Thanks to blockchain technology being able to replace the middleman, investors can earn much higher interest rates with cryptocurrency. Lending crypto isn’t like letting your buddy borrow $20 and never getting it back. When you use crypto to lend funds, your money is protected by a smart contract. Once entered, these contracts must be executed. Your deadbeat cousin can’t just turn off the phone and hope you forget about it.
How can a loan be guaranteed like this? Well, those who take out loans must offer collateral to take out the loan. If the user defaults on a payment, then the smart contract will use the investors’ collateral to make the loan payments.
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One of the most attractive, low risk investments in cryptocurrency are stablecoin interest accounts. Stablecoins are pegged to other assets, most commonly the U.S dollar. This way, you can earn interest off of a stable asset instead of being exposed to cryptocurrency.
Why not just buy bonds then? Here’s the difference: 10-year treasury yields are currently hovering around 1%. Stablecoin interest accounts yield 6% to 12%, depending on the platform you use.
With BlockFi you can ditch your low-yield savings account and start earning great returns without taking on much risk at all. If you’re a more risk tolerant investor, then BlockFi’s loans and interest-bearing cryptocurrency accounts may be for you.