# New challenger bank offering deposit rate of 6.2%



## Brendan Burgess (5 Mar 2019)

*'Crypto Challenger Bank' Offers Bitcoin Interest Account--And Has Great Rates*
_
Bitcoin is out to (eventually) replace your bank account and that's just got more likely with the launch of two bitcoin and ethereum accounts that pay a whopping 6.2% interest on deposits.


There is a catch though—that interest will be paid in either bitcoin or ethereum's ether, depending on the account deposits, making this account most appealing to those who want to accumulate as much bitcoin and ethereum as possible.


The bitcoin and ethereum interest accounts have been launched today by crypto lending platform BlockFi following a private beta in January that saw them attract over $10 million in deposits from retail, corporate, and institutional crypto investors.
_
A very interesting business model. They will be offering loans at 4.5% interest "against bitcoin, ethereum and litecoin."


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## NoRegretsCoyote (5 Mar 2019)

Has a lender ever enforced a crypto currency contract in an Irish courtroom?


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## Brendan Burgess (5 Mar 2019)

I bet you a Satoshi that they haven't. 

Brendan


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## NoRegretsCoyote (6 Mar 2019)

Bitcoin displays the volatility of the exchange rate of a currency of a very small, banana-producing island.

You would want to pay me a lot more than 6% to compensate me for the risk of loss of value and/or fraud.


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## EmmDee (6 Mar 2019)

Brendan Burgess said:


> *'Crypto Challenger Bank' Offers Bitcoin Interest Account--And Has Great Rates*
> _
> Bitcoin is out to (eventually) replace your bank account and that's just got more likely with the launch of two bitcoin and ethereum accounts that pay a whopping 6.2% interest on deposits.
> 
> ...



It's just banking - with a 1.7% spread on assets vs liabilities. The only problem is that (a) no reserves if some of the borrowers fail to repay and no insurance scheme so your exposure is to the "bank" and (b) you carry the Fx risk back to your base currency.

I bet there some great rates on ZWD


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## tecate (8 Mar 2019)

NoRegretsCoyote said:


> Has a lender ever enforced a crypto currency contract in an Irish courtroom?


Once jurisdictions (including Ireland) get their fingers out and achieve complete legislative and regulatory clarity, then this won't be a problem.  Not to do that (or be the last to do that) stymies innovation.  The Swiss (of course) get that - and within weeks of bringing about regulatory clarity there, they've achieved Europe's first tokenised property deal.


NoRegretsCoyote said:


> Bitcoin displays the volatility of the exchange rate of a currency of a very small, banana-producing island.
> You would want to pay me a lot more than 6% to compensate me for the risk of loss of value and/or fraud.


Volatility will dissipate over the long term.  As regards fraud, it's a nascent market so of course there are some shysters operating within it - you have to do your due diligence (although see above, the right type of regulation can help here too).

Crypto-lending has been developing quite nicely through BlockFi, Ethlend, Salt Lending and Genesis Capital.  Meanwhile, the first ever pension funds have invested in crypto whilst one of the  is moving slowly but assuredly into the space.

To your point on 'banana-producing' islands, (though not an island...), it is seeing use in that context for sure.


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## NoRegretsCoyote (8 Mar 2019)

tecate said:


> To your point on 'banana-producing' islands, (though not an island...), it is seeing use in that context for sure.



Prediction: bitcoin and/or other cryptos will have a durable and permanent use for illicit transactions and in places suffering from hyperinflation. This is maybe only 1% or 2% of global GDP btw, which is still a lot of transactions. 

This means that cryptos will always be with us, but there is zero incentive for any government to encourage their use (say, by letting you pay your taxes in bitcoin). Most enterprises will still have 0% of their turnover in cryptos so the demand for lending will never be very much. 

They will always remain vulnerable to the next and better crypto coming along, so they are not a very useful store of value either.


