(Photo by Yuriko Nakao)
Yesterday I was in shock, today I am wearing my Bitcoin socks. Free money is real.
It is enough to shake my faith in reality that after knowing for the bulk of my life there was no such thing as free money, I just received a chunk. Now it’s actually, totally naive to believe there is no such thing as free money because the vast majority of people in this world get just that. The breadwinners are a small proportion of the modern world and the majority get paid out by them all day, every day. I’ll try not go too “Ayn Rand” on you but when you think of the ratio of dependants to creators of value that the dependants rely on, the ratio is sobering.
But I am programmed not to believe in “free money” and yesterday crypto handed me $1,700 for basically nothing. A gift of $1,700 out of thin air is worth an Anglo-Saxon verb and I ejaculated one a few times.
So let me continue right away with my conclusion. Crypto is a huge creator of wealth that is doing an end run around all those rent-seeking “rentiers” who slice and dice us all to death. Because of this avoidance of such rip-offs, or shall we call them depredations, the process showers the early adopters with money. Let’s hope this is an unstoppable process because if it is, it will generate vast wealth by amputating the guilds, cliques and oligarchies that siphon off the wealth of the world for themselves by dint of the currently inescapable structure of human society.
But this is not my point and comrade I have no wish to come across like a post-modernist.
Here is the thing. Crypto is giving income-starved people a shot at a great rate of return and you can understand why. Crypto does not have to support a vast infrastructure of cost, middlemen and owners all with their Tabbi-esque blood funnels stuck into your money supply. Old school dot-communists would call this dis-intermediation and it runs wild in the DeFi crypto revolution.
So the free money story goes like this. There I was playing with the new wild DeFi applications springing up like weeds and there is a leading pioneer called UniSwap. Its app is basically a market maker/stock exchange where you can be the fee earning exchange cum market maker if you fund a market making pool with some crypto.
Click: you add some funds, click: you can withdraw them. Every day you have crypto in a pool you make your share of the trading fees. There is no custodian, no trading floor, no server centers, no compliance, no $10 million CEO salary, etc. You get a 0.3% fee from the trade size in proportion to how much of the liquidity pool you are.
So I popped in $50 and stared at it for a bit and 49 days later pulled out the money. If I’d known which link to click I would have calculated I was earning at a 60% yearly rate and I would have thought, “unsustainable, it will all end in tears, ridiculous.”
So I read this previous weekend that because of a certain but typical crypto-saga, Uniswap was handing out tokens, equivalent to shares, in itself to previous users. I thought I would risk obvious disappointment and go see if I had won any.
I had won 400. Nice, if the value was a couple of cents each that’s equal to a free sandwich and as we know, a free lunch is hard to find. But no, the tokens are worth $4.20 something, so I got $1,700. (Which I immediately moved and turned into bitcoin in case I suddenly woke up out of the dream.)
And there it was: Uniswap with $2 billion of liquidity grinding away paying 5%-10%-70% return on its range of liquidity pools, not an opaque investment scam, a real revolutionary business anyone can be part of.
Uniswap is not a scam or a Ponzi, it is a transparent, decentralized, mainly autonomous exchange, handing out market making revenue for people prepared to dive into the deep black waters of bleeding edge technology, and it just gave me $1,700 for being the merest of friends.
No amount of arguments about risk can explain why this was not free money. The question is: is this a freak or is this simply a function of an emergent revolution?
It is the latter, I was simply splashed with some of the geyser of money being unleashed by this tech revolution.
The zillionaires of technology are not men that fell to earth. They were fortunate enough to push their talented spades into a latent mother lode of wealth. They were lucky and smart enough to survive as huge winners of a technical gold rush that sweeps us all along. Such waves have established superrich dynasties since time immemorial.
Crypto is such a mother lode and it has paid me out like this at every turn. As a man once said, ‘By their fruit you will know them’ and crypto keeps delivering fruit in abundance.
Yet for many, digging into this crazy upwelling of technology is not going to be for them. It’s arcane to say the least, but what is becoming quickly clear is, crypto offers a solution to what many chronically need, and that is income.
There are now many accessible ways to earn income with crypto and you don’t have to stake liquidity on Uniswap for a lunge at 60% annual percentage yield (APY) to get it. I’ll be covering this in later pieces because a 4% annual return on your dollars feels like Nirvana for many and 8% too wildly high to be true. Meanwhile an experimental $8,000 is earning me right now, but maybe not for long, 67% APY. So this is a must know development.
So-called “yield farming” can certainly be a spicy game, but it is definitely real and it will take a long time for the mainstream to swamp the returns and drive them anywhere near to what the overhead bloated financial infrastructure cares to pay out while they skin you for 20% interest on your credit card balance.
Get a complementary issue of Forbes CryptoAsset and Blockchain Advisor here.
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Clem Chambers is the CEO of private investors website ADVFN.com and author of 101 Ways to Pick Stock Market Winners and Trading Cryptocurrencies: A Beginner’s Guide.
Chambers won Journalist of the Year in the Business Market Commentary category in the State Street U.K. Institutional Press Awards in 2018.