How to Loose Money with Fiat Currencies - A Simple Experiment

How to Loose Money with Fiat Currencies - A Simple Experiment

By Lucasgaio | Cryptoscience | 1 Sep 2021

In the crypto universe, the possibilities of income are endless, this is a concept that has been reiterated many times. An investor who does not consider cryptocurrencies in 2021 could regret it very soon. The fear of volatility, like many others related to cryptocurrencies, can be overcome simply by inquiring from reliable sources. However, those who do not want to expose themselves to volatile investments can always read my article on how to receive an income on stablecoins.

In this article, however, we see why if you do not enter the world of cryptocurrencies and do not use the following methods in daily life, you will lose money. I would like to bring to the reader's attention a quick experiment, to see and highlight the difference in income between those who decide to invest in crypro and those who don't. In particular, I wondered how much would be the loss (or loss of profit) that is realized by not using cryptocurrencies in this historical period. To do this, we consider two people and assume that they have the same financial resources but different investments. Let's start by seeing the profile of an investor who uses only FIAT coins in his daily life. Suppose that:

  • Has a bank account with $20,000,

  • Invested $1000 in stocks (S&P500) a year ago,

  • Pays daily bills (let's say $1000 a month) with your credit card.

Considering the performance of his equity investments (around 35%) and the average 2% loss on cash due to inflation, this would be his gain:

-2%(20.000$) = -400$

35%(1000$)= 350$

350$ - 400$ = -50$

As you can see, after one year (I calculated the performance of the S&P500 from August 2020 to August 2021), a loss of $50 was realized even though the investments it made performed well. I have only taken into consideration the profits derived from investments and the devaluation of liquidity as what I am interested in investigating is inherent in the surplus and not in everyday income / expenses.

On the contrary, let's now see what the difference is with a CRYPTO investor, obviously starting from the same premises that we did for the first. So let's assume that:

  • Had invested $1000 a year ago, but in cryptocurrencies and divided as follows: $250 in BNB (equivalent to 10BNB on 08/2020, to get 2% cashback on the Binance Card, and the rest in BTC ($750, equivalent to 0.065BTC ),

  • Has $20,000 available in his bank account,

  • Daily expenses (1000$/month) paid with Binance Card (2% cashback in BNB).

Taking into account the price change of BTC and BNB and the income from cashback, the revenue would then be calculated as follows:

-2%(20.000$) = -400$

2%(1000$) * 12 = 240$

750$(0.065BTC) --> 3185$

250$(10BNB) --> 4880$
240$ + 3185$ + 4880$ - 400$ = 7905$

To which we subtract the $1000 initial investment, to obtain a profit of $6905 in one year. This profit equates to more than $500 a month in extra income on top of your regular salary, and here we haven't taken into account the fact that there are countless strategies available to further optimize this figure, such as annuity services, staking etc. Finally, the choice of using a card that allows you to get a cashback on the expenses that are made in everyday life is neither trivial nor obvious. The idea is to recover a part of what I spend for example by shopping and the Binance Card allows you to do this.

(In case you are interested in learning more, I refer you to these three articles where I discuss the revenues on Bitcoin, Ethereum and Stablecoin).


Conclusion & disclaimer 

I am aware that the calculation was done in a bull-run period and that if it had been done in 2018 it would be different, but if you look at the BTC chart from a wider time-frame you will see that its trend does not hint at descend.

However, I wrote this article in order to demonstrate two things: the first is that investing is a necessity and those who do not learn to do so are unfortunately not up to date. The second thing concerns the type of investment: you must always know how to diversify your portfolio. It is not just these last few years where cryptocurrencies were born, it has always been that way. Investors must know how to divide their capital to minimize risk and sometimes not to lose growing trends such as that of Crypto which in this last period is outperforming any other asset.
Cryptocurrencies are here to stay.
This is a more than current and appropriate consideration, and those who do not accept it will soon have to review their plans.

Although this article is very biased, I must remind the reader to inquire before making any investment. Knowing the asset you want to buy is the basis for starting.


Read Also: My CeFi experience: BlockFi

My DeFi expeience #2: Osmosis Zone on Cosmos


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I am a pharmacist and a scientist.


A blog that speaks about science, a passion that has accompanied me since I was a child. My goal is to spread scientific culture all over the world, starting with cryptocurrencies.

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