Even though Solana is a relative newcomer to the blockchain space, the protocol has already established itself as one of the most prominent blockchain projects out there. The rising popularity of <a href="https://limechain.tech/blog/top-nft-marketplaces/">NFT marketplaces </a>running on Solana has been among the recent success stories in the blockchain space, while the protocol’s native token SOL has been among the best-performing cryptocurrencies this year and is currently the fifth most valuable token on the market.

Yakovenko and the Solana team found a way to utilize that method in a blockchain-based system by using a similar mechanism to the nLocktime feature that can be found in the original blockchain protocol – Bitcoin. NLocktime allows for postdate transactions using block height instead of timestamps. As it turns out, this is a cryptographically-secure way to show that time has passed. The same principle is used to power Solana’s key innovation – the novel Proof of History algorithm. However, the Solana team has refined the approach by using a much more granular verifiable delay function, a SHA 256 hash chain, which is used to checkpoint the Solana ledger and coordinate consensus. Essentially, this method assigns a cryptographic clock to every transaction.  According to Solana, thanks to this method, the protocol could theoretically reach 710,000 transactions per second, or the theoretical limit of a 1GB centralized network.

What is Solana’s Proof of History?

In addition to Proof of History, Solana utilizes a Proof of Stake algorithm which lets users stake tokens to help secure the Solana network. The protocol uses a delegated stake model, which sees users delegating their tokens to established network validators. This is a shared-risk, shared-reward model that incentivizes token holders to have their tokens delegated for long periods of time. At the same time, the goal of a validator is to get more people to delegate tokens because the delegated stake size determines how often a validator is chosen to write new transactions to the ledger. In addition, similarly to other PoS protocols, Solana employs a slashing mechanism – which removes and destroys tokens from a stake – to penalize malicious behavior, which creates a financial incentive for validators to perform their duties diligently. Validators also charge delegators with a commission fee, which is calculated as a percentage of rewards earned. This fee is meant to cover the costs validators incur when running and maintaining their systems. And since validators always look to attract more deligators, this encourages them to compete on fees  – naturally, validators who offer lower fees for their services are more attractive.

What is Solana’s Proof of Stake?

At the heart of the protocol’s architecture lies the Solana cluster – a set of validators working together to serve client transactions and maintain a ledger. At any given moment, a cluster has a leader, with the role being in rotation among all validators participating in that cluster. The cluster leader is responsible for bundling and timestamping incoming client transactions (which are first received by validators and then relayed to the leader) by utilizing the PoH algorithm. Then the leader pushes them onto the cluster’s ‘data plane’. From there they are validated by the validators and added to the ledger.

Architecture

For starters, smart contracts in Solana are called programs and are stateless. This means that, unlike Ethereum smart contracts which contain both the program logic and state, Solana programs contain only the logic and are deployed on-chain in a ‘read-only’ mode. Once deployed, the programs can be accessed by external accounts, which contain the data related to program interaction (unlike Ethereum accounts, accounts on Solana can store data). This separation of logic and state informs the specific production flow of Solana dApps. Every Solana dApp consists of two parts: a blockchain-based program (or set of programs) and a web application through which users can interact with the blockchain code. The blockchain program is deployed directly to a Solana cluster and users can then send instructions to the program via transactions. A single transaction can contain one or several instructions, which are then executed sequentially and atomically. If all instructions are valid, the program is successfully executed. However, if even a single instruction is invalid, the changes made by the transaction are discarded.

What is Solana’s Programmability?

Every Solana dApp consists of two parts: a blockchain-based program (or set of programs) and a web application through which users can interact with the blockchain code. The blockchain program is deployed directly to a Solana cluster and users can then send instructions to the program via transactions. A single transaction can contain one or several instructions, which are then executed sequentially and atomically. If all instructions are valid, the program is successfully executed. However, if even a single instruction is invalid, the changes made by the transaction are discarded.

Solana’s impressive performance in terms of transaction throughput and cost effectiveness has allowed the protocol to emerge as one of the most prominent players in the DLT space. The recent boom of Solana-based NFTs and the rise of NFT marketplaces like Solanart has shown that the platform is capable of competing in an area where Ethereum is widely viewed as an undisputed leader. Meanwhile, the spectacular rise of the SOL token this year suggests that there are many who believe that Solana has a bright future.

What are Solana’s Ups and downs?

What is Solana? A public blockchain that uses novel consensus and synchronization techniques to achieve high transaction throughput.

crypto

Cryptocurrency

moneyandinvestments

Money & Investments

startup

Startups

What is Solana?

To solve Ethereum’s scalability problems, Buterin and the ETH crew have outlined a network upgrade called Ethereum 2.0, or Eth2. Ethereum 2.0 brings foundation-altering changes to how Ethereum works, but it will take years to implement. Since 2020, Ethereum developers have worked tirelessly on bringing the network’s upgrade to fruition, hoping to make Ethereum faster, more secure and more accessible than ever before.

Ethereum 2.0 marks a significant shift in the network’s consensus algorithm. Instead of Ethereum running an energy-intensive proof-of-work algorithm, the Eth2 upgrade means switching to a proof-of-stake algorithm. A PoS algorithm brings many benefits over a PoW one, adjusting various aspects of a network like scalability, security and accessibility.

