Two high-interest Gemini-backed cryptocurrency accounts just came out — is this the beginning of the end for banks?
A Bitcoin Bank Account
Even the greatest proponents of Bitcoin tend to admit that the number one cryptocurrency is unlikely to replace banks anytime soon. However, it certainly has fiat currency in its sights. With the launch of two high-interest Gemini-backed cryptocurrency accounts in Bitcoin (BTC) and Ethereum (ETH), maybe the banks should be worried after all.
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
For those investors who don’t mind a bear market and who want to HODL their chosen cryptocurrency, a 6.2 percent interest rate may be appealing. Perhaps it’s too early for the estimated 92 percent of Americans who don’t own cryptocurrency, though.
Since the cryptocurrency market lost around $400 billion from its market cap in one year, high-interest rates on a dwindling investment may fail to appeal.
However, the Bitcoin and Ethereum interest accounts were launched yesterday via BlockFi crypto lending platform. In its private beta in January, the company attracted more than $10 million in deposits from institutional and retail investors alike — showing a clear demand for its services.
BlockFi also raised a massive $58 million in several rounds of funding, offering loans starting from $2,000 against BTC, ETH, or Litecoin (LTC) with a 4.5 percent interest rate. The company also has plans to launch a cryptocurrency-backed credit card.
However, it’s the 6.2 percent interest on the Bitcoin and Ethereum accounts that will really capture attention. The average interest rate in U.S. bank accounts is less than 1 percent.
A war will be fought between the smart contracts & the crypto banks for your precious crypto assets
Smart contracts: Compound, Maker, Uniswap
Crypto banks: Blockfi, Coinbase, Binance
Best UX w/ highest risk-adjusted yield wins! https://t.co/GTjWjxa7DD
— Ryan Sean Adams (@RyanSAdams) March 5, 2019
According to Forbes, BlockFi CEO Zac Prince enthused:
BlockFi is the first crypto challenger bank. Bitcoin and crypto lending, especially to retail investors, is a nascent market… It has though been pushed on by institutional interest over the last year or so.
The Winklevoss Twins Company Will Act as Custodians
The Winklevoss twins’ Gemini trust company will act as account custodians. They may not have their Bitcoin ETF approved yet, but the brothers refuse to be left out of this growing market.
The high-interest accounts will be available not just in the US but to investors worldwide. Clients can withdraw their funds at any moment. There’s no lock-up period if you find HODLing in the crypto winter is getting too stressful.
After all, while the company insists the market is “nascent,” it’s also going through its longest bear market on record. That’s hardly going to be attractive for mom-and-pop investors right now.
The BlockFi CEO is confident that things will turn around, however, stating that “Bitcoin will end this year higher.”
Many hope that significant investment from Wall Street will boost cryptocurrencies to their glory days of 2017.