Value at Risk (VaR): A Safety Check for Your Investments
Value-at-Risk (VaR) is a powerful tool that helps investors understand potential losses in their portfolio over a specific timeframe.
Think of it as a financial "seatbelt," offering insights into the risks you face.
Here’s how it works: Suppose you have a $100,000 crypto portfolio. If the 1-day VaR at a 95% confidence level is $5,000, this means there’s a 95% chance your portfolio won’t lose more than $5,000 in a single day.
VaR is important as it manages Risk Helps you prepare for potential losses by Performance Benchmarking Measures risk-adjusted returns and Regulatory Use,Often required by financial institutions.
But it’s not without flaws.
VaR is based on historical data and assumes the future will mirror the past something the volatile crypto market doesn’t always guarantee.
It also struggles to predict extreme market events, leaving investors exposed to rare but severe risks.
In the end, VaR is a critical tool for understanding and managing risk.
While it’s not perfect, it provides a structured way to navigate the uncertainties of investing with greater confidence.
Crypto Speak: Gas Limits
On the Ethereum blockchain, every transaction and smart contract execution requires computational effort, measured in gas units.
The gas limit is the maximum amount of gas you’re willing to spend to ensure your transaction or contract has enough resources to complete without unnecessary fees or failure.
Think of gas like fuel for your car. Just as you need enough fuel to reach your destination, a transaction or smart contract needs enough gas to get through its execution.
If you set a gas limit that's too low, your transaction might stall out and fail, wasting both time and resources.
Setting the right gas limit is crucial to avoid failed transactions and unnecessary fees.
For example, if you're sending 10 ETH to a friend, setting a gas limit that's too low might cause the transaction to fail, and you'd still lose the gas you spent trying.
By choosing an appropriate gas limit, you ensure that the transaction goes through successfully, avoiding wasted resources.
In short, gas limits are essential for managing transaction costs and ensuring the smooth operation of the Ethereum network.
By understanding how to set gas limits effectively, you can optimize your transactions and smart contracts, making the most of the Ethereum ecosystem.
😎 Have you heard that Web3 casinos are doing very well out of privacy?
Some of them have seen a huge uptick in users as its centralized Web2 counterparts are required to force their players to provide identity documentation.
Whatever you think of gambling, it’s clear that web users want better privacy, and that this is helping to drive a sea-change in Web3 service adoption.
I’m expecting privacy – and the security it brings – to be a major driver for regular users who migrate to blockchain-based platforms.
📰 It’s amazing how mainstream narratives shift. Not long ago, Bitcoin was considered “bad for the environment”.
Now, it’s being positioned as a means of enabling greater clean energy use.
Critically, Bitcoin is helping power the transition to clean energy.
It allows solar and wind farms to operate continuously, soaking up spare output profitably when it’s not needed.
It’s a good sign that journalists’ understanding of crypto is finally improving.
But it does make you wonder what other mainstream narratives will change in the coming years – both for crypto and elsewhere.
PS: You can read my other related crypto post below
1.crypto quant CEO predicts longest Bitcoin bull cycle ever
2.the hidden cost of bag holding
4.mastering the risk to reward ratio
7.mastering crypto chart patterns for better
9.crypto Analyst planb confirm his 2032 Bitcoin forecast
10.how crypto network congestion affect your trade
11.trump meme coin takes off while we slept
12.crypto speak vital role of custodian
13.why liquidity matter for every crypto traders
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