Welcome to another edition of my Money Diary. If you haven’t checked out some of my other Money Diary stories be sure to do so. For instance, see my crypto-related Money Diary post Taking Bitcoin Profits. Today’s post concerns my investment in two different cryptocurrencies; the Gemini stablecoin, aka GUSD, and Ethereum.
So in early May I started looking for ways to increase the interest I was making on the cash I have. As you are no doubt aware cash is paying next to nothing these days. Most of the cash I do have is currently making .5% which if you looked around is not a bad interest rate. Most of the places that pay even that are internet banks with little to no overhead. If you want to see the best rates currently out there you can check out bankrates best savings accounts via that link. Currently, some of the best payers are Ally, Vio, Citibank, and Marcus just to name a few.
As per the usual disclaimer I am not an investment advisor and the following information is for entertainment purposes only. Do you own due diligence when it comes to financial matters.
Stablecoins for Higher Interest
Anyway, with the fear that inflation might be coming in a bigger way than it already is I started to look for ways earlier this year to make more money on my money. I have a certain percentage of my investments in the stock market, but I wanted my cash to do more than just sit there. With that in mind I started slowly investing into the cryptocurrencies known as stablecoins.
Stablecoins are a type of crypto tied to fiat currencies, like the U.S. dollar, and typically pay much better than what you can get for cash at a typical bank or brokerage. The goal with stablecoins is to be pegged 1 for 1 to the fiat so that there is no volatility as with other cryptos. Of course, there is no guarantee that this will always be maintained but mostly so far the bigger stablecoins have maintained that 1 to 1 ratio.
I then compared some of the various stablecoins like Tether (USDT), the U.S. Dollar Coin (USDC), True USD (TUSD), Paxos (PAX), Binance USD (BUSD), and Gemini USD (GUSD). Tether, the largest stablecoin, was recently audited by the New York attorney general’s office. They revealed that 65% of the Tether in existence is backed by commercial paper, with ratings unknown on that paper. So, I ruled them out.
The Gemini Stablecoin
As I searched for “stable” stablecoins I came across the Gemini coin started by the Winklevoss twins (of Facebook fame). They started their own platform the Gemini platform along with the Gemini stablecoin. As stated on their own Gemini platform:
“The Gemini Dollar is fully backed at a one-to-one ratio with the U.S. dollar. The number of Gemini dollar tokens in circulation is equal to the number of U.S. dollars held at a bank in the United States, and the system is insured with pass-through FDIC deposit insurance as a protective measure against money laundering, theft, and other illicit activities. Overall, Gemini Trust makes use of a centralized system that helps protect against security threats, giving the Gemini dollar key regulatory advantages over many of its competitors.”
So, Gemini seems like a good stablecoin. I then looked at various platforms that paid interest on the GUSD. While the Gemini platform seems like a good one and one on which I may eventually put some money, I also found Blockfi which pays a bit more interest.
Blockfi is not the only Crypto platform I’m looking to use for stablecoins. I’m also comparing the Celsius Network, the Voyager Network, and Crypto.com. One of the reasons I’m also looking at other platforms is to spread my risk around. First, you don’t want to put all your free cash into stablecoins in case something happens to them. And, you’ll want to spread your risk if you do decide to invest in stablecoins. You can do that by using different platforms. For now, I’ll start with Blockfi.
The Blockfi platform was started in 2017 by Zac Prince and Flori Marquez. You can see their team here: Blockfi Team. The current interest rates that Blockfi pays on the various cryptos can be found here: Blockfi rates. They currently pay 7.5% on most of their stable coins including the GUSD or Gemini coin. When I signed up in early May of 21 the rate was 8.6%.
My Blockfi Account
I transferred 20k into Blockfi over the span of a couple of months starting in early May. It was an easy process. As you can see, I have already begun to generate some nice interest in this account. However, in addition to wanting to increase the amount of interest I can make on my cash, I also have another goal, that being to slowly build up a position in Ethereum. I’ll save my thoughts on Ethereum for another post. For now I’ll just say I think it has some great potential.
With that in mind, about a month or so ago, I purchased a couple of Ethereum at a price around $2250 maybe a little higher. As I write this the price of Ethereum is around $1980. Therefore I’m down over $500 on the Ethereum I bought at Blockfi. I’ll give you a screenshot of my blockfi account taken earlier today.
As you can see so far I’ve been paid $142.86 in interest with another $60 currently due to be paid at the end of the month. That accrued interest amount will go up everyday until the end of the month at which point it will be credited to my account.
Currently I’m being paid 7.5% interest on the Gemini stablecoins (GUSD) I own which total $15,640. I’m also being paid 4% on the almost $4,000 of Ethereum that I own. Now, although my total at $19,555 is less than the $20k I started with, I’m happy where I am at.
I’m making about 15 times on the cash than I was making at my bank plus I’m being paid interest on the Ethereum while I wait to see how that investment plays out.
Open a Blockfi Account and Get Rewards
Remember, the funds in your Blockfi account are not FDIC insured so you could lose everything if some catastrophe occurs and Blockfi folds. However, one thing I do like about Blockfi is that because they started in 2017, they have already nicely survived one Crypto Winter. During that time business proceeded as usual. That knowledge gives me encouragement going forward.
If you would like to open a Blockfi account just click that link and when you deposit $100 you’ll get $10 in bitcoin for free and because that is a referral link I’ll also get a free $10 in bitcoin. If you do so, thank you for helping show support for the Wealthvibes site.
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