I came across an article the other day about earning interest north of 10% and it works like a traditional bank savings account. But it is not a bank! It turns out these are known as crypto currency saving accounts. They are not FDIC insured. Meaning, if the company goes out of business, you lose all of your crypto currency savings.
I don’t own any crypto currency, but was attracted to the high interest yield. After some research but I still do not fully understand how it works, I decided to open an account with BlockFi yesterday. I learn better and faster by doing.
When I opened the account, the BlockFi website/app walked me through how it works. If you own crypto currency you can transfer it from your crypto wallet (I don’t have one of these!) to BlockFi’s wallet and start earning interest on your crypto currency.
From my account dashboard, BlockFi shows me the below cryptocurrency and their interest yield. I don’t know why it doesn’t show the two stablecoins it also supports. According to Investopedia, a stablecoin is a new class of cryptocurrencies that attempts to offer price stability and are backed by a reserve asset. The two stablecoin BlockFi supports are GUSD and USDC. They are supposed to be backed by USD reserves with a 1:1 ratio.
Since I don’t have any cryptocurrency, I deposited US dollars from my bank account. When BlockFi receives my money, it converts it to GUSD with a 1:1 ratio. It’s a scary thought, right? I just closed my eyes and did it. To deposit, you have the options of linking your bank account or using wire transfer to your BlockFi account. The deposit process was a bit sketchy. There was a delay in crediting my account because of some discrepancy, but it was finally funded the following day.
As of this writing the interest yield for the two stable coins are:
I learn a ton just by going through the process of opening the account, then depositing money into my BlockFi account. I will provide an update once I start earning interest. I still wonder what is the difference between USDC and GUSD and if I should hold USDC in my account instead.
I was so excited about the potential of earning a higher interest rate than a traditional bank savings account, that I applied for the BlockFi affiliate program. I got the below email from BlockFi because I used a website’s affiliate link to open my account. You can get up to a $250 bonus if you use my BlockFi link. Do your own research. I am just testing this out to learn, and share what I found out.