Breakdown of Ethereum 2.0

Ethereum’s transition into 2.0 is broken down into various stages.

Transitioning to Ethereum 2.0

Phase 0 of the Ethereum 2.0 upgrade introduces what’s called the Beacon Chain. Launched on December 1, 2020, the Beacon Chain marks the shift to PoS, enabling users to stake (lock away) their Ethereum and become validators. That said, Phase 0 does not affect the main Ethereum blockchain, the Beacon Chain exists alongside Ethereum’s mainnet. However, both the Beacon chain and mainnet will eventually be linked. The objective is to “merge” Mainnet into the Beacon Chain-controlled and coordinated proof-of-stake system.

Phase 0

With Ethereum 2.0, validators and other users can run their own shards, validating transactions and keeping the mainchain from seeing too much congestion. A proof-of-stake consensus method is required for shard networks to enter the Ethereum ecosystem safely. Staking will be introduced on the Beacon Chain, preparing the stage for the shard chain update to come later.

Phase 1

Finally, Phase 2 will see the introduction of Ethereum WebAssembly or eWASM.The eWASM compiles code much faster than the EVM, speeding up processes within the network. Gas works more efficiently via the eWASM, and the eWASM is compatible with various traditional coding languages like C and C++.

Phase 2

Basic transactions on Ethereum aren’t the only factors affected by the network’s lack of scalability. Ethereum’s problems affect <a href="https://cointelegraph.com/nonfungible-tokens-for-beginners/what-are-nfts-and-why-are-they-revolutionizing-the-art-world">nonfungible tokens (NFTs) </a>and aspects of decentralized finance like loaning and borrowing. For example, building and trading NFTs on Ethereum can cost hundreds of dollars in gas fees due to network congestion.

What comes next?

Ethereum has suffered from scalability issues long enough. The time to upgrade is now. The Beacon Chain, Merge and Shard Chains are all part of Ethereum 2.0, which will drastically modify the protocol, making it more scalable and efficient.

Ethereum upgrades: A beginner’s guide to ETH 2.0

<ul><li>Researchers and philosophers identify two types of psychological well-being, which can be summarized as the purposeful and the pleasurable. </li><li>Previous research has already established that, on average, wealthy people experience happier, more meaningful lives. </li><li>A new study asks a more nuanced question: Does meaning predict happiness, regardless of wealth? The results suggest that meaning is less important to happiness for wealthy people. </li><li>More importantly, meaning may be extra important for people without much money.</li></ul>

Key Takeaways

Researchers and philosophers differentiate between two types of psychological wellbeing: eudaimonic (the meaningful, purposeful, or significant) and hedonic (the pleasurable or enjoyable). The latter aligns with what most people term “happiness.” To understand the distinction, imagine working hard on an important life goal. This might feel meaningful, but unpleasant. On the other hand, taking heroin might feel meaningless, but enjoyable.

Defining Meaning and Happiness

Meaning and happiness are rarely totally separate. In general, meaningful experiences make people feel happy, and vice versa. For example, spending time with friends, buying gifts for others, and celebrating life milestones can be both meaningful and enjoyable. Finding meaning in life is therefore usually a good way to boost happiness.

Finding Meaning Boosts Happiness

To the possible disappointment of anyone hoping to indulge in some schadenfreude, prior research establishes that, on average, <a href="https://nobascholar.com/chapters/34/download.pdf">wealthy people experience happier</a> and <a href="https://www.pnas.org/doi/10.1073/pnas.2016976118">more meaningful</a> lives than their lower-income counterparts. This is probably because money can buy both meaning and happiness, so long as you <a href="https://www.sciencedirect.com/science/article/abs/pii/S1057740811000209">spend it in the right way</a> — for instance, by purchasing experiences, time with loved ones, or gifts for others.

Money Does Buy Happiness

On one hand, meaning might be especially important for wealthy people’s happiness, since all of their basic needs are met and they have the resources to pursue grand, meaningful experiences. On the other hand, meaning may be less important, because it is easier for the wealthy to pursue happiness in other ways, like fancy trips, fun cars, and big parties.

The Paradox Of Wealth

The wealthier someone is, the less meaning affects their happiness levels. Importantly, this does not mean that high-income people reported less overall meaning or happiness — their levels were about as high, or even higher, than those of lower-income participants. But the study found that meaning was less important to their happiness.

Study 1: The Americans

Once again, the correlation between meaning and happiness became smaller as wealth increased.This pattern held in 10 out of 11 world regions, including Latin America, Sub-Saharan Africa, the Middle East, and Europe.

Study 2: The World

For wealth status, participants rated their socioeconomic status using the MacArthur social ladder, which asks participants where they believe they stand compared to others considering their money, education, and jobs.  Once again, the higher someone reported being on the socio-economic ladder, the less meaning predicted their happiness.

