This Crypto Interest Account Is Paying Out 6.2% - Watch Out Traditional Banks!

Crypto lending platform BlockFi is offering a Bitcoin and Ether account which will offer an interest rate of 6.2% on deposits.

When understanding that some U.S. savings accounts are paying out as little as 0.08%, this account will likely light up the eyes on investors looking to accumulate more BTC and ETH.

And that is perhaps the slight risk with the accounts; that it will be paid in the rather volatile currency. But for a long term investor, this option of obtaining interest could be appealing.

Forbes has the story:

BlockFi, which last year raised some $58 million dollars in various funding rounds, has sought to establish itself as the "go-to provider" of financial services for crypto investors, offering loans from $2,000 against bitcoin, ethereum or litecoin at a 4.5% interest rate, with plans to soon launch a portfolio line of credit and crypto-backed credit card.

The 6.2% interest on BlockFi's bitcoin and ethereum interest accounts, which will see deposits lent out to those who are interested in borrowing crypto, compares to an average U.S. account interest rate of 0.08%, according to some saving trackers.

"BlockFi is the first crypto challenger bank. Bitcoin and crypto lending, especially to retail investors, is a nascent market," BlockFi chief executive Zac Prince said. "It has though been pushed on by institutional interest over the last year or so."

The Winklevoss twins' Gemini exchange is providing custody of the accounts, which recently announced it has added digital asset insurance coverage. Those who open bitcoin or ether interest-bearing accounts with BlockFi are able to withdraw their funds at any time.

The interest will be paid out monthly with the account requiring a minimum of one Bitcoin or 25 Ether.

BlockFi has provided a simple example of how the interest rate payout will work on their official website:

For example: With 6% compound interest, a BlockFi Interest Account user who deposits 1 Bitcoin, valued at $4,000, on February 28 will have an updated balance of $4,020.38 in BTC at the end of March This process repeats month over month until the user decides to withdraw their funds.

If the interest rate and deposited crypto’s price remain unchanged, the user who deposits 1 Bitcoin valued at $4,000 on February 28, 2019 will see their overall holdings increase to a value of 1.062 BTC ($4,247.41, +6.2%) over a 12 month period.

And all I have to say is ... watch out traditional banks, crypto is here.