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BlockFi launches Bitcoin [BTC] and Ethereum [ETH] savings account with 6% annual interest




Bitcoin [BTC] and Ethereum [ETH] savings account with 6% annual interest launched by BlockFI
Source: Pixabay

BlockFi announced the launch of the world’s first cryptocurrency-based savings account, on 4 March. This account will allow users to deposit Bitcoin [BTC] and Ethereum [ETH] and earn a massive 6% annual interest rate.

According to BlockFi, a cryptocurrency lending platform, the interest is paid every month in virtual currencies and then compounded to give a 6.2 percent annual percentage yield. However, the savings accounts in question are not newly opened accounts. Instead, these accounts have been in a private beta phase since the start of 2019 and currently hold over $10 million in assets.

BlockFi’s tweet stated,

“Today we are launching the BlockFi interest Account (BIA). Users can securely store Bitcoin or Ether at BlockFi and receive 6% annual interest, paid monthly in cryptocurrency! BIA interest compounds monthly, delivering an industry-leading APY of 6.2%.”

The Twitter thread further revealed that the assets of the account holders will be custodied by Gemini Trust Company, LLC, the cryptocurrency exchange led by the Cameron and Tyler Winklevoss. Gemini is under direct regulation of the New York State Department of Financial Services.

After depositing 25 BTC or ETH, users can commence collecting their interest. This service will be available to the company’s U.S users, except those residing in the states of New York, Washington and Connecticut.

BlockFi further stated that the yield distributed by the accounts will be generated from institutional borrowers. The company stated,

“BlockFi’s proprietary risk management system, which automatically initiates margin calls and liquidations to protect our customers’ assets, has a perfect zero-loss performance record since launching in 2017.”

Zac Prince, the CEO of BlockFi said,

“The launch of BIA is a significant step in BlockFi’s goal of becoming the go-to provider of financial services for crypto investors. We’re excited to leverage our relationships to provide yield on digital assets for crypto investors.”

BlockFi has substantial backing from Crypto-enthusiast Mike Novogratz’s Galaxy Digital which led a $52.5 million fundraising round for the crypto-lending company back in July 2018, a time when BlockFi only offered loans backed by cryptoassets.

Other backers of BlockFi include Susquehanna, Morgan Creek Digital, ConsenSys Ventures, SoFi, Fidelity, Coinbase Ventures and Akuna Capital, among others.

The cryptocurrency community is abuzz following BlockFi’s announcement. Anthony Pompliano, Founder and Managing Partner at Morgan Creek Digital, and a backer of BlockFi tweeted,

@TheRealBlockFi is launching a Bitcoin and Ether deposit account today where you get paid 6% annual interest, compounding monthly, paid in cryptocurrency.
Bringing the HEAT on a Tuesday 🔥🔥”

However, some remain skeptical.  @zoinky commented,

“Sounds like a terrible idea. These rarely end well in the bitcoin space. And usually at the worst time for most of the people using it (peaks of markets)”

Another Twitter user, Brett Russell commented,

“Good stuff here Pomp. This is definitely going to excite the #crypto market. A little hesitant in this climate. Maybe full disclosure from you is appropriate and will help (you’re an investor) and that Gemini (Winklevoss) is custodian, can quell the claims of scam.”

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Facebook’s Libra is a double edged-sword, but will benefit Bitcoin, says Caitlin Long





Facebook's cryptocurrency Libra is a double edged-sword, but will benefit Bitcoin [BTC], says Caitlin Long
Source: Unsplash

On 18 June, the world’s biggest social media platform, Facebook, introduced its new cryptocurrency, Libra, set to launch in the first half of 2020. The coin that would have its own blockchain will be backed by several sovereign currencies, and these reserves would be managed by the Libra Association. The association will also be engaged in several other key activities, which would focus solely on the development of the Libra ecosystem.

Notably, the coin has brought together major players in both the financial and technology industry including, MasterCard, Paypal, and Coinbase. Despite such strong backing however, the concept of the coin was soon shot down by several influencers and government authorities.

The French Minister of Finance and Economy, Bruno Le Maire, released a statement asserting that Facebook’s digital currency becoming a sovereign currency was “out of question,” adding that “it can’t and must not happen.” Along with this statement, the Finance Minister also raised concerns about money laundering and terrorism funding and urged G-7 countries Central Bank Governors to draft a report on the new “global currency” for their meeting in July.

Further, Facebook’s cryptocurrency is also facing hurdles in its native country. Maxine Waters, Chair of the House Financial Services, has requested the social media giant to hit the pause button on the development of Libra, until Congress and regulatory authorities hold a discussion on the digital currency. This request was put forth mainly because of the firm’s “troubled past.”

In an interview with WhatBitcoinDid, Caitlin Long, Co-founder of the Wyoming Blockchain Coalition, stated that Libra had its pros and cons, adding that it was a “double-edged sword.” However, the blockchain evangelist continued to assert that this was going to benefit Bitcoin, stating that the social networking platform was “making cryptocurrency a mainstream word.” She added that Facebook would introduce the concept of digitally scarce money to people and that these people would look for the best cryptos that would retain the most value over time. That crypto was going to be Bitcoin, she said.

Long stated,

“This is a detour kind of like Andreas analogy, it’s the intranet before internet. We’ve even seen it in this industry, it’s blockchain not Bitcoin but people are coming full circle back around to Bitcoin. These are detours that are ultimately helpful to gaining adoption and wider support, but they’re not where we end up and I think we will end up in Bitcoin.”

Further, Long was asked whether Libra was going to be its own currency, considering it will not be pegged to a specific currency, but several fiat currencies. To this, she stated that Libra was indeed going to be a currency of its own, similar to Bitcoin. She stated that it was going to function like a “central bank,” remarking that it would be a “private version of a central bank.” Long went on to add,

“They’re going to be managing reserves against the liability. For them it will be the people who own the coins and they will be managing the reserves against that […] they are going to be marketing this in the developing world, this is going to be a developing world concept probably more than a developed world concepts […] so my guess is this is mostly an emerging market phenomenon secondarily a European phenomenon and lastly a U.S. phenomenon.”

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