Crypto Boom #2

Crypto Boom #2

By Nathan Teale | Crypto Explosion | 12 Feb 2020


Ok we're here, it's 2020 and the Cryptocurrency markets are well and truly out of the bear market and heading towards new highs approaching the halving of Bitcoin scheduled to take place in May.
For those that have read my previous crypto article, you should have somewhat of an understanding of what to expect coming into this cycles' bull run. If not, this article is aimed at the audience who is interested in the asset class but doesn't really know where to look to find the best, relatable, up to date information that you should know to gain a decent understanding of the space and perhaps to diversify your investment portfolio.

Crypto 101 - A starting point for newbies

Crypto / Digital Currencies have become the number one asset class to hold in recent years and it has easily outperformed the SNP500 in overall percentage gains. It's value is defined in its decentralized, deflationary nature unlike fiat currencies which can be printed without limitation or backing by any hard value such as gold or the US dollar. The fundamentals behind each coin combined with the global user base give it purpose and even though there is much negative stipulation regarding price and volatility from the media that don't understand the asset class, and that are generally in disbelief it will gain any kind of fundamental traction, the gains continue to make new high as time goes on.

Why?

As is the case with most new things, it takes a long time for people to be comfortable with new technologies, especially if you are not fond of investing the time to understand why something is better before it is adopted globally. Ever had an update on your phone and thought, "why do I need an update when it works already?" Most peoples parents, mine included, don't like change. Switching phone companies or plans seems too stressful because they're happy with what they have and would rather keep what works instead of swapping to something new. For me, this only raises the questions, "What if I could be more happy?", "What if I can save some money?"
Fair question right? You don't know what you don't know until you research it, are informed about it, or it's widely adopted. Other than that you could have the same data plan for years without realizing you could be saving money, or doubling your data for a small increase of cost.

Internet Adoption

In 1995, Letterman hosted a now infamous interview with Bill Gates on the uprising of the internet and what it could do for us. The interview as a whole was rhetorically comical in nature given the fact that, at the time, little was known about the internet by the masses, what it could mean for the future, how it would be adopted by mainstream sources and how it could actually be useful to us. 

https://www.youtube.com/watch?v=gipL_CEw-fk

In this short 2 min video you will see how the general public responds to something that they didn't understand. It's laughed at for it's speculative outlook due to other technologies doing the same thing...now, 25 years after the interview, the internet is as essential to our daily lives as having fuel to drive your car. 

The Crypto world is largely the same. Bitcoin price action has dominated the markets since it's inception. It used to be worth pennies...now it's around US$10000 and only becoming more popular and more valuable. With a total market cap of US$200B and a deflationary attribute, if Bitcoin is to be adopted for mass use within the IOV (internet of value) then the price action will only increase due to fear-of-missing-out (FOMO), popularity and legacy adaptation.

If you aren't on the bitcoin train, it is becoming widely accepted by some notable financial guru's and large cap corporations that you should have at least a few percent of your investment portfolio credited to crypto currencies. Companies such as: Microsoft, IBM, Berkshire Hathaway, Samsung and Apple are among a few mega corps that are developing their own software to adopt wider use cases for these digital assets.

On top of these big household names, there are new companies on the prowl that are really starting to take off in the fields of lending and finance and are literally stamping out the need for 'middle men' of currency transfer. Yes, we're talking about the banking system. The ultimate middle men of your personal income that take fees wherever possible, give you minimal back for using their system and use your money to make capital gains from the fractional reserve {this was explained in my Crypto Boom #1 article) and also pay zero taxes on these gains due to the nature of borrowing and lending which I'll touch on later in the article.

Dependence on old systems

A typical bank have savings account returns of 2-2.75% per year. This is on the highest end of the scale and generally paid in simple (non compounding) interest. Gone are the days where you could bank on a high yielding interest account to give you a nice extra chunk of retirement funds. In Australia when I was a kid, my Dad had an account that was the highest yield for a bank that I've heard of to this date which was ING Direct at a whopping 7.75%. This percentage gain is non existent these days and with the continuous amount of debt being created, no bank will ever return to these levels. 

Take a look at this page to inform yourself of how bad the global debt figure actually is.

https://www.usdebtclock.org/world-debt-clock.html

All the money system serves to do is pollute the economy with paper money to fund future debt with present credit which pertains to more tax and more inflation. Given that the current money system does nothing to rectify this continuous monumental and worldwide problem, it is only by human nature that another form of value exchange would come into existence and provide the means to further our advancement and rid ourselves of this backwards, broken financial system.

Over the last 6 months I have become keenly aware of new companies that are taking the banking system by storm for the simple fact that they are offering more bang for your buck than banks will ever be able to.

