A Modern-Day Fable: Virtual Candy
Imagine that you do something very nice for a friend of yours who owns a candy factory. Pretend that her name is Ms. Clever. Imagine that this friend asks you do some secret taste testing of some proto-type products. Ms. Clever does not go through her company’s marketing department. She knows they are doing their own market research and focus groups, but because you are a chocolate connoisseur, she asks you to do this little favor for her on a Sunday afternoon. You take a few hours and test several prototypes. Then give her your honest feedback: some of the products are fantastic, two are terrible.
She is grateful. She trusts your judgement and wants to pay you for your time and expertise. However, she does not want to insult any of her employees and leave evidence of your activities, so she offers to pay you in virtual candy. “Virtual candy? What is that?” you ask. She says it is another prototype she is developing, but even more secret than the others. Will you take 100 virtual DNE’s (short for Does Not Exist) in exchange for your time this afternoon? One of my employees also has a beauty shop, and she will exchange 50 DNE’s for a haircut. With 100 DNEs, you can get two haircuts if you would like.”
“Great!” you reply. She sends you a text message that you now own 100 DNEs, a virtual candy that is allegedly made with chocolate. It is small with a hard outside shell so that it is not messy as you eat it—that is, if it were real. The candy has no calories, and you cannot see it, feel it, or taste it. However, you are excited about owning it.
You go to get your haircut as was recommended by Ms. Clever. However, the hairdresser excitedly tells you that your 100 DNEs are now worth 2000 DNEs. “Can you believe it? Word has gotten out about this virtual candy. Thanks to social media, its existence has spread rapidly, because it can be hidden from the Diet and Nutrition Police. In fact, you can buy other items with it—besides haircuts—because so many people want it.”
“Really? How is that possible?” you respond. Well, as it turns out, people have figured out how to consume or trade this candy without any detection, so it has become quite valuable. In fact, you can even give it to your grandchildren, and you will not be accused of being a bad grandparent by the Diet and Nutrition Police.
Over the next year, you become astonished that the value has grown so much. It has become a secret commodity. Well, it is not so secret now, because everyone is finding out about it. Many other people who are like Ms. Clever have figured out how to make more virtual candy, like DNE, except with slight differences. Demand has swelled! The idea of being able to eat candy without anyone knowing about it, judging you, or questioning you has gained massive appeal.
In this case, the DNE candy started out with a legitimate value: there was an exchange of a virtual product for an actual service. There was also a vendor who was willing to accept this type of currency. However, the scarcity of it, combined with the knowledge that you could indulge and now one would know it, rapidly drove up the value of this virtual candy.
The Diet and Nutrition Police have been completely caught off guard by DNE. They now want to know who owns it, who is buying it and who is selling it.
The national weight loss companies have offered to store virtual candy and keep it safe for those lucky people who possess it. But you are suspicious of this. After all, aren’t they required to report all activity to the Diet and Nutrition Police?
You starting to become a bit suspicious of this product and the skyrocketing value. You have also become uncertain as to what you can and cannot buy with it (since it has now become too valuable to eat.) In fact, last month, the value was such that you could buy a nice car with it.
Your financial advisor has told you to not count on this virtual candy. They will only accept real candy. (They have an abundance of real chocolates at their office.) They advise you to not get enticed into this virtual world. You remain skeptical, but every day, the daily chocolate and candy journals cover this new virtual candy, DNE—as well as many others. They never can quite explain how it all works. It is a strange new world, but you wisely decide to sit tight with what you have, monitor your real chocolates, and not be seduced by the virtual world of virtual candy.
Disclaimer: Any resemblance to any similar virtual product is purely a coincidence. This weekend, we hope you feast on small amounts of real candy (and desserts), and not worry about the Diet and Nutrition Police, or the virtual activities you may be missing.
Have a wonderful holiday weekend!
Kristina Bolhouse CPA/PFS, CFP®
© 2021 The Arkansas Financial Group, Inc., All rights reserved.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by The Arkansas Financial Group, Inc. (“AFG”), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from AFG. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. AFG is neither a law firm, nor a certified public accounting firm, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of AFG’s current written disclosure Brochure discussing our advisory services and fees is available upon request.
Please Note: If you are a AFG client, please remember to contact AFG, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. AFG shall continue to rely on the accuracy of information that you have provided.