“Crypto is weird,” says Sean Sanders, the CEO and founder of Revix. “But then again, everything was weird at one point in time.” That goes for the internet, email, Uber, Airbnb; strange concepts that are now normal—read: crucial—parts of our everyday lives. “The point is, with crypto, just like anything else, you don’t have to understand how it works, you just have to see what it can do,” he adds. Here’s what you need to know about crypto in South Africa.
What Should I Know About Investing In Crypto?
Sanders’ company offers a more levelheaded approach to investing in these future “currencies”. There are many people, he says, who treat crypto like gambling, betting on fringe coins hoping for big gains. However, at Revix, you can buy into a so-called readymade basket of different coins, diversifying your investments the same way you would with a portfolio of more traditional assets.
“The reality is that crypto, as an investment, is highly volatile, making it one of the riskiest asset classes out there,” says Sanders. “It’s volatile, but there’s money to be made without treating this market like a casino.”
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What Is A Blockchain?
The world of crypto—at first glance—can seem confusing. Here we have a digital currency created and issued by private groups (not a government), with each coin supported and tracked by something known as the “blockchain”.
A blockchain is essentially a tamper-resistant record of transactions that keeps logs of who owns what. Ultimately, this system prevents fraud, ensuring that opportunists can’t duplicate their holdings.
The result: a decentralised currency that cuts through the financial red tape (and delays) associated with old-world currencies and assets. Some currencies, such as crypto heavyweight Bitcoin, are created through mining, a process whereby advanced computers solve a series of complex mathematical problems to verify the authenticity of each transaction. Others, such as SolarCoin, mint new coins with every megawatt hour generated by solar technology.
“The thing people need to understand is that not all crypto wants to be digital money,” says Sanders. “Sure, Bitcoin is the digital equivalent of investing in gold, but there are other currencies tailored to specific platforms that give you discounts, enhanced access and so on. Those tokens exist for a particular reason, but it’s just as important.”
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How Did Sanders Get Into The World Of Crypto?
Sanders’ journey with crypto began back when he was 19, bouncing between gigs across the world as an actor and model. He started to notice that many of the other models would leave their earnings with their respective agencies rather than deal with the hassles, headaches and transfers costs of bringing it back home and investing it.
“So there I am, the overly confident Sean telling them they shouldn’t leave their money with these agencies, but should let me start investing it,” says Sanders.
Before long, he had his own trading firm, and he was handling a significant chunk of change. The only problem: he was ill-equipped for that fateful moment when someone came along to withdraw.
“Less than a year later, I had a client urgently wanting to withdraw their funds to buy the apartment of their dreams in New York,” he says. Bottom line: he had a lot of money to move very quickly, but there was no easy way to get it overseas other than dealing with traditional banking’s ever-present red tape and fees.
When Did Sanders Realise The Potential Of Crypto?
That’s when a friend introduced him to Bitcoin. This was back in 2013, and the cryptocurrency was still five years away from disrupting the world economy, and dominating every conversation at every braai for the rest of time. (For reference, the value of Bitcoin peaked at just R17 000 that year; a few cents shy of its R453 000 worth at the time of this story being published.) “It was a significant amount of cash, but using Bitcoin I managed to get the money over to my client [in the United States],” says Sanders. “It was a pretty exciting transfer, especially for someone who had never done this before, but it worked out.”
And that was it: a brief window into the untapped potentials of a decentralised currency. It was only a few years later when Sanders was working at a UK family office that he would have an epiphany about digital currency. “There I was, really in the depths of traditional finance,” he says. “But I was helping high-level investors get involved in crypto, and that really hit home: it’s still scary to invest in the space, it can be complicated, but I had my own idea on how I could improve things.”
By the time he founded Revix, he was certain about the future of crypto—“I knew the financial system was going to be rewritten,” he says.
How Much Should I Be Investing In Crypto?
While he’s an advocate for decentralised, future-proof currencies, Sanders still espouses a cautious approach to investing in crypto. “People get caught in the boom,” he says. “I’m seeing a lot of young guys convert their entire investment portfolio to crypto… But right now, it’s all too volatile. You should be investing a maximum of ten percent of your total wealth in this space.”
Is Investing In Crypto Risky?
You have to understand your risk tolerance, and you have to know what you’re investing in, he says. The crypto market is rife with pump-and-dump schemes, fly-by-night operations and other questionable coins. His company Revix aims to take out a lot of the guesswork, with his team tackling the “due diligence” part of the equation to vet and curate a “basket” of assets.
It’s still a volatile investment, but this way you’re at least spreading the risk (and minimising the chances of getting caught up in a Ponzi scheme.)“Think if you went back in time to the dot-com bubble,” he says. “Would you have been able to identify the most successful companies? Most likely not. Maybe you would’ve picked out a Microsoft, but it’s just as likely that you would’ve hedged your bets with AOL.” For the uninitiated, AOL’s rise and fall is akin to the “unsinkable” Titanic’s run in with an iceberg.
The dot-com bubble reshaped the world—that’s an undeniable fact. And that boom—just like any new piece of technology—had its naysayers. Crypto is now in that liminal state, a technology on the cusp of greatness. And for now, sure, it’s still weird.
“But as it becomes a part of our lives, as we can see it in action and start to understand its true capabilities,” says Sanders.
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What Are NFTs?
Non-fungible tokens (NFT) are now dominating that part of the conversation once reserved for crypto. But WTF is an NFT?
The operative word here is non-fungible. A crypto coin is a fungible token, so it can be traded for another of the same coin, and you’ll have exactly the same thing. But non-fungible tokens are unique. (You can think of them as a particularly rare trading card.) And no one can replicate or tamper with your ownership records for a particular token. As such, once it has been “minted”, only one of these tokens can exist out in the world.
The first fleet of NFTs to make the news were digital artworks fetching sizeable sums. Pieces such as Beeple’s “Everydays” sold for $69 million. On the surface, it seems silly. Why pay a small—read: huge—fortune for something you can just screenshot and claim as your own. But Sanders says the underlying concept, that—thanks to the blockchain—you could have verifiable ownership over a digital item, has major potential.