Study 3: Different Questions

One of the downsides of large survey studies, of course, is that the researchers cannot control every relevant factor that could affect the results. In particular, <a href="https://onlinelibrary.wiley.com/doi/abs/10.1002/(SICI)1520-6793(199701)14:1%3C71::AID-MAR5%3E3.0.CO;2-L">age and religiosity</a> are correlated with meaning and income, making them potential confounding factors. Additionally, income might affect how much meaning and happiness vary — in other words, how much their scores can be expected to spread out. This can affect statistical analyses.

Confounding Factors

In short, data from more than 500,000 people suggest that meaning is less important to happiness for wealthy people. This does not mean that wealthy people are struggling to find meaning: Both their meaning and happiness levels are on par with, or even higher than, their lower-income counterparts.  Perhaps wealthy people simply do not need meaning to be happy. Their resources minimize the stress of meeting daily needs like paying bills or affording food. They can also afford the kinds of purchases that boost happiness, like fun experiences and enjoyable hobbies.

The Findings: The Rich Are Busy Being Rich

The more important takeaway is that meaning may be extra important for <a href="https://journals.sagepub.com/doi/abs/10.1177/0956797613507286">people without much money</a>. Compared to their wealthier counterparts, poor people suffer high rates of <a href="https://onlinelibrary.wiley.com/doi/abs/10.1002/hec.1011">depression and other mental health</a> problems. Incorporating meaning-making into one’s life may be a free way to improve happiness.

Meaning Is A Currency Of The Poor

Philosophers identify two different kinds of happiness. Research finds that having money makes it easier to attain both of them.

personaldevelopment

Personal Development

Can't buy me meaning? Money cuts a quicker path to happiness

The envelope budgeting money management strategy forces you to accurately budget your expenses each month by only giving you access to a predetermined amount of money, and the goal is to teach you to gain better control of your finances.Though the envelope budgeting method might not be suitable for everybody since it requires only the use of cash, it is still a great exercise to help you form a disciplined budgeting habit. So how does the envelope system work, and is it the right choice for you? Here is what you need to know.

Intro: Restart Your Saving Habit

The envelope system is a <a href="https://mint.intuit.com/blog/budgeting/money-saving-challenge/">money management technique</a> that helps track exactly how much money you have in each budget category for the month by keeping your cash tucked away in physical envelopes. Once you’ve decided how much to budget for each category, you are only allowed to spend the amount of cash available in each envelope. Once you run out of cash, you can’t spend money in that category until the following month.

Defining The Envelope 

1. Create Categories and a BudgetCreate clear categories so that you know exactly where your money is going and how much is being spent.2. Label the EnvelopesAfter deciding which categories to include in your spending budget, you’ll next write the names of the category and the budget amount on each envelope.3. Allocate Funds to Each EnvelopePlace the allocated funds according to your established budget into each envelope.4. Spend WiselyWhen it’s time to go grocery shopping or pay your bills, take funds from the appropriate category or simply carry the envelope with you on the trip.

Start Using the Envelope Budgeting System

Even if you already have a healthy emergency fund, a budget tracker or worksheet will allow you to track how much money you’re earning, investing, and spending each month. Unlike the envelope method, you aren’t restricted to only spending with cash, which allows much more flexibility. Though manually tracking your expenses can take up some time, it’ll also force you to think about potential ways to cut down on your spending and improve your money habits.

Use A Monthly budget Tracker

Looking for a new way to save money? Consider envelope budgeting to help divide your income into different categories and manage spending.

career

Career

How to Use Envelope Budgeting to Increase Your Savings

NFTs are now rarely being a passive income, but in near future, they'll be the best source of passive income.And make sure you're early in the game!

Present

But, How can it be possible?for example, If a YouTuber had 100 videos in his channel and he minted them as NFTs, he shares the profit of the amount he earned through monetization to the owner of the videos.Like,you bought one NFT from him, if he earned $100 from that video he'll share the percentage of the amount you guys decided when you bought the NFT.

Possibilities

This will be more like a share market, we might be see this type of passive income with NFTs in real estate, creator economy, startup funding and many more places.Recently, a music artist, Blau minted 300+ NFTs for his album to share 50% of revenues from the song 'Worst Case' for the holders.Ever thought to invest on a creator? I'm so excited for this.Let me know your views on this type of Passive Income with NFTs.And thank you for reading :)

Creator Economy

Can we consider NFTs as passive Income? 

The first rule of compounding is to never interrupt it unnecessarily.

Don’t switch fields, don’t look for a new job, don’t move on.There’s a decent chance your motivation for leaving is driven by two things: The grass-is-greener fallacy of wrongly assuming the alternative is better or denying the fact that great opportunities occasionally require annoyance and sacrifice.On the flip side, some careers and jobs are dreadful, and the economy only works when people are willing and able to find better opportunities. Stay put is good advice maybe a third of the time when you’re young and perhaps half the time when you’re older.

