Cryptos are becoming increasingly popular and at a faster rate in the last couple of years. In the last one year or so, the value of cryptocurrencies such as bitcoin have surged by a considerable amount. Cryptos’ popularity has exploded in the last couple of months with bitcoin rising 66 percent in 2021 alone, while ether has rallied over 200 percent, according to CNBC. Bitcoin, which is probably the most popular cryptocurrency at present, reached a peak of around $63,000 in mid-April.
Cryptos have also become a hot trend in the investment world. More and more investors across the globe are now being lured into the crypto investment realm due to various factors, be it its surging popularity or the Covid-19 pandemic. Even the old players or the matured investors are adding cryptos to their baskets.
Now, investment banks are also encouraging their clients to put their money on cryptocurrencies. It was reported by CoinDesk that New York-based investment bank and financial services holding company JP Morgan is setting up an actively managed bitcoin fund for its wealthy customers. The bitcoin fund could be rolled out in mid-2021 and the New York Digital Investment Group would serve as JP Morgan’s custody provider. Similarly, another investment giant Goldman Sachs is expected to start offering bitcoin exposure to its wealthy clients.
While it is possible to make money from crypto investment, one must also understand their volatile nature. South Africa-based digital crypto broker Revix offers crypto bundles that offerits users the ability to invest in more than one crypto and at the same time mitigate the specific risk associated with any single cryptocurrency. Revix recently raised $4 million in funding to help it launch a mobile app and expand in Europe. Sean Andrew Sanders, chief executive officer at Revix, in an interview with Global Business Outlook shares his insights with regard to the startup, its crypto bundles, the crypto ecosystem and its outlook.
Can you tell us a bit more about Revix’s new mobile app?
Yes, we’re very excited to announce that we’ll be launching our mobile app later this year which will include all the latest technologies and security features. Revix stands for revolutionary investment experience and we want our app to offer just that – an investment experience unlike any other investment platform. This starts with a customer centric approach, an obsession about the smaller details and, thanks to our skilled UX team, investing will become easier than ever before with our mobile app. Our mobile app will be both iOS and Android compatible and will enable our customers to manage their investments on the go.
What value proposition Revix has to offer that sets it apart from its competitors?
There are several areas that set us apart from other crypto investment platforms. We offer crypto bundles that operate as the S&P500 or JSE Top 40 for crypto for effortless low-cost diversification. Soon we’ll be blurring the lines between crypto and traditional investing as we’ll enable everyday people to invest in both cryptocurrencies and theme-based ETFs on the same investment platform.
We aren’t a crypto exchange, we’re more like a digital crypto broker which means we can trade across multiple exchanges and trading desks to get the best prices for our customers. Our customer support is hands down the best in the industry so when you have a query it gets answered within minutes or at worst, hours – not days or weeks.
Revix Rewards loyalty programme is the first behavioural driven investment rewards program in South Africa that pays out points to customers for performing specific actions. These include growing the Revix community, diversifying an investment portfolio, making regular investments, etc. Revix points can then be directly converted into Bitcoin and reinvested or withdrawn.
What are the ways a stock investor can diversify their stock portfolio with respect to cryptocurrencies? Can you tell us a bit more about Revix’s crypto bundles?
Buying a single cryptocurrency can be easy if you know which one to buy but many people are not confident enough to know which cryptocurrency to back, and even the pros only get it right about 50 percent of the time, so buying a Bundle – rather like an EFT [exchange-traded fund] or unit trust – takes the guesswork out of it.
Unlike the pure plays on the rise of Bitcoin or any other single cryptocurrency, Revix’s crypto bundles offer investors a broader basket of cryptocurrencies that passively track the growth of the broader crypto market. The concept has merit for investors as a unique way to profit from the next Bitcoin while significantly reducing the concentration risk (the specific risk associated with any single cryptocurrency).
Just as you would diversify your stock portfolio to reduce the risks of exposure to a single stock or industry, we do the same with cryptocurrencies.
What are considered to be the smart ways to invest in cryptocurrencies?
There are 3 main rules.
1. Don’t invest more than you can afford to lose. A smart amount to invest would be to put no more than 1 to 10 percent of your total net worth into the crypto market. This is obviously heavily dependent on your own personal circumstances.
2. Rather dollar-cost-average (DCA) into the crypto market. This means investing a small amount over a fixed time period – i.e. $100 every 2-weeks. This means you get the average price over the long-term and if the market is going up you’ll benefit from the growth in the market over time while significantly reducing your risk if you were to invest at a point in time before the crypto market sharply declines for whatever reason. The wisdom here is that you should not try time the market – you will get it wrong as often as you get it right, and
3. Don’t bet on a single cryptocurrency. Rather own a diversified basket of cryptocurrencies like what we offer at Revix through our Bundles. This approach allows you to spread your risk as well as have a crypto investment portfolio that automatically updates every month with our automated rebalancing.
