Cryptocurrencies have an entirely deserved reputation for volatility, as was demonstrated yet again over the last few months. Most cryptos dropped 50% or more after a sharp run-up in price in the previous six months.
This kind of volatility dissuades many people from participating in the crypto market. It’s a roller coaster ride that keeps many people sidelined, notwithstanding the obvious truth that cryptos, such as Bitcoin, have repeatedly bounced back from periods of weakness to set new highs.
“What is particularly exciting about cryptos is the emergence of new opportunities to grow wealth without the volatility, and earn interest rates that are far superior to those offered by traditional financial institutions,” says Brett Hope Robertson, investment analyst at Revix.
For the risk-averse looking for a relatively low-risk exposure to crypto and a hedge against rand depreciation, Revix offers direct exposure to a stablecoin called USD Coin (known by its ticker USDC).
A stablecoin is a type of cryptocurrency that is pegged to a commodity or currency such as the US dollar on a 1:1 basis. Every unit of this stablecoin in circulation is backed up by $1 that is held in reserve, in a mix of cash and short-term US Treasury bonds. USDC is issued by the Centre consortium, which is a regulated financial institution.
Hope Robertson says investors can redeem 1 USDC for $1, giving it a stable price in contrast to other cryptoassets like Bitcoin. But unlike regular US dollars, USDC does not require a bank account, nor does it require that you live in a particular geography. This is one of the great advantages of stablecoins – they allow anyone, anywhere in the world, to switch their wealth into a stable, fiat-backed currency such as the US dollar.
“Another advantage of USDC is that it can be transferred anywhere in the world in minutes,” says Hope Robertson. “Compare that with the current process of moving funds abroad using the banking and Swift transfer system. It is also much cheaper to use.”
Several use cases have been unveiled for the USD Coin. It provides a safe haven for crypto investors in times of volatility, allowing them to switch out of volatile crypto assets, such as Bitcoin, into USDC, thereby avoiding the costs and friction associated with moving funds into fiat. This can also be done at lightning speed with minimal costs.
The real opportunity for holding USDC is just around the corner, as more and more merchants and businesses start to accept payments in digital assets. The emerging decentralised finance (DeFi) eco-system is already overhauling traditional finance at a rate that was unimaginable just two years ago.
As things stand, stablecoins are seen as crypto assets and therefore do not fall under exchange control. There is no limit to the amount you can own.
A key reason for holding USDC is its rand hedge properties. Hope Robertson points out that the rand has depreciated by close to 6.2% against the dollar over the last five decades.
“Looking over the long term, this erosion in value can become a substantial number. An average deprecation of -6.2% actually translates to around a -70% loss of your wealth in just 20 years. Holding US Dollars can stop this wealth erosion and make it work for you, not against you.”
“Overall, the goal is to create an ecosystem where stablecoins are accepted by as many wallets, exchanges, service providers and decentralised applications (dApps) as possible. The stablecoin market has become exceedingly crowded over recent years, but this only goes to show the immense need by customers for this technology.”
Why hold USD Coin?
Some of the benefits of holding USDC relative to other stablecoins include:
- It is regulated, audited and transactions are transparent
- It is fully backed 1:1 with US dollars.
- It trades 24/7/365
- It is listed in more than 50 crypto exchanges
- There are lightning-quick transaction times
- There’s a low minimum investment amount
- It is redeemable for US dollars at any time.
“The bottom line is that USDC is ideal for all crypto users alike, as it has a stable dollar-linked value and is maintained by reputable institutions,” says Hope Robertson. “It is a way to grow wealth without being exposed to the volatility of crypto assets such as Bitcoin.”
Earn 4% interest on your USD Coin
While SA banks offer between zero and 4.5% annual interest on a depreciating South African rand – provided you are prepared to lock up your funds for three months – Revix offers a US dollar denominated Savings Vault that earns around 4% a year with no lock-up period.
“In the real world, the bank will offer customers 1% while lending out that money at 5%, and take that 4% margin as profit for itself. Unlike traditional banks, we work to optimise the rate earned for our customers, and this is how we can offer our customers around 4%.”
“The fact that you can safely earn 4% a year in US dollar terms means you can increase your wealth in US dollar-equivalent terms, rather than in rands,” says Hope Robertson.
Revix’s $1 million USDC Vault promotion
Revix is offering a promotion on its new savings product.
The promotion states that Revix will match your initial investment in your USDC Savings Vault up to the value of $1 million USDC.
This USDC Match promotion starts Friday the 23 July 2021 and ends on the 31 of August 2021 at 23:59.
Through Revix, you can also gain access to their ready-made “Crypto Bundles”. These Bundles allow you to own an equally-weighted basket of the world’s largest and, by default, most successful cryptocurrencies.
Revix brings simplicity, trust and great customer service to investing. Its easy to use online platform enables anyone to securely own the world’s top investments in just a few clicks.
Revix guides new clients through the sign-up process to their first deposit and first investment. Once set up, most customers manage their own portfolio but can access support from the Revix team at any time.
For more information, please visit www.revix.com.
This article is intended for informational purposes only. The views expressed are not and should not be construed as investment advice or recommendations. This article is not an offer, nor the solicitation of an offer, to buy or sell any of the assets or securities mentioned herein. You should not invest more than you can afford to lose, and before investing, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.
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