Stay On Your Course

<ul><li>Most people would never consider marrying a partner until they’ve dated for at least a year, maybe five, because it takes that long to grasp what a person is or isn’t capable of beyond their surface-level resume. </li><li>However, people expect their employers and coworkers to give them full respect, autonomy, and confidence from the start. It rarely happens. </li><li>Trust has to be earned, and it’s mostly earned through firsthand observation over time when people watch you under a variety of circumstances. Even when you have a track record at other companies, trust is doled out in small doses initially.</li></ul>

Trust Takes Time

The key is that you’ll probably do your best work when you've earned your colleagues’ trust, which is the hidden value of staying put. This is especially true if your job involves making good decisions vs. doing something physical with your body. Good decisions <a href="https://www.collaborativefund.com/blog/lazy-work-good-work/">require lots of quiet time alone in your head, maybe sitting on the couch thinking or going for a walk</a>. It rarely looks like work, which means your coworkers have to trust you when you’re doing it.

Earning Trust Is The Hidden Benefit Of Staying Put

In investing, selling after a bad stretch feels like the right thing to do. You learned your lesson and seek greener pastures. But everything we know about investing shows it’s the wrong action: the big money comes from compounding uninterrupted over years and decades, when what you’ve done is not as important <a href="https://www.collaborativefund.com/blog/the-freakishly-strong-base/">as how long you’ve been doing it for</a>.

Staying Put In Investing

A lot of good ideas are ignored because they’re only occasionally useful. No one wants to bring them up because there are so many counterexamples of times they were wrong. One I thought about recently after watching a few friends manage their careers is the value of staying put. Don’t switch fields, don’t look for a new job, don’t move on. There’s a decent chance your motivation for leaving is driven by two things: The grass-is-greener fallacy of wrongly assuming the alternative is better, or denying the fact that great opportunities occasionally require annoyance and sacrifice. Of course it’s not universal advice. Some careers and jobs are dreadful, and the economy only works when people are willing and able to find better opportunities. Stay put is good advice maybe a third of the time when you’re young and perhaps half the time when you’re older. But when it’s good advice, it can be staggeringly good advice. What’s easy to overlook is that networks and trust compound like any other asset, and every time you switch jobs or careers you reset the clock to some degree. Robert Weinberg – a cancer researcher who’s worked at MIT for more than half a century – said recently: People say to me sometimes, “How could you stay in one place for so long?” We all know the lives of academic gypsies who spend three years here, 14 years there, five years there. And each time, each place they settle down they make friends and colleagues, and after a period of time they and their families are uprooted and moved to some other place. There is never any constancy in their lives. Never any robust social network. Never any lifelong friends whom one can associate with. So I have no regret about being a stick in the mud, having never moved very far, and working now only a couple hundred yards from where I was an undergraduate. If I were still doing the same things that I had done as a student I would be a little regretful. But in fact this is a very dynamic place. Academia is different from other careers. But this nails a few points. One is how long it takes for social networks to compound. Most people would never consider marrying a partner until they’ve dated for at least a year, maybe five, because it takes that long to grasp what a person is or isn’t capable of beyond their surface-level resume. But those same people expect their employers and coworkers to give them full respect, autonomy, and confidence from the start. It rarely happens. Trust has to be earned, and it’s mostly earned through firsthand observation over time, when people watch you under a variety of circumstances. Even when you have a track record at other companies, trust is doled out in small doses when you’re a new face. The key is that you’ll probably do your best work when your’ve earned your colleagues’ trust, which is the hidden value of staying put. This is especially true if your job involves making good decisions vs. doing something physical with your body. Good decisions require lots of quiet time alone in your head, maybe sitting on the couch thinking or going for a walk. It rarely looks like work, which means your coworkers have to trust you when you’re doing it. Then there’s the skill side. Most of the time you see someone do something incredible, with what seems like little effort, and you ask “How did you do that?”, the honest answer is, “I’ve been doing this every day for 10+ years.” Noticing patterns and connecting the subtle dots is something that’s hard to teach in a classroom but becomes obvious when you’ve lived and breathed a field for decades. All of that breaks down when you move to a new field or a new company. The shiny allure of new overrides the quiet power of compounding in a way that’s easy to overlook. In investing, selling after a bad stretch feels like the right thing to do. You learned your lesson and seek greener pastures. But everything we know about investing shows it’s the wrong action: the big money comes from compounding uninterrupted over years and decades, when what you’ve done is not as important as how long you’ve been doing it for. Nassim Taleb says if you’re going to panic in investing, panic early. Same goes for your career – if you’re going to quit, quit early so whatever’s next has a shot at compounding.

problemsolving

Problem Solving

leadershipandmanagement

Leadership & Management

Staying Put

There are clever methods to break free from the painful cycle of working for others your entire life while failing to preserve anything.

   Critical Lessons from “Rich Dad Poor Dad”

"Money without financial literacy is no money"Making money and keeping money are two different things. Never confuse the two . Remember the athlete who made millions at 24 but ended up sleeping under a bridge ten years later?

1. Financial education is your greatest asset

Learning can increase your knowledge and equip you with unique talents to help you advance in your career.

2.Don't work to earn money; work to learn..

"An asset is something that puts money in your pocket and a liability is something that takes money out of your pocket,"Rich people acquire assets (securities and investments) and poor people add liabilities (commitments and obligations).This is the most significant distinction that can affect an individual's own financial future.

