Why people are switching from Banks to digital Stable Coins for a 10% APR with virtually no risk!
With the explosion of interest in crypto currencies, it is worthwhile considering what role Stable Coins should play in growing your savings. While technically you don’t really ‘invest’ in Stable Coins, (since they, in themselves, cannot offer you a return), they still offer a number of key benefits.
Stable Coins have massively increased in popularity of late with the likes of USDC (United States Dollar Coin). This is because Stable Coins offer a number of key benefits to trades that include:
Price stability – the value stays locked at $1 per coin.
A useful transfer mechanism – can be easily converted back into cash like the Euro or GBP, or more speculative crypto currencies like Bitcoin.
A lending tool for earning high interest rates.
Let’s look at each of these individually.
Price Stability
Stable Coins, in particular, USDC (a USD-backed stable coin) gained popularity in late 2017 as the crypto market exploded. Users saw this particular asset as a tool to hedge price risks as the volatility of Bitcoin and many other crypto currencies spiked wildly.
The market capitalization of USDC (a measure of the total value of USDC in circulation) went from approximately $10m at the beginning of 2017 to over $1.3bn by the end of the year; a 130x increase.
Many Stable Coins have followed the success of USDC. These include Tether, TUSD, DAI, PAX and more recently exchange-specific Stable Coins such as Binance USD (BUSD). What is clear is that all the most popular Stable Coins have one consistent trend: the peg to the USD dollar. This is due to the fact that the dollar is widely considered to be the reserve currency of the world and is commonly used as the de facto pricing unit for international trade.
A Useful Transfer Mechanism
Stable Coins have become an increasingly popular way of transferring value across the crypto currency ecosystem. Stable Coins could usurp traditional payment providers in the future, moving beyond just being a trading tool into a payment method. With Paypal, Visa and Mastercard now offering payments in USDC for buyers, it means that we can already buy our coffee and fill up with petrol using a debit card for our store of USDC, which is then paid to the merchant in the local currency.
A Lending Tool For Earning High Interest Rates
Loan providers such as Celsius Network, Swissborg, Blockfi, Crypto.com and Nexo have innovated to provide investors the ability to earn interest on their Stable Coins. They do this in a similar way to banks by accepting USD Stable Coin deposits and then lending those deposits to traders for a predetermined interest rate with the loan backed by crypto collateral.
With Crypto.com for instance you can achieve a return of over 10% PA while they also give you a Debit card specifically designed for the USDC coins you hold in your account. Simply deposit Euros into Crypto.com, apply for the debit card and start earning 1% cashback on all your purchases with the card while also generating 10% PA on the USDC balance. This option more than compensates for the loss of value most of us have experienced in the purchasing power of our Euros over the last few years with bank saving rates at 0.01%
The interest rates are higher than savings rates you would get on traditional savings accounts because of the perceived risk being higher. However, with Crypto.com having a market capital of over 6 billion USD and growing rapidly, the chances of losing your money are very low!
Ultimately, you should choose the Stable Coin and investment product that suits your needs and, as always, do your own research.
For more details on this, you can email me at andrewhurrell2000@yahoo.com