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BlockFi, the cryptocurrency lending platform, has launched a cryptocurrency savings account that claims to give a 6.2 percent annual percentage yield.
BlockFi will be offering the interest bearing accounts that compounds monthly only to individuals that hold over $10 million USD in assets and is operating in private beta this year. The account holders will have their assets held by Gemini Trust Company, LLC, the cryptocurrency exchange, which is regulated by New York State Department of Financial Services. The service will also only be available to U.S. customers using Bitcoin and Ethereum, and denied to consumers in New York, Washington and Connecticut.
BlockFi is able to tout significant backing from Mike Novogratz’s Galaxy Digital, Susquehanna, Morgan Creek Digital, ConsenSys Ventures, SoFi, Fidelity, Coinbase Ventures and Akuna Capital, and others. Last year, they had a $52.5 million fundraising round while only offering cryptocurrency lending, and thus, displayed a significant market opportunity.
Mixed reactions from consumers and investors
The initial reactions to the launch has been mixed with some calling it an amazing idea while others thought it would be bad for the cryptocurrency community overall. The reasons for the good can include the ability to give consumers more saving options that are much higher that the prevailing market interest rate for savings accounts. However, the bad can include the fact that many may put more savings into the volatile sector, incentivized by a seemingly “guaranteed” returns, without factoring in that even with a high return, there is the risk that an investor will get their money back with a lower purchasing power and thus lose from the deal.
Nevertheless, there is a demand for cryptocurrency savings to reap the rewards of its scarcity and keep money within the ecosystem rather than seeing the money leave for fiat to fetch market returns. The simple fact that consumers are looking at cryptocurrency shows that they are unsatisfied with the returns in traditional markets. Thankfully, Dash offers similarly high payments in exchange for conducting work for the network.
Dash pays out returns in exchange for network contributions
Due to Dash’s unique setup, masternodes receive a portion of block payments for operating a node that helps enable InstantSend, PrivateSend, and other advanced features on the Dash network. Currently, this amounts to masternodes getting around 6.7% per year, which is higher than what BlockFi offers and has a lower point of entry of 1,000 Dash, which is now less than $100,000 USD. Additionally, shared masternode pools, like Crowdnode have emerged to offer a portion of the masternode returns to individuals pooling their funds to acquire a full node. Their service has become very popular as they now have over 17 pooled masternodes.
These developments are helping Dash become digital cash for everyday individuals who do not have large amounts of cash to lock into a savings account and risk with cryptocurrency. Shared masternode pools make Dash more inclusive thanks to its extremely low barrier to entry. These accomplishments help fulfill many of the original goals of cryptocurrency to serve the unbanked and underbanked.