3. Know the difference between ASSETS and LIABILITIES..

The profits generated by your assets should be re-invested in new ones.

4. Reinvest the profits you make

Rich people are taught from an early age that wealth is earned by LEVERAGE rather than hard effort. They put their money into investment entities, which handle all of the "labour."

5.The rich DON'T work for money, Their Money Works For THEM

Reading is a fundamental step when attempting to improve your personal finances.

Although we have been successful in our careers, they have not turned out quite as we expected. We both have changed positions several times-for all the right reasons-but there are no pension plans vesting on our behalf. Our retirement funds are growing only through our individual contributions. Michael and I have a wonderful marriage with three great children. As I write this, two are in college and one is just beginning high school. We have spent a fortune making sure our children have received the best education available. One day in 1996, one of my children came home disillusioned with school. He was bored and tired of studying. “Why should I put time into studying subjects I will never use in real life?” he protested. Without thinking, I responded, “Because if you don't get good grades, you won't get into college.” “Regardless of whether I go to college,” he replied, “I'm going to be rich.”

books

Books

Kiyosaki is best known for his book Rich Dad, Poor Dad, the #1 New York Times bestseller. Kiyosaki followed with Rich Dad's CASHFLOW Quadrant and Rich Dad's Guide to Investing.

Robert T. Kiyosaki

Rich Dad, Poor Dad

It has always been important to have a solid financial plan, especially during times of economic uncertainty. In this list, here are five financial tips that I use on a daily basis that have worked for me and I hope you find value in them as well.

Personal Finance Tips

We hear quite frequently that sitting on cash is a mistake because of the "silent tax", otherwise known as inflation eating away at it year after year. While this is true, and it is not the best investment to hold a huge portion of cash sitting in a savings account with a low-interest rate, it is essential to have at least a few months of savings on hand to protect yourself in case of an emergency. Without having some savings on hand, you would be walking on a thin line where any event that could happen may place you in a tough position. In the event of a sudden expense, you cannot avoid it.

1. Always Have a Savings Cushion

Make sure you are taken care of first financially, whether it is investments, savings, or having cash on hand for a rainy day before everything else. If you do not pay yourself first, then you are creating a system where you are making everyone else surrounding you a little wealthier, but at the end of the day you are out of money, and nothing left for you. This is a perfect formula for restricting your financial freedom because if you do not have your own finances in order first, it is hard to help everyone else around you in the long-term

2. Pay Yourself First Before Other Expenses

I like to think of this as a snowball effect and a consolidation technique. Starting off small and compounding to a large payoff, and eliminating the small debt early on so you can focus on tackling the larger ones. By taking care of the smaller debts first, you are setting small, but achievable goals to pay off your debt without being overwhelmed with focusing on paying off the larger debts first, potentially hurting your morale. Working to consolidate as few debts as possible also helps to clear your mind and focus more.

3. If you Carry Debt, Pay the Smaller Debts off First Before the Larger Ones

Most people that have any investments most likely have just a 401k and nothing else. While it is a great resource to have, it puts you in a high-risk situation because you are at the mercy of the stock market. It is especially tragic to hear about a couple investing in their 401k for 40+ years and when the time comes to draw off of it, the market crashes. Diversifying in multiple investments, better protects you from experiencing this sudden loss. In addition to a 401k, having a real estates fund, such as Fundrise, or a cryptocurrency investment.

4. Diversify Your Money When Possible

At the end of the day, cash is still the best form of payment whenever possible. Cash also helps you manage your money better because it is physically on hand and this is what you have to work with. If you can only buy what you can afford in hand, you are more likely to make smarter purchases. By relying on a credit or debit card, most people do not pay close attention to where their money is going and they are more likely to make impulse purchases because they do not have the physical money in hand. Money that is out of sight is out of mind and is usually more costly.

5. Cash is Still King, so Use it Whenever Possible

Tips for Personal Finance and investing money in a better way.

Money Investments 

Humanity has used several forms of leverage to create wealth through history, Naval Ravikant summarizes them into four kinds: Labour, Capital, Media and Code.Besides leverage, the way we put work into our careers and projects can also be divided into two categories, which are Time-based work and Iterations-based work.In this Thread I'm going to dissect these categories, go through how we can use this knowledge to find our own way to generate wealth and show how it can be permissionless and not solely based on hard work.

The "Newly Rich" Way To Generate Wealth

Leverage is about disconnecting your inputs from your outputs, or increasing the ratio between one and the other.For example, if you're a lumberjack and work by yourself, 8 hours of work will equal roughly "8 hours worth" of output, depending on your physical capacity and experience.However, if you were to hire a team to work for or with you, you'd be leveraging your work though labour, and increasing the ratio of results to hours put in.

What Is Leverage?