These new lending platforms are outperforming banks in all ways because of 3 specific reasons:

     - High interest interest yields
     - Compounding interest feature
     - Collateralized loans

There are multiple standout lending platforms I am familiar with, use regularly and would highly recommend. 

Lending / DeFi platforms

"DeFi lending platforms provide loans to users or businesses in a trustless manner, i.e., without any intermediaries, whereas the lending protocols allows every participant to get interests on crypto coins and stablecoins"
For examples sake I will go into detail with the lending platform Nexo.

NEXO

Nexo was the first platform I became aware of in this space due to the lack of wanting to trade to make gains. It stood out in my pursuit of wanting to maximize on my holdings and it offers a great dividend payout structure on it's native NEXO tokens, at a rate of 30% of the companies net profits.

Dividends are paid out according to this formula:
         30% of the companies profit / Circulating Supply x Nexo tokens held.

For example I'll use my account holdings of 10,153.95 Nexo.  
        2,409,574.87 / 560,000,011 x 10153.95 = $47.97. 

On top of this dividend I will be receiving a loyalty dividend based on 1/3 of the dividend payout and having held the assets for a full cycle of the dividend system. In my case an extra $15.99

I was immediately attracted as dividends are not new on my radar and I understand the benefits of them in the normal stock trading legacy system, especially when you have the option of dividend reinvestment which is then added to your compounding interest. The only downside of these legacy system rules is it generally only happens twice per year. 

On top of this though, Nexo offers some of the highest compounded interest rates for holdings of Stablecoins, a digitized fiat coin i.e. USDT. They are tied to the dollar value of real currency and therefor have the least chance of losing value over time. Currently I earn a respectable 8.6% compounded interest on my USDT. The interest is paid out daily, compounds and is paid in USDT. This means that on top of my dividend yield I earn approximately US$0.16 daily which is added to my USDT holdings and then the updated total is compounded daily.

I bought about $650 of USDT to test this out when I heard of Nexo and with this structure I would stand to gain US$59.21 by the end of a full year. Combine this with the dividend yield and we have a total profit of US$123.17. Combine these figures and my principle and we get a total USDT $773.17. As a percentage gain this worked out to 18.95%. If I had $100,000 in this account I would have made $18,950 in the year for doing absolutely nothing but investing the principle.

To earn this amount in one year with a principle of just $650 is quite lucrative and you can see that by just holding the USDT stablecoin that is tied to the price of a fiat currency, meaning it's a safe bet (besides inflation), it will outperform any form of traditional banking system.

But before we stop there, you may have asked by now, this information is under a heading labelled Lending / DeFi platforms, which brings me to the last and greatest utility this type of service offers. Nexo lending blew me away with what it stands to do as a retail investor.

Say you want to borrow money to buy a $5000 car but you are rejected by a bank for a loan for whatever reason but you have some bitcoin that you could sell to pay for your car. You also think that letting go of your Bitcoin on an exchange would forfeit any possible future gains, especially when the bull cycle is in. How do you do both? The answer is a DeFi platform

With Nexo and other lending/DeFi platforms you are able to utilize your digital assets similarly to using equity on a house. Being able to take out a loan based on the amount of Crypto and stablecoins you posses has a tremendous benefit: it allows you to keep your asset which has the potential to appreciate in value whilst still being able to borrow the money you need to purchase that car you so need. That car example that we wanted to buy but weren't able to through a banking system is now accessible to us via the leverage on your holdings. In Nexo's case, your holdings of 1 BTC worth $10000 would allow you to borrow up to 50% of it's worth, $5000. There are a variety of other crypto currencies you can hold on the platform to utilize this leverage option including XRP, TRON, XLM and also stablecoins, so USDT, EUR and GBP (which yield 90% available leverage). These assets all have different percentage attributes which is called an LTV (loan to value) ratio and details of that can be found here:

https://support.nexo.io/hc/en-us/articles/360008240893-What-is-Loan-to-Value-LTV-Ratio-

To borrow this loan is not free of course, but the interest rate is superior to the fees of any bank and also one of the best in the DeFi space at a ridiculous rate of 5.9% when you use NEXO tokens to pay for the interest generated. On top of this, there is no requirement to pay the principle back until you want to. This service utilizes the fact that you only need to pay the minimal amount of interest to be able to take out a loan to ease your stress of a real world need that a bank has been unable to help you with. 

