UPDATE: On July 13, 2022, Celsius and several of its affiliates commenced voluntary Chapter 11 bankruptcy proceedings. See my latest post on the matter at Lesson Learned.
I was never great at staying on track with new year’s resolutions. Sure, we all start out ambitious enough – try and exercise more, eat healthier, take up a new hobby, etc. – but my goals usually start to obscure within a few weeks from their nascence. Perhaps therein lies the problem – I need to be better about being goal oriented. I have read we should write goals down, being specific and keeping things measurable and attainable. For example, my goal is to write at least two blog posts a month this year. Okay 2022, let’s go!
In today’s post, I wanted to introduce a new investment vehicle I started to use last month. However, before I go any further, as always – I am but a mere amateur investor and rookie blogger, everything I suggest should be investigated further and probably presented to a financial professional.
At an ugly sweater Christmas party last month, I struck up a conversation with a friend about investing. As an introvert, I do not always like attending these events. Predominantly, however, I find I not only thoroughly end up enjoying myself but also learning quite a bit of useful information from other people’s ideas and experiences. As was the case here.
Now, terms like cryptocurrency, blockchain technology, non-fungible tokens (NFTs) – some of it still confuses and frankly scares me a little. Nonetheless, it does appear that it is here to stay. Therefore, (and perhaps another potential 2022 goal?) I have vowed to keep an open mind to it and slowly incorporate it into my overall investment portfolio.
Where was I? Oh yeah, at the social event I so courageously attended last Christmas, my friend turned me on to a company (and app) called Celsius. The hook for me was that he had been receiving a steady 10-12% interest on his money, WEEKLY! According to Bankrate.com, the national average interest rate on savings accounts as of last week was 0.06 percent. Another recent interesting statistic, consumer prices jumped 7% in 2021. When our savings do not grow at or above the same rate as inflation, essentially we are losing money because our purchasing power diminishes as time goes on.
Even though Celcius’s motto is to “unbank yourself” from the traditional financial systems, their service is basically a bank for digital currency. The Celcius Network is a platform that offers interest-bearing savings accounts and loan borrowing at remarkably low rates. No withdrawl, transfer, transaction, origination nor termination fees (for their services). They tout a mission statement that aims to act in the best interest of the community; in large part by giving back 80% of revenue to customers in the form of interest.
In exchange for storing your cryptocurrency funds within the Celcius wallet (which the company in turn loans out retail and institutional borrows), every week you receive an interest payment into your account. You can choose to receive payments in like-kind or in CEL (Celcius’s native tokens – an option only available to accredited investors if you live within the U.S.).
A particular class of cryptocurrency, referred to as stablecoins, is a non-volatile and price-stable asset. Essentially, with Bitcoin and Ethereum, the level of volatility may be thrilling for some investors but it hinders its benefit as a medium of exchange for many businesses. At least with stablecoins, the stable value means the coin can always be redeemed for an equivalent currency amount at any time.
After the Xmas party, per my friends instructions, I went home and downloaded Coinbase, CoinbasePro and the Celcius app. I created accounts for each, set up all the two-factor verification security stuff, and set up the payment method within Coinbase to acquire funds from my checking account. Within Coinbase, I “traded” (i.e. purchased) a certain dollar amount of USD Coin (USDC) stablecoin. Unfortunately, while the coins may be added to your Coinbase wallet immediately, they are unable to be transferred out for short while after. Eventually you will receive an email from Coinbase stating
|The $xxx.xx buy you made on (e.g.) January 01, 2022 is now available to withdraw or send. Please login to view your total available balance.|
After the funds are available to be traded out (usually about a week after the initial trade took place), I opened up CoinbasePro, navigated to Portfolio, and under Wallets would locate the Deposit option. Fortunately, there are no fee’s to transfer from Coinbase to CoinbasePro. From what I was told, a CoinbasePro transfer to Celcius take less of a fee than transfers from Coinbase directly. Also, Celcius lets you purchase USDC directly within the Celcius app but the fees (standard credit card processing fees, bank transfer fees) are higher still then if you are using Coinbase and CoinbasePro. Fees vary based on the amounts being transferred. After the funds are in your CoinbasePro account, you are immediately able to get them into Celcius. Within the Celcius app, you follow the Receive Coins link and (very importantly) make sure to choose the right asset from the drop-down.
Celcius will then alert you that the address is meant to receive only that specific token or digital asset, and anything else being sent over may result in permanent loss of funds. BE CAREFUL HERE!
I hit Copy on the address they provide (making a mental note of the last 3 or 4 digits of the long alphanumeric address), go back into CoinbasePro and then choose the Withdraw option under the Portfolio tab. I select USDC (or whatever asset you choose to trade with), and then select the Crypto Address option. I make ABSOLUTELY CERTAIN that when I paste the address, the last 4 digits matches the one Celcius Network gave me.
Here is the point you will encounter Network Fees, and the amount you send will have to account for those fees being available to be withdrawn.
On some final notes here, as with any investments, there is a possibility of loss of funds. Celcius Network is very established, is reviewed highly, and has an ever-growing following of Celcian users. However, they do not provide any insurance on our deposits, so if the company falls victim to a hack for instance, we may be screwed. Also, the Celcius interest rates vary weekly as well as from coin to coin. When my friend at the party started with them, it was 10-12%; I have consistently been getting 8.50% – which, in today’s market, is still nothing to sneeze at.
Lastly, the CEO – Alex Mashinsky – hosts a weekly broadcast called AMA – “Ask Mashinsky Anything.” I have tuned in to a few of these now, and have been loving the philosophy and transparency of the company, the leadership and support staff appear genuinely happy to work for company, and I get the sense they really do have a solid sense of community well-being.
Again, I am not a professional that you should be seeking any sort of financial advice from and cannot be held accountable if your cryptocurrency get lost in the blockchain metaverse. Please seek independent financial advice before dealing with digital assets. Within my own portfolio, Celcius Network is just another means to diversify a bit.
Thank you for reading this post! If I can help in anyway, with the understanding that I am a newb myself, I am most certainly happy to do so! Also, full disclosure, if you click on (and ultimately sign up for) the Celcius Network hyperlink I provided above (or use Referral ID 173697cff1) – we each receive their promotional reward. I have no other financial disclosures to report. Have a great day!