BlockFi offers credits with cryptocoins as collateral - and now gets an investment of $ 52 million

Bitcoin and other cryptocurrencies are becoming more and more involved in general finance. BlockFi realizes a thing that has been missing so far: Loans for which you have to deposit Cryptocoins as security. The New York startup has now received a $52 million investment in Mike Novogratz's Galaxy Digital.

If a thing is a valuable object then you can pledge it or use it as collateral to get a loan. That's one of the reasons why real estate is such a good investment. This has not yet been possible with cryptocurrencies - at least officially. My banker did not even want to talk about it when I asked him if ...

For the inhabitants of 42 US states that changed a few months ago. BlockFi, a startup founded in January 2018 in New York lends against collateral in Bitcoin. Right from the beginning, BlockFi received a $ 1.55 million investment from Consensys. Now, Mike Novogratz, a former Wall Street banker, has been investing in Bitcoin since mid-2013. His fund Galaxy Digital leads a round of investors, which has raised $ 52 million for BlockFi.

BlockFi can deposit both Bitcoin and Ether as collateral for a loan of up to $ 10 million. The standard interest rate is 12 percent and the planned term is one year. The credit-to-value ratio is 35 percent, which means you have to deposit 3.5 Bitcoin to borrow $ 1 worth of Bitcoin. This ratio was chosen to prevent potential risks and volatility of the price. If the price of the crypto currencies falls below a certain level, BlockFi asks for a lookup. If you deposit the cryptocurrencies, they will be stored at the US stock exchange Gemini. The stock exchange has a kind of private deposit protection and the crypto-credit also insured.

"A robust credit market," explains Mike Novogratz on the occasion of his group's investment, "is a key element of a financial system." BlockFi sets out to become the forerunner of such a market in the crypto-economy. Among other things, the startup promises to be extremely fast and, depending on the circumstances, to pay out a loan already 1.5 hours after the application. With the investment of Galaxy Digital, the startup wants to take off and win even more customers. So far, according to the CEO and founder Zac Prince, the reaction of the customers is extremely positive and there is already a great demand for the product.