Labour<ul><li>The oldest form of leverage, existing ever since feudal societies.</li><li>Permissioned leverage, requires people to work for or with you.</li><li>Hard to manage, requires great people management skills.</li></ul>Capital<ul><li>The form of leverage behind the rich of the previous generations</li><li>Permissioned leverage, requires acquisition of money from other people.</li><li>Good credit can greatly facilitate access to this form of leverage, though it can be risky.</li></ul>

Classic Kinds Of Leverage

Media<ul><li>More recent, came to be through the printing press and exponentially blew up with the internet.</li><li>Permissionless, anyone can create content and distribute it to nearly the whole world.</li></ul>Code<ul><li>The most recent kind of leverage, behind the "Newly Rich".</li><li>Can work for you while you sleep.</li><li>Permissionless, any product or service created through code has near infinite capability of distribution and scalability.</li></ul>

"Newly Rich" Kinds Of Leverage

Easier and more efficient than leveraging work in which "hours worked" is the main input, you can leverage work based on iterations.If you have the knowledge required for some manual kind of work – let's use baking as an example – you can productize the information itself instead of working solely through labour.By creating an infoproduct such as an ebook or an online course, you'll have a product that can instantly be multiplied and sold to anyone, anywhere in the world.

Which Kind Of Work To Leverage?

"But I'm not qualified enough to do it" False. Not only can you market it as beginner friendly and sell it for cheaper, you will also learn even more by creating, and then be able to reiterate and make new, diferent kinds of content.Thanks to the new forms of leverage, you can start practically without cost, and have a product that works for you while you sleep.Try it as a fun side project, do it with a friend, do it about a topic you love, or do it just to prove to yourself that you can leverage your knowledge and generate wealth.

Stop Doubting Yourself, Just Start

What I've learned so far reading the "wealth" section The Almanack of Naval Ravikant, I strongly recommend everyone to read it.

GETTING RICH IS NOT JUST ABOUT LUCK; HAPPINESS IS NOT JUST A TRAIT WE ARE BORN WITH. These aspirations may seem out of reach, but building wealth and being happy are skills we can learn. So what are these skills, and how do we learn them? What are the principles that should guide our efforts? What does progress really look like? Naval Ravikant is an entrepreneur, philosopher, and investor who has captivated the world with his principles for building wealth and creating long-term happiness. The Almanack of Naval Ravikant is a collection of Naval's wisdom and experience from the last ten years, shared as a curation of his most insightful interviews and poignant reflections. This isn't a how-to book, or a step-by-step gimmick. Instead, through Naval's own words, you will learn how to walk your own unique path toward a happier, wealthier life.

Getting rich is not just about luck; happiness is not just a trait we are born with. These aspirations may seem out of reach, but building wealth and being happy are skills we can learn. So what are these skills, and how do we learn them? What are the principles that should guide our efforts? What does progress really look like? Naval Ravikant is an entrepreneur, philosopher, and investor who has captivated the world with his principles for building wealth and creating long-term happiness. The Almanack of Naval Ravikant is a collection of Naval's wisdom and experience from the last ten years, shared as a curation of his most insightful interviews and poignant reflections. This isn't a how-to book, or a step-by-step gimmick. Instead, through Naval's own words, you will learn how to walk your own unique path toward a happier, wealthier life.

Eric Jorgenson is an entrepreneur, writer, and investor. He is on the founding team of Zaarly, and has been publishing online since 2014. His blog has educated and entertained over a million readers.Eric is on a quest to create (and eat) the perfect sandwich. He tweets at @ericjorgenson and publishes new pieces and projects on ejorgenson.com/blog

Eric Jorgenson

The Almanack of Naval Ravikant

The Almanack Of Naval Ravikant

<ul><li>Get owner’s compensation right and stop playing games with distributions.</li><li>Breakeven is 10% pretax profits.</li><li>Labour efficiency is the key to profitability. Manage your salary cap and build a team culture around labor productivity.</li><li>Forecasting is better than budgeting. Spend 75% of your time looking ahead at what you plan to make happen and 25% of your time reviewing actual performance.</li><li>Understand the economic value of your business so you have a baseline for equity decisions.</li></ul>

<ul><li>Don’t confuse business profits with owner's salary.</li><li>You get paid a salary for what you do, and you get a return on what you own.</li><li>Until you pay yourself a market-based wage and plug that number into your financials, your financial data is worthless.</li><li>If you got run over by a bus today and your heirs decided they would keep the business going in your absence, what would they have to pay someone to do your job? Answering this question determines your market based-wage.</li></ul>

Owner's Salary: Why Your Salary and Distributions are Fogging Your View of Net Income

<ul><li>If you’re not able to pay yourself a market-based wage, then you’re operating at a loss.</li><li>Until you pay yourself a market-based wage—and make a profit on top of that you have a sick cow on your hands.</li><li>Your goal should be to create a business that generates income for you every day (cash cow).</li></ul>

Create A Cash Cow

<ul><li>Use sweat equity to compensate yourself when you can’t afford a market-based wage.</li><li>Sweat equity is the value you have created for your business through your unpaid work.</li><li>This concept helps you calculate your lost opportunity to earn market-based wages had you chosen to work elsewhere.</li><li>If you have outside investors, it gives you a way to balance the worth of your effort with the money they invested.</li></ul>

Calculate Your Sweat Equity

<ul><li>A high employee turnover rate is very expensive.</li><li>Fair does not mean equal. Two people are rarely worth the same amount of money.</li><li>Management by committee is an absolute failure as a business model. There has to be a clear leader even if the stock ownership is equal.</li></ul>