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## tecate (8 Mar 2019)

NoRegretsCoyote said:


> Prediction: bitcoin and/or other cryptos will have a durable and permanent use for illicit transactions and in places suffering from hyperinflation. This is maybe only 1% or 2% of global GDP btw, which is still a lot of transactions.


Well, I don't think many will disagree with you...you could take the view that this is already the case.  That said, the big juicy 'illicit payments' remain the preserve of big banking as it has always done.  LINK1 LINK2 LINK3 ....which just proves that KYC/AML are just a ruse to facilitate total financial surveillance by governments on their populations.



NoRegretsCoyote said:


> This means that cryptos will always be with us, but there is zero incentive for any government to encourage their use (say, by letting you pay your taxes in bitcoin). Most enterprises will still have 0% of their turnover in cryptos so the demand for lending will never be very much.


I welcome the acknowledgement that crypto will always be with us.  The narrative seems to be changing and the point we seem to be at now is a discussion on the "right type of crypto".  Jamie Dimon of JPMorgan Chase famously dissed Bitcoin (and crypto generally), calling it a fraud.  Now JPMorgan is launching its own crypto.  The word 'shitcoin' has been used to describe many of the coins in existence - and this is one!  We will now see a phase of permissioned, private cryptocurrencies - but that defeats much of the purpose of crypto to begin with.

Facebook are close to launching their own coin as part of what the Zuck describes as their "Privacy-focused vision" - when privacy will be the last thing in the world that will be achieved with Facebook!  That said, it will play its part in being a stepping stone towards crypto.

I agree that governments have a difficulty with crypto - and there will be further pushback to come.  In recent days, the French made noises about banning anonymous cryptos.   As regards payment of taxes, the state of Ohio now accepts payment of taxes in Bitcoin.  There are one or two states to follow...Wyoming for sure (if that's not already the case).

Demand for lending is not going to be much for the foreseeable - agreed.  However, within the crypto/blockchain eco-system its needed and its welcome  - and it supports that innovative sector.



NoRegretsCoyote said:


> They will always remain vulnerable to the next and better crypto coming along, so they are not a very useful store of value either.


You could be proven right although I disagree.  We will have to see how it pans out.


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## NoRegretsCoyote (8 Mar 2019)

Personally, c 2009 I thought bitcoin was doomed as I underestimated the demand for cryptos as a means of exchange for illicit transactions over long distances. Carting suitcases full of notes around is cumbersome and highly risky. 

I don't see demand for it as a means of exchange in many other contexts. 

Long run, the lack of flexibility of cryptos is a major problem. If you have a big economic shock you need to make money cheap. You can do that with a fiat currency, but not with a crypto.


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## tecate (8 Mar 2019)

NoRegretsCoyote said:


> Personally, c 2009 I thought bitcoin was doomed as I underestimated the demand for cryptos as a means of exchange for illicit transactions over long distances. Carting suitcases full of notes around is cumbersome and highly risky.


HSBC would certainly agree with you.  They designed specially shaped boxes to fit the teller windows - to try and get all that cartel money in. :-D


NoRegretsCoyote said:


> I don't see demand for it as a means of exchange in many other contexts.


On a serious note, bear in mind that the determination of 'illicit' is open to interpretation.  Dissidents in countries with repressive regimes may also use cryptocurrency.  The current round of economic sanctions is leading to a wave of state backed cryptos.  Venezuela has one, russia has announced that it will also introduce an oil-backed crypto and iran has one waiting in the wings.  They are also looking to gain acceptance for these cryptos as a unit of account in the oil trading arena.  Pretty significant implications, potentially.



NoRegretsCoyote said:


> Long run, the lack of flexibility of cryptos is a major problem. If you have a big economic shock you need to make money cheap. You can do that with a fiat currency, but not with a crypto.


Well, very few are expecting a complete swap out.   There are things that crypto is suited to and things that it's not.  I can't profess to have a competent understanding of macro-economics.  Many have made that point - i..e about the lack of flexibility of crypto when it comes to interest rates, etc.  However, you don't know from one minute to the next what that will be in the FIAT context.  The rate of inflation is known with Bitcoin (although, yes, volatility needs to go away - that's a given). 
Other than that, perhaps we need to get away from boom and bust economic cycles...?


