To set the stage, if you're a Coinbase fan, or a Binance pro, or any other platform wiz out there, the purpose of this article is to show the financial advantage of dollar cost averaging (DCA) Bitcoin between the two publicly traded company's apps in America. Immediately, I know you will have preconceived notions and biases, but I encourage you to look at the numbers to make your final judgement, especially if you are a crypto n00b. So, let's go over some definitions, some assumptions, and see just how much money you could make with each platform. And, yes, I have a referral link to Voyager for $25 free Bitcoin at the end of this article, but I think the information is more important for investors.
My argument: $100 DCA on Voyager could have made you $1,300 more than Coinbase this past year alone!
What is Dollar Cost Averaging? Since the crypto market is very unpredictable and highly volatile, the market could immediately plummet or rise after any purchase. Dollar Cost Averaging, or DCA, is an investment strategy an investor can take by dividing an investment over periodic purchases in order to reduce, or average out, the impact of volatility on the overall purchase. So, for the sake of this example, we are going to spend $100 per week on Bitcoin for 52 weeks (1 year), for a grand total of $5,200 investment.
What are the Assumptions on this Comparison? There are two publicly traded companies in America that sell digital assets on a mobile device: Coinbase ($COIN) and Voyager Digital (OTC:$VYGVF).
- Assumption (1): For a $100 purchase, Coinbase charges a $2.99 per transaction, so customers are actually paying for $97.01 of Bitcoin on a purchase all year.
- Assumption (2): Voyager's spread for the year is 0.57%. Voyager does not charge a commission fee, but generates revenue by listing a spread on the price of Bitcoin. Voyager is a digital assets broker and has an algorithm that "shops" for the best price relevant to the spread. On today's market (May 12, 2021), the spread was 0.57% for Bitcoin, so we will use this data point for all purchases over the year. The spread goes up and down relevant to supply, demand, and number of customers on the Voyager app.
- Assumption (3): Interest on Bitcoin from Voyager is 6.5% APY. Voyager offers interest for holding Bitcoin on its platform. On today's market, the interest on Bitcoin is 6.5% APY. Interest on Voyager is delivered on a monthly basis and determined by calculating the monthly average (MA) of Bitcoin held on the Voyager app, multiplying by the APY, and dividing by 12. You must have a minimum of 0.01 Bitcoin MA for the month to receive interest coins. So either 0.01 Bitcoin for the entire month, or 0.02 Bitcoin for half the month, or 0.03 Bitcoin for 1/3 of the month will get you the interest.
- Assumption (4): Interest from Voyager is distributed within 5 business Days. These new coins are included in your APY, so really the interest rate for Voyager is compounded and slightly more than 6.5% APY. Since we are looking at a year's purchase, the comparison will only have 11 months of interest paid, because we won't receive interest on the last month quite yet.
- Assumption (5): All Bitcoin prices are historical data prices found on CoinMarketCap.com at the open of the day on Sunday. Why? People say Sunday has the lowest price on average (free to argue that point), but you need to pick a day, so I picked that one for the year. So, Bitcoin price at market open on May 9 is $58,877.39.
- Disclosure (1): Yes, Voyager did not offer 6.5% interest for the past year, but we will be using this current rate to apply to past price points for us to extrapolate the future.
What are the results?
If you DCA $100 on Coinbase for 52 weeks from May 2020-2021, you should have 0.3236 Bitcoin in your wallet valued at $19,052.45. The average amount of Bitcoin purchased each week is 0.0061 Bitcoin.
If you DCA $100 on Voyager for 52 weeks from May 2020-2021, you should have 0.3457 Bitcoin in your wallet valued at $20,352.50. HODLing Bitcoin on the Voyager app generated 0.013997 Bitcoin, and compounding this added value to your wallet generated an extra $1,300.05.
In other words: it would essentially take you an extra MONTH on Coinbase to generate the same revenue target. Or, you're just going to hold less Bitcoin for the same amount of money! Why waste it in fees???
You can check my spreadsheets here: https://docs.google.com/spreadsheets/d/1k1yayHkYeDVCbgC9rtiCO4T26Y_TjVes1Wux0jnWXVY/edit?usp=sharing. If you have any comments or corrections, please let me know below.
If you've made it this far, you're wondering how you can download Voyager for yourself. My referral link is: https://voyager.onelink.me/WNly/referral?af_sub5=D8718B. If you download the app with this link (or use code D8718B) and trade $100, you will get $25 of free Bitcoin added to your account.
Also, I am not saying don't use Coinbase or Kraken or Binance, for these platforms allow you to purchase digital assets that are not on Voyager yet. But if you want to trust a publicly traded company and earn interest, my recommendation is buy Bitcoin on Voyager.
Important claims: I am not a financial advisor, this is just data I am presenting from the internet as my reason for using Voyager. Please do your own research before you invest any money. Crypto currency is not FDIC insured. I own an air fryer.