BR #18: Revolut pays 4.84% yield. HOW?

(1-minute read)

A friend recently shared this Revolut screenshot below with me and asked: "How do they generate this yield?"

The short answer is:

• The EU, Britain, and theEU print it. They give it to Revolut. Revolut keeps a cut for itself and shares the rest with you.

The long answer is:

• Revolut lends your fiat to governments (by buying US, British, and EU bonds);
• Governments use your fiat to pay for their spending (salaries, infrastructure, war, social support systems, etc);
• Governments collect taxes to pay you back..and if taxes aren't enough (which they never are):
• Then central banks print the remainder along with the promised yield to Revolut.

In the meantime, real inflation runs between 6% and 20% (your specific inflation is dependent on your personal consumer basket).

So you end up in a situation where:

• You park your savings to earn 4-5%
• Real inflation is 6-20%

You get a short-term dopamine spike by earning 5% 🤑

But on a net basis, you are at a loss. Your long-term savings melt. 😬

This is the sad reality for the vast amount of investors globally (or at least for a part of their portfolio).

They get robbed in broad daylight by the fiat system.

Satoshi Nakamoto invented Bitcoin as a simple alternative:

• An asset and a network whose rules are the same for you, me, and central banks;
• As people organically adopt bitcoin it experiences volatility;
• Some years it grows massively - between 200% and 2,000%;
• In other years it can drop between 30% and 80%;
• This short-term volatility can be scary;
• But when you zoom out bitcoin's annualized return is >50% over the last 10 years.

And these ~50% returns ain't random. They are caused by the halving earthquakes.

To recap:

• Traditional savings accounts are not a way to store value.
• They are a way to lose value slower than you would if you just hold cash.
• Bitcoin looks like a scary store of value, but it is massively rewarding for those who adopt it.

I also hold a part of my savings in a Revolut type of savings account, but I am cognizant, this is just a game to nurture me with instant dopamine while robbing me from the back door. I make sure my bitcoin gains are way higher than what the fiat system robs from me.

Till next Saturday!