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## NoRegretsCoyote (8 Mar 2019)

tecate said:


> However, you don't know from one minute to the next what that will be in the FIAT context.



Central banks in developed countries, and even most developing ones, have inflation under control even though they retain the power to print money and leave it lying around on the street.




tecate said:


> The rate of inflation is known with Bitcoin (although, yes, volatility needs to go away - that's a given).



No it is not. The *money supply of bitcoin* is known. The price of toilet roll, denominated in bitcoin, is remarkably volatile.


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## tecate (8 Mar 2019)

NoRegretsCoyote said:


> Central banks in developed countries, and even most developing ones, have inflation under control even though they retain the power to print money and leave it lying around on the street.


Sure - albeit Q.E. remains an experiment we have not seen the full results of yet.



NoRegretsCoyote said:


> No it is not. The *money supply of bitcoin* is known. The price of toilet roll, denominated in bitcoin, is remarkably volatile.


I'm not sure what you're disagreeing with?  I made that point about volatility.  And over the fullness of time, that volatility will dissipate.


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## EmmDee (8 Mar 2019)

tecate said:


> ....which just proves that KYC/AML are just a ruse to facilitate total financial surveillance by governments on their populations.



Which brand of tinfoil do you find best? That "own-brand" stuff is very flimsy I find


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## tecate (8 Mar 2019)

EmmDee said:


> Which brand of tinfoil do you find best? That "own-brand" stuff is very flimsy I find


A simple "I don't agree" would have covered it.  I made the point that the vast majority of money laundering is catered for by conventional banking means - backed up by fact.  I don't much care for the jibe (nor in any way agree with it or see how you arrrived at it) but the naivety is adooorable....awww  :-D


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## NoRegretsCoyote (8 Mar 2019)

@tecate 

QE has recently celebrated its tenth birthday and no signs of hyperinflation yet.

You are confusing the rate of growth in the money supply and the rate of inflation. It's worth looking up the difference


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## tecate (8 Mar 2019)

NoRegretsCoyote said:


> @tecate
> 
> QE has recently celebrated its tenth birthday and no signs of hyperinflation yet.


Ok, and have we come down off that phase completely yet?



NoRegretsCoyote said:


> You are confusing the rate of growth in the money supply and the rate of inflation. It's worth looking up the difference


With respect, I don't think I am. 

If you detach price speculation from it, then through the supply of money, you can determine the rate of inflation.  I'm inclined to detach the two of them in looking at that.

Bitcoin continues in price discovery mode and that's going to go on for some time.  Furthermore, the size of the market is miniscule meaning the market can be moved easily right now.  If it's ultimately successful, this will dissipate over time.

With FIAT currency, who knows when they will turn on the QE taps.


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## Bronte (9 Mar 2019)

8% interest here. Guaranteed. And regulated.

https://www.bbc.com/news/uk-england-47454328

Shocking. And I don’t mean the collapsed firm. Not that I’m one bit surprised. Useless regulators asleep at wheels is nothing new..


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## RedOnion (9 Mar 2019)

Bronte said:


> Shocking. And I don’t mean the collapsed firm. Not that I’m one bit surprised. Useless regulators asleep at wheels is nothing new..


That case is a bit more complicated than that. The products aren't actually regulated. But the firm was regulated (for providing advice) so the only real regulatory powers are around mis-selling and misleading advertising.  If a non regulated firm did the same thing, there'd be nothing the regulator could actually do.


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## tecate (9 Mar 2019)

Bronte said:


> 8% interest here. Guarenteed. And regulated.


That's excellent.  Who's that with?


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## tecate (29 Mar 2019)

This new product claims to offer up to 8% interest - with your crypto funds remaining in insured cold storage.


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