On Getting 6.2% Interest In Crypto... I'm For It!
Pretty much the entire blockchain industry lit up today all atwitter about the "highest yielding deposit account in finance" from BlockFi. Even Forbes got in on the lovefest.
I can't tell you how many WeChat messages I got and tweets came through my feed today saying basically the same thing.
"Did you see what BlockFi is doing with 6.2% interest? Love that."
"Hey, did you hear you can get 6+% interest on your crypto in crypto?"
"What is this about a bitcoin savings account? DAYUM."
Initially, I was like, "Meh, sounds good, I guess. I'll check it out in a bit." And then I did! And take a looky here:
That's a real, live website. I honestly think I'll be sending my Coinbase stash over to BlockFi this weekend.
Custody is by Gemini, the exchange started by those annoying twins portrayed in The Social Network. I'm sure they're not like that in real life.
But Gemini is a pretty stand-up name in the cryptosphere and backers of one of the better stablecoins out there - GUSD.
So it makes sense, right? Deep down, I'm just a blind HODLer, right?
I thought so, but then I read an old Chicago trader's post about the news where he trotted out the old "High yield means high risk" line... to which you would think most blockchain enthusiasts would scream back at him saying
DUH! IT'S CRYPTO!
To my surprise, however, everyone agreed with him. Social media is so weird like that.
So, here's what I say. Look, the yield is 6.2% APY in bitcoin or ethereum, not cash. So you’re still making a bet on cryptocurrency. This we know. Most people on Steemit or with enough BTC or ETH to consider locking it up for the long-term are not gonna bat an eye at the potential bone-crushing volatility in cash returns on these things. They just want to increase their STACKZ.
I like it. What’s the big deal?
I’ll give my kid 1 BTC in that account and forget about it.
By the time she goes to college, she’ll either have 2 BTC worth a bunch of USD, and I mean like maybe enough to pay for her whole collegiate adventure and still have some satoshis left over to go travelling a bit, or she'll have 2 BTC worth nothing.
Either way she'll have about 2x'ed her return in crypto terms with this BlockFi product.
Sounds like a “Heads I win. Tails I don’t lose too much” scenario to me.
Sign me up.
LOL, invest in steem, it will be more than 10% APR in STEEM, not cash.
Yeah, I couldn't believe how incredulous this old trader guy was! I'm like, yo, I thought you knew crypto.
I think I like the higher yield on Steem delegation through minnow booster better. I have delegations receiving 18% on there with a pretty short lockup.
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Of course I love STEEM. And delegate myself. But this is an insured, custodied solution involving the top 2 coins!
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Agree it could be the right solution for many people im just more of a risk taker when it comes to many of my investments and the 18% is worth the risk to me. This could be a great option if you want to hold those coins specifically so I agree with that. I would consider it for my non Steem holdings that would qualify bc right now they earn nothing and I’m holding for a long period - well that’s the plan now.
Yeah, you got it!
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Thank you so much for participating in the Partiko Delegation Plan Round 1! We really appreciate your support! As part of the delegation benefits, we just gave you a 3.00% upvote! Together, let’s change the world!
If you have it to delegate - you can get more than that for your steem with @minnowbooster.
I lease delegated sp for about 14% apr on three blogs:
@bxlphabet
@fitinfun
@fitinfunfood has an offer in there right now.
One of my accounts is always in there with an offer, and I am grateful to anyone who fills a lease :)
Other people offer more but a lot of those are bots. This is me and my son and we post real content.
You got a 9.72% upvote from @joeparys! Thank you for your support of our services. To continue your support, please follow and delegate Steem power to @joeparys for daily steem and steem dollar payouts!
That legitimately sounds like a Ponzi scheme to me. It's a high yield in a deflationary denomination. Unsustainable as you get.
Do you crypto? Comparing 6.2% in crypto to 6.2% in cash is like comparing rabbits to monkeys. It’s not the same.
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You don't need to ask that, you only need to look at my profile to know I do crypto.
You are right, they are not the same. One would be reasonably sustainable. The other is a fantasy. If there is any major price rise they will go insolvent and then eventually bankrupt trying to honor that interest rate. Your analysis in your initial post didn't account for Bitcoin rising but your account balance not being honored if they go bankrupt as a result.
Why would they go insolvent? I’m sure they have a deal in place to make money off the BTC and ETH you stake that exceeds the 6% threshold.
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Because as the price of Bitcoin and ETH rises, they must make more profit off the loans they are making with those coins to actually pay them back. BTC and ETH are not stable measures of purchasing power or economic productivity so you can easily overshoot and end up owing more than you can pay back.
BTC especially is a deflationary currency. The whole point is that it's harder to get more of, because there's only so much to go around. That fundamentally makes offering a % return on BTC risky and difficult to sustain.
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