Even if someone cannot create all three layers at once, building them gradually still creates stability. A small cash flow buffer comes first, then a reserve fund, and finally an emergency fund for last resort situations. This progression means that most day to day or even midevel emergencies can be resolved without ever needing to touch the emergency fund.
You should know that when you're investing in bitcoin, first thing comes first which is your discretionary income. When you have your discretionary income available, you can start your bitcoin investment. Your bitcoin investment comes first, followed by your emergency funds as your next priority because that is your backup to your bitcoin investment so that you don't sell it when you are hit with real life emergency.
Reserve funds shouldn't be set up first before emergency funds because that's a misplaced priority. The reason why I said so is because it takes up to one year or more to build an emergency funds of at least three months of your monthly income which means it's the largest portion of all other funds that is prepared down to prevent you from touching your bitcoin investment and it is very crucial to have it.
Your reserve funds can dry up and it would not affect your bitcoin investment provided that your emergency funds is on ground. But if you don't have emergency funds on ground when you're hit with real life emergency, you will use your bitcoin portfolio as your emergency funds. Reserve funds is used to take care of minor issues that if not attended to wouldn't cause any damage to your bitcoin investment.
While a person is building up his back up funds, he is not necessarily going to be able to completely separate out emergency funds only, so he likely has to be more flexible, since all kinds of expenses or even miscalculations could end up taking place in which the guy does not have any other back up funds besides what he was trying to keep as his emergency funds, so his only choice might be whether to tap into his bitcoin or to tap into his emergency funds, and I would think that tapping into emergency funds would be the better route.
You are correct that it could take a year or more to get emergency funds to add up to 3 months of expenses, and if they get tapped into then they have to be replaced, but it might take even longer to build them up, and surely guys might sometimes have imbalances in regards to what kinds of back up funds they have and how their bitcoin is growing in the beginning - yet if they are growing their bitcoin investment and not building and/or maintaining enough back up funds, then they are putting their bitcoin at risk.. . .which may well mean that they have to consider if their might be ways that they can increase their discretionary income by increasing their income and/or cutting their expenses.
I believe you've just hit on one of the most overlooked areas, as it concerns financial planning and attaining financial freedom.
Indeed, it is theoretically true that the main idea is putting one's spare dollars into Bitcoin accumulation, especially when the person believes so much in its long term potentials. But the truth is that, life isn't something that's lived on a spreadsheet. Having or building wealth isn't just about maximizing future wealth, it's also about maximizing the quality of life now, while building for tomorrow, it's important not to neglect that you have a life now.
And I believe that's the reason why the jar system works pretty well. Having a jar for emergencies and another for fun simply proves that you've expressly given yourself the go ahead and also creating the opportunity for you to enjoy a part of your discretionary income without having any form of guilt. Some people might look at the $200 fun jar as a missed opportunity to buy more Bitcoin, but the truth is that, it is best to consider it as buying peace of mind, happiness and also sustainability. I like to take myself for instance, whenever I allow myself occasional indulgence, I am more likely to stick with my broader plans over the long run, rather than burning myself out or sabotaging myself later on.
And as one proceeds overtime, and with the growing of their Bitcoin position, their financial foundation equally grows stronger than it initially was too, and they can equally increase the size of each jar. Each and everyone has their own unique individual factors (income, goals, risk tolerance, expenses, family situation, values, etc) that contributes immensely to their journey, but the most important thing is to have some structure in place and also coming to the realisation that flexibility is built into the process. Sometimes, your discretionary income goes to something silly, and sometimes it goes to something wise, but the most important thing is that you learn how to strike a balance between the two, adjust your position respectfully and keep moving.