The Return Multiplier Effect

Now if Bitcoin prices fluctuate, what happens to your assets? The answer is a very good answer. The fact that you still have a holding of 1 BTC worth $10000 at the time of depositing, means that any price increase would mean that your holdings increase as well. If you sold your bitcoin to buy that car and the price doubled at the next halving, you would now not have 1 BTC worth $20000 and probably be kicking yourself. The fact that it's possible to to keep your 1 BTC and borrow against it means that you could buy the car for $5000 and then pay the loan back with the profits you have made from not letting go of your BTC and then still be in profit by $5000. On top of this, by not selling your digital asset, you will not be paying the capital gains tax on your profits made. Instead, because of the nature of borrowing and lending, there is no taxable amount on a loan as credit is not a form of income like selling an asset is. 

Is this all starting to make sense?
Giving you ideas?

It took me a while to digest this information and really grasp the scope of all these benefits combined. To some it up in one sentence, Nexo and DeFi platforms are essentially:

A Cryptocurrency bank account offering a very high compounded interest rate that pays dividends and allows you to avoid taxes by borrowing money against an asset you hold that is very likely to appreciate in value. 

So, this is my take on Nexo. To recap, the main benefits of this account are as follows:

                              -High interest yield of 8% on Stablecoins
                              -Compounded daily interest
                              -Dividend payouts accumulating to the compounding interest
                              -Lowest loan fee the internet has to offer at 5.9% (when you use Nexo to pay the interest generated)
                              -Great informative customer service support

For further details check them out at:
https://platform.nexo.io/

I like to be transparent about all this as means to bring more people into the awareness cloud, so here's a screenshot of my Nexo daily interest which is almost offsetting the loan I currently hold with them.

Nexo daily interest


There are of course other platforms which have similar traits and some actually have compound interest options on holding cryptocurrency as well as stablecoins. A few notable mentions are:

     -Crypto.com - an account that pays out simple interest on a myriad of crypto and stablecoin and a sky high interest return of 16% on their native token CRO
https://crypto.com/en/earn.html

     -Blockfi - This platform is my favorite for compounding interest on BTC holdings. The interest is paid out monthly. It also has lending options available but Nexo has a lower rate of interest. I use Blockfi specifically for passive earning on my BTC.
https://blockfi.com/crypto-interest-account/

Here's a screenshot of the interest I am accruing monthly on BlockFi

351665157-067c9f4ac8643bacf2ad192441ae6341f33cb76613f93c4739203b6851c75c2b.png
Note: Remember this is amazing as the value of BTC is always increasing, so being paid out interest in BTC has a return multiplier: Compound Interest paid out in an appreciating, deflationary currency.

     -Celsius Network - Quickly becoming a more popular platform for all your Crypto needs. The offer of compounding interest on a large collection of tokens, loan options and utility features with their native token CEL.
https://celsius.network/earn-interest-on-your-crypto/


All things considered, I am very bullish on this new type of investment borrowing. It's very comparable to how the rich use their assets and wealth to create more wealth, something everyday people generally aren't able to apply. With these new technologies coming to the forefront of our generation (arguably) I feel like this space has big potential and it's upward momentum as of late has been making waves to the people in the know. And if you didn't know about this...well now you know.

My aim is to bring these corridors of financial opportunity to the attention of my friends and family and anyone else who comes across these articles that I plan to keep writing.

Using multiple accounts to gain a better position

If you're anything like me, an average guy living life wondering if there will ever be an opportunity to attain financial freedom and negate having to work until you're 70 years old, or at least the option to offset some of the debts that life throws at all of us, then you'll have most likely already asked yourself, how can I maximize on this new type of wealth creation?

After thinking about all of this for the last few months I have began my own loose strategy to make as many gains across the board as I can with the money that I am able to and comfortable investing. I say comfortable as all investments have a risk involved and this should be taken into account person to person. But, with the way that crypto is heading into the future, I have very limited doubts that I will lose my principle due to the fact that I don't really intend to sell any for a USD value. A wise man once said "You only lose when you sell at a loss".

The ideas that I have put into fruition have so far yielded me a monthly gain (in interest alone)of about US$20. I thought this was a fantastic return for doing not much besides having positions in multiple accounts. Of coarse I am looking for more gains and aim to 10x this return as quickly as possible but, Canada has just made it increasingly difficult to buy Crypto with a nation wide ban on all forms of crypto trade. I can no longer use my debit or credit card to make purchases and given the gains in the last 2 weeks, this infuriates me.

I'm just going to side note for a second....

The 1%

Consider this, you work a job that takes 40 hours of your week away from you. You then wish to take that money and use it for whatever reason you want to, you know, because it's your money. Then you try to buy a form of currency online that has the ability to make profits for yourself and then to finally figure out that the country disallows it.