Market-Based Wages For All

Pretax Profit = Total Sales – (COGS + Operating Expense + Interest Expense)<ul><li>Pretax profit is the profit you make after you take all your sales minus all your costs, before you pay taxes.</li><li>Focus on your pretax profit. Interest, depreciation, and amortization are real numbers that you need to consider in the profit calculation.</li><li>If you can’t pay yourself a market-based wage, the first thing to focus on is getting your business profitable.</li></ul>

Profit: The Importance of Pretax Profit

Gross Profit = Revenue – COGSDo NOT include direct labor costs in cost of goods sold.Cost of goods sold typically includes pass-through costs like finished goods, materials, and subcontractors.By focusing on gross profit instead of revenue, most businesses from any industry can be compared side to side.Contribution Margin = Gross Profit – Direct Labor

Gross Proft And Contribution Margin

<ul><li>The target for pretax profit is 10%.</li><li>By the time you’re at the breakeven point, your business is already dead.</li><li>The best businesses operate between 10 percent and 15 percent.</li></ul>

Breaking Even Isn’t Good Enough

The “black hole” exists between the $1 million and $5 million in revenue.This is a time in your business growth when you’re forced to add staffing and infrastructure before you can really afford to.One of the keys to success is continually upgrading your staff.The need to add management infrastructure seems to naturally occur when you have about twenty employees typically, when you’re between $2 million and $3.5 million in revenue.

The Black Hole

<ul><li>Hire slowly, fire quickly.</li><li>Use the topgrading concept of hiring when it comes to interviewing and selecting candidates.</li><li>Use personality profiles as part of the screening process.</li><li>Beware of hiring the “been there, done that” credential. Ask yourself why that person is available.</li><li>Hire young. These young people are like sponges, and they want to absorb knowledge and information.</li><li>Don’t take a trail-and-error approach to hiring. Follow a process and make an informed decision.</li></ul>

Hiring 101

<ul><li>Your “capital safety net” is calculated by figuring how much cash you need to hire the people you need, then estimating how long it will be before your business can pay the new hires and still remain profitable.</li><li>Prepare a cash flow forecast by month for the time period of the expansion to determine your capital needs.</li><li>If you don’t have the capital, but still want to go on a journey through the “black hole” then you’ll need to raise capital.</li></ul>

Your Capital Safety Net

<ul><li>Focus on your gross profit per labor dollar as your key indicator for labor productivity.</li><li>Stay at the 10% pretax profit mark every step of the way by adding labour only at the last possible moment.</li><li>You can’t increase pretax profit by revenue growth alone. You improve your profitability by getting more productivity out of your labor.</li><li>The profit curve should ideally mirror the revenue curve. As revenue increases, you should maintain 10% profitability.</li><li>Beware of labor creep as you grow. This is when you start hiring more people than you need to take care of the annoying tasks in your business. </li></ul>

 Labour Productivity: Your Key to Surviving the Black Hole

<ul><li>Determining your salary cap is the best way to achieve your required labour productivity.</li><li>Nonsalary costs include all fixed and variable costs, including COGS, that are not paid labour.</li><li>In the example below, your salary cap for the year is $500,000. This is how much you can spend in total on wages, including all salaried and hourly employees.</li></ul>

Determining Your Salary Cap

<ul><li>Managing the salary cap is the key to improving profits.</li><li>If you are exceeding your salary cap, decide what to do about it. Are you going to hold wages constant until you hit your profit target, are you going to cut staff, or are you going to do some of both?</li><li>Once you get to 15% pretax profit, then you can add employees to drive your profit back down to 10% again. Work your way back up to 15% and repeat.</li><li>If you try to raise your salary cap when you have only 10% pretax profit, you’ll drive your profit down toward 5%, which is the danger area.</li></ul>

Managing Your Salary Cap

<ul><li>Before you spend money on anything, you have to set the taxes aside.</li><li>Don’t pay taxes until you absolutely have to without incurring a penalty.</li><li>But until you pay the taxes, you have to set the money aside and get it out of your financial calculations so you know it isn’t yours to spend.</li></ul>

Business Physics: The Four Forces of Cash Flow - #1. Paying Your Taxes

<ul><li>You can’t build wealth until you get out of debt.</li><li>People who take a low- to no-debt approach can handle bad economic news because they live more stable and productive lives.</li><li>If you borrow money, you have to forgo any after-tax profits because you have to repay debt with those profits.</li><li>Do not confuse debt with capital. Capital is the cash you leave in the business to fund your receivables and inventory for normal business conditions, and debt is financing for special cases.</li></ul>

#2. Repaying Debt

<ul><li>As a general rule of thumb, your core capital target is equal to two months of operating expenses in cash and nothing drawn on a line of credit.</li><li>Your core capital target forces you to pay for accounts receivable, inventory, and equipment with capital or term debt.</li></ul>

