BlockFi – Incentivizing the Saving Revolution

Maybe I’m missing something here, but this might be the single biggest step function in changing our mindset about saving money. You can save money with them and it will actually grow! I’ve been hearing a lot about decentralized finance lately, an open system where there are no major institutions in the middle. I don’t think that everyone is ready for a fully decentralized finance world but BlockFi is absolutely a step in the right direction. In this I’ll cover what BlockFi is and the implications of a system designed to empower customers.

Less Centralized Finance


This is not a commercial for BlockFi, it’s an introduction to the upcoming global shift away from blindly trusting large institutions that have feasted on the poor and played gatekeeper for too long. We don’t have to play by their rules anymore. The internet is democratizing access to finance, and BlockFi is leading this revolution. They are leading this revolution by actually offering products that are advantageous for their customers to use. This is something that sounds so elementary, but it’s actually a rarity in the modern banking world. The areas that they win in are offering interest on cash and Bitcoin and a few other cryptocurrencies, trading between them, and collateralized loans on your crypto holdings.

One platform to rule them all. You can get interest back on dollars deposited in, stored as stablecoins, and you can also get interest back if you choose to store your BTC on their platform. They are providing access to the best money every created; global, decentralized, uncorrelated, limited supply, and it is designed to pump forever. They make it easy to make small purchases, or you can receive your interest payments in Bitcoin. That alone is a game changer in my mind, but add in 6% interest on your bitcoin and you’re leveraging the power of compound interest on top of an appreciating asset. Think about that, in the book, “I will Teach You to be Rich” by Ramit Sethi he urges people to invest in index funds that average out at 8% a year. Get rich slowly and take advantage of your money working for you gaining interest. What if there was an option to leverage 6% interest on an asset that has grown over 20% a year? The long term wealth gain on this is going to change the game for those willing to play.

Implications

I write this because I can’t figure out why more people don’t use this. It’s a bank. It’s a bank that pays out interest on deposits. My online savings account with a “high interest” savings account, has consistently lowered its interest rates to .5%. It’s nothing. It does this because the Federal Reserve controls the interest rates and they are the lowest they have ever been. Our savings accounts at our banks are beholden to the rate that the fed sets. Kind of a weird concept right? Why do we have to play this game? We don’t, and a solution independent of government influence has arrived.

In comes BlockFi which gives out 8.6% interest on USD backed stable coins GUSD, USDC, and PAX. USD backed stable coins are going to always be pegged to the US Dollar and are audited to ensure they have 100% cash reserves backing it up.
8.6%/.5%= 17.2x increase in interest. It’s a yearly difference between getting $50 and $860 interest a year on a $10,000 deposit. That’s an extra $810 that you can have yearly, compound that to the following years and you get interest on that interest and the compounding begins. Warren Buffett is such a fan of compound interest that he called it the 8th wonder of the world. One of the best minds of our time, basically giving a commercial for Blockfi.

Think of the ramifications of this. The incentives of money can change to reward savers. This is a shift in the mindset of many, if not most people living in the western world. The focus has always been buying the latest shiny object and finding the shiniest loan or credit card to fund that purchase. This is fundamentally backwards. This will be the start in the shift to individual fiscal responsibility. Pay yourself first, save what you can, only buy what you need. For any money that you don’t spend will grow your wealth. I think that this will be the revolution coming out of the global COVID 19 pandemic. We all have to sit on the sidelines and have time to think. Many lost jobs, changed careers, and were forced to take time to work on themselves. Financial struggle builds character, but also can build systems that compound on themselves. The character to not spend relentlessly and follow along with whatever product is being advertised to you, and the systems to put any extra money away to protect oneself from financial ruin. If you look at the big picture, this could be the catalyst for positive change.

With the power of emerging technology, we are seeing the beginning of the empowerment of the individual. It is up to us to take steps towards this and find our own path towards a good life, here is a step that found to be valuable to me. Get your money right, get your mind right.

Here’s my ref link to get whatever generous sign up bonus they are offering: HERE