How will CBDC impact the market? Can cryptos and CBDCs co-exist?
Money used with a credit or debit card is, in fact, bank money and it is one step removed from the issuing authority. Bank money is often the place where fees are levied, which means CBDC would offer the fee-free cost of sovereign money with the convenience of digital money.
The benefits of a CBDC are obvious – lower fees, near instant clearing and settlement, improved AML tracking, etc, – but launching these would fundamentally impact the banking industry in a very negative way, as fees would be taken directly from banking and payment service provider’s pocket – and likely put hundreds of thousands of jobs at risk which is a high-risk strategy with little upside potential for massive downside risk (from a political standpoint that is).
Can cryptos and CBDCs co-exist?
Yes, they can co-exist but I suspect one will truly succeed if the other one fails. Technically cryptos and CBDCs are completely different assets even though they can both be used for payments. They’re like comparing gold to property, both store wealth but are very different assets.
CBDCs will have their long-term values pegged to several factors including the confidence people have in national economic policies, the long-term growth rate of the money supply (i.e. inflation), economic growth and several other factors. Cryptos on the other hand are non-sovereign and see increased long-term adoption when nations default on debt repayments or perform excessive quantitative easing (printing of money) causing a loss of confidence and value of fiat currencies.
For the foreseeable future crypto and CBDC will co-exist, however, over the very long-term I don’t think the system will permit both to compete for market share. This is a winner-take-all market and in my personal opinion cryptocurrencies will become the defacto global means of value exchange instead of the fiat currencies we see today.
Do elaborate about the technology Revix uses and ways to reduce risk or fraud when dealing with an exchange platform.
First, we only use trading partners that are regulated and/or perform AMLD5 KYC and AML checks.
Secondly, we make use of professional custody partners and Know-Your-Transaction (KYT) partners. This ensures that our customers’ assets are secure and that any incoming or outgoing crypto is coming from or going to a crypto address that has not been black listed or associated with nefarious activities.
Thirdly, we monitor all transactions – both crypto and fiat currency transactions – and automatically flag any transactions or set of transactions that seem suspicious. We can then request additional information from the customer.
We also only enable customers to deposit fiat currency from a bank account registered in their own name and we only permit withdrawals into an account registered in their own name. This lowers the risk of anyone making payments and/or withdrawals to 3rd parties which prevents anyone from using Revix for nefarious activities.
Lastly, before any cryptocurrency enters one of our crypto bundles, we independently evaluate it for security, liquidity, regulatory status and other factors. This ensures it can be held in a safe, secure, and regulatory-compliant manner.
While bitcoin grabs all the headlines, which are the top-performing cryptocurrencies according to you? Also, the altcoin market has seen tremendous growth over the past five years. What are your views on this?
There are more than 4,500 cryptocurrencies as of March 2021, up from just a handful in 2013. This shows the amount of development and energy being ploughed into this new technology built around the blockchain, allowing for transactions to occur and be permanently recorded without an intermediary or centralised database.
Cardano, Polkadot, Ethereum and Chainlink have all shown spectacular growth over the last 12 months. In some cases, like Cardano, growth is over 2,000 percent. If you look at how the total value of Bitcoin relative to the rest of the crypto market has changed you’ll see a clear trend of what’s going on: 5-years ago Bitcoin made up 90 percent of the total crypto market’s value but today it makes up just 50 percent. The longer-term trend of altcoins outperforming Bitcoin is likely going to continue as new cryptocurrencies are created and developed to tackle real-world problems in a more scalable, efficient and environment friendly fashion.
1.What is your outlook for the crypto market in the next five years?
I’m very bullish on the outlook of the crypto market over the next 5-years. In my opinion, the following will occur:
● Bitcoin will overtake gold in terms of market value
● Ethereum (or one of Ethereum’s competitors like Cardano or Polkadot) will overtake Bitcoin in terms of the number one most valuable cryptocurrency.
● Most central banks will have launched a digital currency representing a digital version of their sovereign currencies. China will likely take the lead given their large head start today.
● Many emerging market currencies will have failed and entered a period of hyper-inflation. This will lead to increased dollarization and a greater demand for fixed supply cryptocurrencies like Bitcoin and Litecoin. We may even see the first country to turn to Bitcoin as their primary currency.
● The crypto market will undoubtedly become fully regulated and in 5-years’ time there won’t be any major crypto platform that is operating outside of a strict regulatory structure.
● Lastly, I see traditional banks being disintermediated. There’s a quote that says “Banking is essential, banks are not” and I can’t see a future where these slow-moving outdated banking systems exist in the new world of peer-to-peer and automated finance. Banks will look very different in 5 years compared to today.