#3. Reach Your Core Capital Target

<ul><li>Capital formation is the sum of sweat equity, the money you invest, and after-tax profits that you keep in the business.</li><li>Consistent profits over time allow you to build equity by keeping those profits in the business, which then allows you to hit your core capital target, which then allows you to have excess cash that you can take out without damaging your business’s ability to grow or deal with struggles.</li></ul> <ul><li>Most entrepreneurs who have businesses between #1 million and $5 million need to build up a foundation of $2 million of liquid, safe, core assets that give them stability.</li></ul>

#4. Taking Profit Distributions

<ul><li>Paying yourself with distributions instead of a salary to avoid payroll taxes (S-Corps).</li><li>Getting involved in offshore activities for the benefit of saving taxes only.</li><li>Intentionally miscoding personal expenses as business expenses.</li><li>Bartering by way of trading legitimate business expenses for something that is for your personal benefit.</li><li>Not filing tax forms for subcontractors.</li></ul>

Common Areas of Tax Fraud

Opportunity is missed by most people because it is dressed in overalls and looks like work.

<ul><li>Document your culture and how it ties into your profitability as a business.</li><li>The more you document it, the easier it is to live it and maintain it.</li><li>Send an email at the beginning of the week that highlights one segment of our culture document to let everyone know what our focus of the week is.</li><li>A company with great culture and no profits is going to die.</li><li>You have to make sure your culture doesn’t excuse people from getting their jobs done.</li></ul>

The Lip Service On Culture

<ul><li>Companies that underpay employees tend to struggle in the long run due to high employee turnover.</li><li>You also can’t assume that if you pay higher wages you’ll get more productivity.</li><li>Never give employees a cost-of-living adjustment.</li><li>What you pay them should be within a market-based range for their role.</li><li>Years of experience often don’t count for much. The important thing is what people know and if they have the capacity to produce.</li></ul>

The Salary To Give To Employees

<ul><li>Your employees need to understand what is expected of them in terms of productivity.</li><li>The best way to accomplish this is through the employee review process.</li><li>You need to have a formal meeting with each employee at least twice a year.</li><li>Focus on career planning and career path in employee reviews.</li><li>Help employees understand that they are welcome to work at your company as long as you both are getting a fair exchange.</li><li>It’s the responsibility of the CEO to provide employees with a vibrant environment, a fair wage, and a good culture.</li></ul>

Evaluation Process is Key

<ul><li>Throwing money at a problem doesn’t change the outcome.</li><li>Most entrepreneurs look to incentive plans as a substitute for management and leadership.</li><li>It’s usually more effective to use small amounts of money along the way to recognize outstanding achievements.</li></ul>

Be Careful With Incentive Plans

<ul><li>Capital (Equity) = What you own (Assets) – What you owe (Liabilities)</li><li>Capital is used to purchase assets, such as inventory and equipment, and allows you to have the proper amount of cash on hand to meet your core capital target.</li><li>Debt is NOT capital. The bank does not provide you with capital. They give you debt.</li></ul>

 The Three Sources of Capital: How to Get Money and Effort to Play Nicely

<ul><li>Look to your own resources first before you go borrow money elsewhere.</li><li>If you start a business with your own money, you’re going to defend it to the greatest degree.</li></ul>

Source #1: Use Your Own Money

<ul><li>Not all businesses can be funded with debt. Sometimes you need a long-term investor.</li><li>Use investor money as a last resort.</li><li>You tend not to be as careful because it’s not our money. It makes it easier to postpone difficult decisions.</li><li>When you use OPM, you have to be clear about the investors’ expectations and let them know you’re not giving them a salary. They get a salary only if they do a particular job within the business operation.</li></ul>

Source #2: Other People’s Money

Least understood and least measured form of capital (yet it’s the most common!)If you can’t afford to pay yourself a market-based wage for your efforts, then you’re going to have to defer payment and work for it.The trap that most people fall into is believing that because they have a low wage, they can live off the profits of the business. It’s better to live off your savings and let your sweat equity build capital in your business. Then pay yourself a market-based wage when your business reaches 2 or 3 percent pretax profit.

Source #3: Sweat Equity

This book teaches the fundamentals of owner compensation, profit targets, labour productivity, cash flow, and data reporting. Clear explanations and helpful illustrations throughout make it a must-read guide for small business owners looking to achieve higher profits.

Simple Numbers can guide you to increased business profitability Take the mystery out of small business finance with this no-frills guide to understanding the numbers that will guide your business out of any financial black hole. Author Greg Crabtree, a successful accountant, small business advisor, and popular presenter, shows you how to use your firm's key financial indicators as a basis for smart business decisions as you grow your firm from startup to $5 million (and, more ) in annual revenue. Jargon free, and presented in an easy-to-follow, step-by-step format, with plenty of real-world examples, Crabtree's down-to-earth discussion highlights the most common financial errors committed by small businesses, and how to avoid them. You'll be fascinated to learn: Why your numbers are lying to you (and why you are the cause ) How labor productivity is the key to profitability and simplifying human resource decisions Why the amount of tax you pay is your #1 key performance indicator Take advantage of Crabtree's years of experience teaching clients how to build successful businesses by ''seeing beyond numbers'' with this step-by-step guide to increasing your businesses profitability.

Simple Numbers, Straight Talk, Big Profits!

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