Stablecoins are probably the most important assets of this decade; with them, income earning & debt ceilings are potentially boundless.
Bitcoin has held many titles: Online currency, Store of Value & Safe Haven Asset; but many of us didn't pay attention to it until 2016 -- at least I didn't. Now Facebook wants in ... at least into the Stablecoin arena.
Coinbase's USDC is constantly in the news lately, with loans from J.P. Morgan and (correlated) lower interest rates ⁴; Paxos' success with PAXUSD has led to other stablecoins like PAXG; then there is ... Tether -- it is pivotal even today, and I will go into detail on how I use it, but the potential for Tether to collapse and start another chain reaction like the previous bear market (that we may or may not still be in) is unsettling to say the least.
In short: a stablecoin is a 1:1 peg to an asset; it is money.
Goldman Sachs recently noted: Bitcoin is many things (but money) and still has many hurdles; whether that's true or not, time will tell ... and to punctuate that note, I'd add this tweet to the list ...
... Bitcoin seems to be a clock; limited supply in [all] Cryptocurrencies might simply be magnifying the decreasing purchasing power of the U.S. dollar, and less so their actual increase in market or utility value.
History might be repeating itself & we're doomed like most news articles have been saying recently
... OR ...
today's Online Economy means we all can earn more, and work less by investing time and attention in others.
The "best time to invest" is a tired arbitrary argument, but since hindsight is 2020, as is this year -- I'll show some pictures of my past successes and monumental failures:
When I started the above practice portfolio, I was in High School; no money, or income to speak of -- just a passion for finding value. The screenshot of this simulator was taken a few years after initial investments.
The minimum age to invest in the U.S. with a Brokerage is 18 -- Markets are open 9:30am - 4pm EST, and closed on most major holidays; to avoid additional restrictions, it's advised to start with $25,000.
In the Online Economy: Any age can trade 24 hours a day, 7 days a week, all year round.
By the time I could trade school was starting in the fall; my focus was split between what I loved to do [find value and invest in it] and debt funded schooling.
After crossing the aforementioned $25,000 mark, qualifying me as an official Daytrader, I stopped listening to anyone who wanted to give me advise about what I "needed to do to be successful in life", and took my first life altering decision: dropping out of college.
The following year I traveled, relaxed, and through a painful process of trial and error: lost everything, and then some; leading me to get a regular 9 - 5 job.
What does all this have to do with Stablecoins? ... Everything.
Coinbase's USDC, Paxos' PAXUSD, MakerDao's Dai & Tether DID lower the risk of a blockfolio falling to zero and volatility was dramatically reduced; but they also set the stage to purchase limited assets via debt. The U.S. dollar, simply speaking, itself is back by debt & income (G.D.P.); the efficiency ratio gives the false sense of security that debt is indefinitely able to be postponed if the value a country produces (it's revenue) is able to make its payments.
So I'm going to do a similar experiment!
Bitcoin and correlated assets tend to do this over the summer:
So hoarding Stablecoins is probably something we ALL should be doing right about now; but instead of simply hoarding fiat: I am attempting to increase my income, keep fiat on hand ... all while hoarding Stablecoins. This may cost me $2,000 in fiat, and in the process I will accumulate an additional $25,000 in (collateralized) debt -- but the end result will hopefully yield $30,000 in stablecoins, as well as $2,500 per year in interest income. My plan has a specific goal, but others are realizing potential in earning interest away from legacy financial institutions.
When seeing Salt Lending, Nexo, Blockfi & Celsius Network, many forget they also need to be able to trust their Stablecoins won't come out with a scandal or ban that affects their business; and since I feel PAX and USDC are farther away from a scandal than Tether, a side effect of hoarding my stablecoins with Nexo for example means, after a while, they can potentially give out loans in PAX, USDC or other Stablecoins instead of over relying on Tether.
A peek at my current progress:
The credit line that makes the magic happen:
The entire process may need a separate article in a following update, but the plan is basically:
- Buy a lot of Stablecoins from collateralized loan debt (Salt has up to 70% loan to Value & Nexo up to 90% right now)
- Add Crypto bought when/if there is another correction in the overall market
- Pay down the loans while I wait for the prices of said Crypto to recover
- Enjoy gains in those tens of thousands of Stablecoins & Crypto when and if prices increase & debt is paid off
If you've never heard of Nexo before, here's a Publish0x article by Alvin Brian that covers the basics linked here & an article on who works with Nexo so far in 2020 in an article by List3r linked here.
In Summary: Stablecoins, whether digital tokens of real life assets have real value or not is an argument that seems closely tied with that of cryptocurrencies; but one thing is for sure: we can hoard more by simply taking a loan out against the ones we have and paying the debt with the increase in price of other crypto assets or interest we earn. A horrible idea? Just take a look at your favorite country's debt to GDP ratio, then it might make either a little more sense, or make debt look a whole lot scarier. For obvious reasons, I don't recommend anyone try this with their accounts, even if I DO succeed [because it may be an outlier situation].
Let me know if this is a hair-brained plan in the comments below :) I would genuinely like to know which Stablecoins others have chosen to use, invest in or trust. Do you think that one Stablecoin is better than the rest or that they're all essentially the same?
