#Liquidity101 Liquidity 101: Which of the following statements are true? Select all that apply.
The concept of decentralization, both socially and administratively, emerged during and after the French Revolution.
Distributed systems have been a longstanding area of research in computer science.
Distributed computing enabled peer-to-peer communication on the internet starting in the late 1980s.
Blockchain technology has enabled new forms of decentralization.
Decentralization is not always a binary or black-and-white concept.
Understanding Liquidity
Liquidity refers to how easily an asset can be bought or sold without significantly impacting its price. Highly liquid assets—such as major stocks or currencies—can be traded quickly with minimal price fluctuation. In contrast, low-liquidity assets may experience larger price movements when traded.
For traders and investors, liquidity is essential. It affects how easily positions can be entered or exited. Higher liquidity typically results in narrower bid-ask spreads and less slippage, while lower liquidity can lead to wider spreads and increased volatility.