Can you become a stablecoin millionaire?

Updated: Nov 3, 2021

PLEASE NOTE: This article does not constitute financial advice and is for informational purposes only. The price of digital assets can go down as well as up and you may lose all of your capital. Investors should consult a professional advisor before making any investment decisions.

As an investor I try to keep an open mind, especially when it comes to alt coins. The crypto space is constantly evolving and there are some fantastic projects that are constantly looking to innovate and push the boundaries. Unfortunately it is a harsh reality that many of these will fail; we saw this happen after the 2017/18 bull market and it will happen again. As the space matures the market will ultimately decide those that will survive and go on to be industry leaders and for the investors who are astute enough to have the belief in those projects will be rewarded incredibly well.

Although cryptocurrencies have without doubt shown to be the best performing assets the world has seen for the average investor the idea of putting their money into such a volatile and uncertain asset class can be a little disconcerting. Regardless of what amount of research you are prepared to undertake on a project one should never consider investing more than you are comfortable losing. With that being said most of us are unfortunately left between a rock and hard place as being able to achieve any meaningful yield on fiat money is becoming more of a challenge and the mere thought of saving enough to become a millionaire any time in the foreseeable future might seem preposterous, or just far too time-consuming.

But what if there was a way to save a reasonable amount of money every month and become a millionaire in time to actually get to enjoy the money?

Well, believe it or not it is possible to achieve this with decentralized finance or DeFi.

In the world of traditional investing, the type of returns that are achievable in DeFi have long since gone. In fact, traditional investing is currently battling storms that are emanating from three fronts: rising inflation, interest rates at all time lows, and a lack of yield across the majority of traditional asset classes. With these storms converging and gathering strength it is becoming an ever bigger challenge today for those investing in traditional asset classes, such as bonds and equities, to be able to avoid losing their purchasing power, or the number of goods and services their money can ultimately buy.

If you choose to simply keep your money in a traditional bank account, the challenge is exacerbated further. The average interest on a bank account in the US in 2021 is between 0.03% to 0.09% – which is insignificant when you factor in the 5.3% year-on-year national inflation rate reported in August. However, one could argue that these figures have been massaged to suit the political narrative. If you look at the estimate of inflation for today as if it were calculated the same way it was in 1990 that figure is actually closer to 10%.

On an investment of $100,000, in a bank account one would receive a mere $30-$90 in annual interest! Then if you factor in inflation using the ‘massaged’ inflation rate, more than $5,300 would be eaten from the true value of your money. So basically with savers entrusting their money to a bank account they are losing a significant proportion of their purchasing power every day, which should be concerning to anyone.

The predicament exists for savers all across the world after central banks decided to keep their money printers working overtime resulting in unprecedented amounts of money flooding into the economy.