This is not right. How is it not my decision what I do with the money that I earn for my hard work? When I found this out I was supremely aggravated and this is why banks are a backwards system that need to be non existent. Banks are the number one fraud mongers in the world. They are able to utilize 90% of your money to make their own financial gains (see Crypto Boom #1 for thorough details on this). but also ban the purchasing attempts of crypto for everyday customers

This is absolutely heinous. Am I living in a third world country? Is this acceptable in this day and age? I feel like I've been sent to the naughty corner at school and only a teacher can alleviate the situation. This is what the 1% want, to stay rich and to stop us normal people from having options to reach financial freedom. I think it's a very deep conspiracy which deserves it's own article...so maybe in a couple weeks you'll see one on my page.

Anyway back to the topic at hand.

Using Passive Income and Leverage to accumulate

The passive income I am earning monthly is great, but to truly maximize on this I intend to use those gains to acquire more tokens and utilise the Return Multiplier Effect previously mentioned. Just to give you some ideas of what is possible these are some adopted strategies that I follow:

Hold a value of BTC that is always receiving a yield on Blockfi.
Hold a value of stablecoin in Nexo to offset the cost of loan interest
Continue to acquire Nexo tokens to mitigate the interest cost of leveraged loans.
Accumulation of small cap tokens via profits from asset appreciation combined with interest yields.
Use my own leverage to create avenues for larger profits due to the bullish nature of the current crypto cycle.
Utilizing the highest possible return interest (16%) on Crypto.com with CRO tokens

For the sake of transparency, here is a screenshot of my total return on investments detailing just the gains of crypto that I have bought since getting back on this train plus the investments i had made years ago.


Cointracker.io


I'm hoping to make gains across multiple avenues using these strategies and also by holding coins such as BTC, XRP, CRO, MCO, XTZ, and some other crypto's that are all poised to boom in the coming weeks and months. By creating such possibilities through crypto leverage and compound interest is one way that I intend to make some good financial choices in 2020, the future and one day may lead me to financial sovereignty.
All aboard!

In the last 2 weeks the space has boomed and anyone lucky enough to be holding, basically any of the main Altcoins or Bitcoin, have reaped some good returns and will only continue to make more. The halving of Bitcoin is coming up in May and this will only create better financial opportunities for people like us: Retail Investors

I am learning new things about this space continuously and watch/listen to A LOT of youtube analytics and speculation as my job enables me the use of headphones for generally 8/10 hours each shift. I try to stay up to date with specific information as it occurs and am always looking for ways to maximize on my positions with the limited resources I have to play with. One amazing insightful and very undervalued youtuber that I follow is CRYPTOONESTOP, found here:
https://www.youtube.com/channel/UCNgGAqSgBp8-qxY51u1-_MA

His videos have taught me a lot about the return multiplier and different ways to generate profits in this market due to the fact that I am not a day trader but am looking for more passive ways to gain better positions without alleviating my principle investments.

The second extremely well informed youtuber that is dedicated to all things relating to Ripple and XRP is MOONLAMBO found here: 
https://www.youtube.com/channel/UCf3Vlkhhxrwr3A8IYN8KVkw 

These 2 have been a really great source of information regarding this market and I definitely recommend following both of these guys if you are into this space at all.


Unbanking ourselves

In the constant battle to create more opportunities for wealth diversification, passive income avenues and the continuous strive unbank ourselves so that we have full control of our income, I believe it's a wise decision to start investing time into learning about these new technologies. Not only are they an indication that banks are becoming obsolete, but with the recent ban on the purchase of crypto in Canada, you can see that the old financial system is scared of what's to come. And they should be. If we all as a global force, start realizing the benefits of digitized currency, then they won't be able to make insane profits using our labor as their leverage.


That's it!


I really wanted to elaborate on earning potentials with these lending platforms and bring to light what is possible in this day and age without having profound knowledge of investing or stock trading. Hopefully this article hit it's mark and gained some rapport with community members and brought some insight into your financial ideas.

I think that's it for this article but I will continue to bring information out as I learn it myself.

So, until next time...



Peace!

 

Some other noteable tubers:

- Moon Lambo
https://www.youtube.com/channel/UCf3Vlkhhxrwr3A8IYN8KVkw

- Kevin Cage
https://www.youtube.com/channel/UCPDw-Qz0dd4tIaoolCN7ttQ

- DIY Investing
https://www.youtube.com/channel/UCvts9csZ03FZXsuMnOIQ4VQ

- Altcoin Daily
https://www.youtube.com/results?search_query=altcoin+daily


Nathan Teale
Nathan Teale

When you like my posts, I get a payrise, my dog is happier and my parents love me more.


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