Cryptocurrency and blockchain have been huge buzzwords in the tech industry in recent years, and despite the occasional dip in the market, it was a pretty quick and easy way to make some extra cash … until last year.
According to CoinDesk, November 2018 saw the worst monthly decline for Bitcoin in the past seven years. It wasn’t the only cryptocurrency to endure such turbulent times, but as by far the most recognisable cryptocurrency, it’s been a good indicator for the general public to know how the market has been doing. With the current volatility in the cryptocurrency market, you have to ask why anyone would start a cryptocurrency company now. To gain some insight, I sat down with Sean Andrew Sanders, co-founder of Revix, to find out more about their South African start-up.
Popular Mechanics: What is Revix?
Sean Andrew Sanders: The guiding logic is this: If the cryptocurrency asset class is going to increase in value, what are the best ways to participate in that growth?
It probably doesn’t involve going out and trying to select one, three or five randomly chosen cryptocurrencies. The best thing to do would be to own a bundle of the top 10 cryptocurrencies.
We weight them because, with a market-weighted bundle, we don’t overweight the chance of one coin’s success over another.
Ultimately, if it turns out that the success story is with one of the smaller cryptocurrencies, it’s a question of how you participate in that growth. That’s why we’ve gone with these equally weighted bundles.
Normal investors don’t have any inside knowledge, or even a good understanding of what’s going on in the crypto space. You may have heard that a certain cryptocurrency is great or has a successful team behind it, but you can’t verify that for yourself. There are no fund managers out there who are really more competent than, well, the guys in tech who are on the ground. That’s where Revix comes in.
PM: How did Revix all begin?
SAS: In 2014 I finished my studies and then went on to complete my CFA (chartered financial analyst) qualification. There I learnt what makes a risky investment, and why you shouldn’t be playing around with speculative assets that have no value at that point in time. From there, I started working at Sabvest, then went to Knife Capital, a venture capital firm in Cape Town. While there, I met a number of entrepreneurs who inspired me to start something of my own. Interestingly, every entrepreneur I met would explain some problem they were facing, and I’d make notes, essentially advising myself what I should and shouldn’t do in my own future business ventures. I realised that I had the start-up bug, and I knew that I wanted to create something exciting.
In January of last year, two friends and I decided to start a crypto hedge fund here in South Africa that would be domiciled offshore. We arranged a few million rand in committed capital, and felt really positive, assuming the market would continue rising. Luckily – as it turned out, with the way crypto markets went in 2018 – the regulations weren’t in place and we weren’t actually able to obtain a hedge fund licence. So that company fell through and I immediately knew I wanted to be involved in something else in this space. There were a million ideas floating through my mind, so it was a case of homing in on one.
I met up with my business partner and explained my idea of creating an investment company that enables ordinary people who don’t understand the crypto space to get involved in a safe manner. We decided to backtest, to figure out how we were going to do this.
After cycling through five different business name options, we settled on Revix. It’s based on ‘revolutionary index’, because we realised we needed a name that was emotive, and inspired people to get involved and move forward. We compiled a business plan and sought funding from an investor who asked us to align with a host of requirements, which we were happy to do. With all of that in place, we were able to set up our new company.
PM: Why is Revix so revolutionary?
SAS: If you want to gain investment exposure in automotive stocks, there’s an exchange-traded fund (ETF) currently based in the US that you can invest in. Or, let’s say you want to gain exposure in the technology sector; there is a different ETF and a multitude of funds that enable you to do that. That mechanism does not really exist in the crypto market, which is where Revix comes in. There are a few competitors out there in this space, but nothing that gives you direct exposure to the crypto market, with constant rebalancing and at a low cost. We are now in that space.
PM: Why should I invest in cryptocurrency?
SAS: Without a doubt, I think cryptocurrency got ahead of itself. A lot of people speculated and there were vast sums of money flying in from everywhere, yet people had no clue what they were investing in. But eventually the bubble got too big and people realised that the actual use case, or a specific situation in which cryptocurrency can be used, wasn’t there, and the money started flying out. That’s where we are right now.
Look at the Internet of Things (IoT) as an example – it’s gradually becoming more ubiquitous in our homes and cars, but it’s happening four or five years after the big hype cycle began. In the future, digital natives are going to be happier with transacting online and I think cryptocurrencies are going to find a use case, whether it’s going to be payment focused or privacy focused.
PM: Why should I use Revix?
SAS: It’s the smarter way to invest in cryptocurrencies. Revix is a better way for you to minimise your investment risk. Volatility is high with our bundles. We’re not here selling a low-volatility product; we’re selling a product that’s going to lower the risk of losing capital. We offer the ability to take thematic approaches to various things like privacy, platforms or payments – and that’s innovative. There’s no other company doing that in South Africa. In fact, there’s no other company doing that in the southern hemisphere.
Taken from the March 2019 issue which is currently on shelves.