Cryptocurrency is on the upfront bulletins of almost every industry – as such a lending platform, BlockFi hit a new announcement introducing the compound interest rate to be paid in cryptocurrency – Bitcoin and Ethereum.
Crypto Interest Account
Accordingly, New-York based BlockFi published a blog post on March 04, 2019, announcing the launch of a new cryptocurrency account that supports two largest cryptocurrencies – Bitcoin (BTC) and Ethereum (ETH). Per the announcement, the account bears 6 percent annual interest that would be further paid in mentioned cryptocurrencies. In addition to this, monthly interest earned on an amount deposited will be then turned into compound interest, resulting in 6.2 percent annually. Nevertheless, it’s worth to add that its custodial solution is taken care of by Winklevoss’s Gemini Trust Company.
BlockFi offering 6.2% on both BTC and ETH deposits changes the game. Will be interesting to see if/how centralized crypto deposit takers and lenders impact #DeFi volumes overtime. A thread:
— Ryan Todd (@_RJTodd) March 5, 2019
While crypto enthusiasts perceive it as a potential way to increase the wealth, on the other hand, lawyers like Jake Chervinsky compares it with the ICO ecosystem. In his latest tweet, an indirect message that would direct you think on BlockFi’s part states;
If you think crypto lending platforms enable you to become a risk-free creditor & collect interest on any size loan at several hundred basis points above the target federal funds rate in perpetuity, then I have a bridge to sell you.
On top of all, in his continuous response to the conversation, he also claimed that the concept is capturing the crowd as ICO does in the year 2017. To note, there were many ICOs introduced and disappeared shortly when Bitcoin peaked to almost $20k in 2017.
In his words;
One would hope, but I’ve seen more than one marketing effort trying to push this idea on the same crowd that threw money at ICOs in 2017.
— Jake Chervinsky (@jchervinsky) March 5, 2019
It’s worth to add that many crypto enthusiasts didn’t support his view, in a similar context, one such user, Fontaine (@Fonta1n3) explains;
I think BlockFi provides a great service that allows anyone to obtain USD denominated loans at reasonable rates and earn interest denominated in BTC. Everything has a risk but if we are going to democratize finance this is a step forward. Financialization network effect starting.
Pomp and Mike Novogratz are BlockFi’s Investors
To note, the industry’s most influential figures are already the investor in BlockFi – this was revealed when a user doubt it as a pyramid scheme. To clarify user’s doubt, Morgan Creek’s Anthony Pompliano reveals that he himself and Mike Novogratz are the investors in BlockFi. However, the amount invested in the platform is out of sight but Pomp claimed that this is a custodial service. He says;
This is a custodial service that pays interest. Definitely possible to pay 6% and in fact, there are plenty of retail and institutional investors who have been using the product and getting paid already 🙂
— Pomp 🌪 (@APompliano) March 5, 2019
What’s your view on BlockFi? Do you agree with Jake or are you optimistic as Pomp? Share your thoughts with us.