Pocock Insists – Do not fall for illusion of free money by crypto companies disguised as Interest – Do your researchApril 1, 2019
Annual interest on cryptocurrency accounts is offered to Hodlers. This crypto interest scheme has been seen to be appealing investors in the year 2019. Increasing numbers of investors are locking up their digital assets to earn the annual interest.
Previously, the only source of passive income on the cryptocurrency for the investors was to HODL and hope for the value to rise in terms of the dollars. Yet another alternate option to make passive income was to operate for a dubious Altcoin by becoming one of their master nodes.
Nexo has announced 6.5% interest on their stable coins. The interest will be applicable to “PAX, DAI, USDT, TUSD, and USDC.” The interest will be protected by custodial insurance and will be compounded daily. Nexo permits its clients to withdraw any amount of money anytime. The dollar interest is far better than several other savings accounts. The crypto accounts thus become a checking account for the investors, and it can be stocked with dollar pegged cryptocurrency.
Blockfi as well announced a crypto interest scheme; however, it was seen that these assets would not be insured against losses. Therefore, investors need to discriminate between crypto interest accounts that are insured from losses and those that are not.
Zane Pocock stated, “Financialization of Bitcoin is unavoidable and vitally important.” Pocock insisted that investors should do their own research about the interest rates offered by the different crypto companies. He warned investors from falling into the trap of “the illusion of free money.” The interest rate program is an interesting proposal, and the numbers of such offers are set to multiply over the years.
Erik Vorhees stated, if the inflationary nature of the fiat currencies is factored, then the crypto interest accounts will become very significant. He tweeted: “When comparing crypto-denominated interest/yield to fiat-denominated yields, remember to subtract 2-3% of the fiat yield due to inflation. Stated differently, compare the real yield of fiat returns to the nominal yield of crypto returns. The delta is what central banks r stealing.”
Coinbase has been supporting staking by reporting, “Today, we’re announcing Tezos (XTZ) staking for Custody clients with Coinbase. We are proud to offer the first full-service, comprehensively-insured, regulated, and 100% offline staking provider in crypto.”
A passive income service has as well been launched by Coinbase for its users.
Kathleen Breitman, the co-founder of Tezos implied “The launch of Tezos staking provides for an acute need of institutional participants who depend on a secure and offline custodian to take up an active role in the network, thereby, providing for a mission of creating a ‘digital commonwealth’ facilitating participation for everyone including institutional customers that Coinbase Custody brings to the space.”