without liquid reserves, you are unable to act quickly to take advantage of new, emerging opportunities.
Key Ratios – Redeeming DirtiCoin
The Company has a special obligation to DirtiCoin buyers that most real estate investors do not. Because DirtiCoin is a currency, buyers can present it to the Company at any time with the request to redeem it. When the gold standard applied to US currency, this meant that a person had the right to redeem their dollars for gold. In practice, the redemption for gold was usually reserved only for other nations who had bought USD.
Because a purchase of DirtiCoin is not directly linked, either wholly or fractionally, to a specific real estate investment, our promise is that we will redeem DirtiCoin for cash. We will buy it back from you at the current prevailing Asset-Ledger value, regardless of the value when you bought it. We reserve the right to take up to 3 business days for an ordinary redemption. For extraordinary redemptions we reserve the right to take up to 90 calendar days.
If you prefer not to wait, you can take your DirtiCoin to any participating digital exchange and they may be able to exchange your DirtiCoin for any currency offered by that exchange.
Routine Buy Backs
Buying back DirtiCoin will usually be a routine event for the Company. In fact, we anticipate times when we may elect to buy DirtiCoin back into the treasury (and Asset Ledger). The cash reserves a designed to handle this.
If we invested 100% of your wealth in real estate, we would be unable to quickly and easily redeem DirtiCoin for its full market value. With all your wealth locked up in real estate we would be forced to sell real estate to redeem your DirtiCoin. That would lower the values in the Asset Ledger and would directly reduce the value of your DirtiDollars,
We keep a significant portion of your DirtiCoin wealth in cash to prevent forced sales and for special opportunities.
Conclusions
We established target asset ratios in the Asset Ledger of 65% in real estate and 35% in liquid assets. We set variance boundaries set for these ratios. If they are exceeded we take predefined actions intended to protect your wealth stored in DirtiCoin. Our asset ratios are considered key performance indicators (KPI) for the health of DirtiCoin and the Company.
These asset ratios are designed to make it easy and fast for you to meet routine cash needs from the wealth you store in DirtiCoin. In ordinary circumstances you will be able to get full value for every DirtiDollar (DiD). We have designed this to make it as easy as when you store your wealth in a bank. You expect to make routine withdrawals without delays or penalties.
