Celsius Network was founded by an innovative team with a simple idea: financial services should only ever act in the best interest of their community. It’s a vision we’ve kept and will continue to promote as our community grows and as competition increases. While other companies slowly enter this space hoping to disrupt the system and decentralize the big banks, it’s absolutely vital that depositors understand where they are putting their funds, and what each company is promoting behind the scenes.
If a company isn’t able to explain their business model or vision in clear and simple terms, it’s a red flag that something quite isn’t right. Our team is hard at work acting in your best interest; and like our team, our business model is also straightforward and transparent.
Through our platform, individuals and businesses are able to secure crypto-backed dollar loans starting at 4.95% per year, and crypto HODLers can create interest-earning accounts at rates up to 7.5% (7–10 times more than banks pay). We lend our community’s assets to crypto exchanges and hedge funds looking to borrow coins. Up to 80% of all profits generated are given back to the community in the form of weekly interest which is distributed directly to our coin depositors. When we earn more, our community earns more, and THAT is doing what is in your best interest.
When BlockFi announced their new interest-earning accounts last week, many were quick to compare their services to the services offered by us at Celsius Network, but when you take a closer look, such comparisons don’t hold up.
In the interest of the crypto community, I want to offer some advice I’ve learned from my own experience by sharing some potential red flags with the new BlockFi interest-earning accounts. It’s easy to assume their promise of high interest rates is a move that acts in the best interest of the community, but underneath this, it looks like it might just be a covert means to attract attention and increase profits for their shareholders and investors. Here’s why…
“BlockFi and our third party partners may experience cyber-attacks, extreme market conditions, or other operational or technical difficulties which could result in the immediate halt of deposits and withdrawals of cryptocurrency either temporarily or permanently. BlockFi is not and will not be responsible or liable for any loss or damage of any sort incurred by you as a result of such cyber-attacks, operational or technical difficulties or suspensions of deposits or withdrawals.”
In case there was confusion the clause above, they go on to state, “These Terms and the deposit relationship do not create a fiduciary relationship between us.” In simpler terms, BlockFi is not bound to have a legal or ethical relationship with its depositors.
As the CEO of Celsius, I cannot imagine defining such an untrusting relationship between our community and our company. If you’re interested, I encourage you to read our own terms and conditions to see how we are acting in your best interest.
Over the years, banks have used “compounding interest” as a tool to entice individuals to deposit with their institution over the competition. It also incentivizes individuals to deposit more money as banks are likely to project higher returns on larger amounts over long periods of time — typically forecasted for 5, 10, or even 40 years. In both cases, compounded interest presents much greater advantages for the banks (and their shareholders) than it does for the depositors.
BlockFi recently announced they will be offering depositors compounded interest paid out monthly at rates of 6% with an annual yield rate of 6.2%. While it may sound exciting on the surface, the reality is that 0.2% compounded over 12 months isn’t much to write home about — especially when you read the fine print from BlockFi’s Terms of Service which states, “If you withdraw any assets from your Crypto Interest Account prior to the last calendar day of the month, you will incur an early withdrawal penalty equal to the amount of interest accrued during that month on the assets withdrawn.”
So if you want to withdraw your funds during any of the other 29 days of the month, BlockFi uses your compounded interest as payment just so you can access your own money. Celsius does not charge any fees, there are no early termination penalties, and you’ll never find a hidden “gotcha” clause.
One of the most alarming aspects of BlockFi’s new interest-earning accounts is how they are funding their 6% interest rates and their extra 0.2% of compounded interest. In December, BlockFi CEO Zac Prince stated that their interest rates “will fluctuate and be subsidized in effect by our venture investors.” So, if BlockFi’s VCs ever choose to stop funding the project, it’s possible that those rates could crash and burn harder than 2017.
Celsius is transparent with how our rates are determined; the process was built from the ground up to maximize return for our depositors. Our rates are subject to change on a weekly basis as they are calculated by the weekly demand for each coin combined with our promise that up to 80% of our profits are returned to the depositors. The more people that deposit, the more profits there are to distribute to the community, and THAT is a sustainable and scalable promise.
If a financial institution requires customers to deposit a minimum amount, they see you as a dollar sign rather than as an individual worthy of financial independence. Why should the amount of money you have determine if you’re able to earn interest on that money?
Celsius Network’s mission is to bring the next 100 million people to the blockchain, and chances are 90% of them will have less than $500 to invest in crypto. We have no minimum requirement to create an account and make a deposit because our large depositors subsidize the small depositors. BlockFi requires a minimum of 1 BTC or 25 ETH to open an account with them, proving that crypto adoption and growing the community is not their core mission.
BlockFi also requires a minimum amount deposited before any withdrawals can be made. Their terms of service state, “If you are making a partial withdrawal, your Crypto Interest Account must retain a minimum deposit after your withdrawal has been processed that is greater than or equal to the Minimum Balance to continue earning interest.”
So there’s a minimum amount required to open an account and a minimum amount required to be left into your account just so you can access your own funds. You will not find any restrictions at Celsius; you can deposit and withdraw any amount at any time and you’ll continue earning on the balance left in your account.
On the surface, BlockFi boasts its commitment to transparency. A closer look at the fine print listed in their terms of service would suggest otherwise. For example, you could get locked out from your funds with withdrawal limits as they state, “Withdrawal limits based on frequency may apply from time-to-time and will be described in your Crypto Interest Account interface.” They also note, “BlockFi reserves up to 7 days to process a client fund withdrawal.” Based on how fast the cryptocurrency world moves, 7 days is an awfully long time to wait for approval to access your own money.
Unlike Celsius Network, which pays interest every Monday to our community, BlockFi doesn’t exactly guarantee that same level of timeliness. “We will credit your Crypto Interest Account with the interest earned within five business days of the end of each calendar month.” That difference of getting your money every week may actually be more than the compounding interest they offer you.
I am a firm believer that competition is essential for innovation to flourish and I encourage companies to follow in our footsteps. Our goal is to level the financial playing field for all individuals by providing services and solutions that are fair and democratized rather than trying to increase profits for the 1%. At this stage, BlockFi is not doing enough for the cryptocurrency community to be compared to Celsius. If we want to take the power from the banks and give it back to the people, we need to support a platform that was designed to do just that from the ground up with a team proven to execute and scale.
From creating VOIP so voice calls will be free (over 3.5 billion people use VOIP) to bringing free LTE + WiFi to the NYC subways, I am proud to have a 30-year history of disrupting the “status quo” by taking power away from big businesses — like phone companies and governments — and bringing it back to the community to make the world a better place. When was the last time you paid for a local or international call? Soon we’ll be asking the same question about paying bank fees or earning less than 5% in interest on our money. Celsius Network created MOIP (Money Over Internet Protocol) — my way of disrupting the banks and bringing the power of money back to the people, and it’s nice to finally see that other financial institutions are starting to get the message and have tried to build platforms that are focused on the community as well.
Help us grow the community by joining Celsius and spreading the word and your coins (try our CelPay service)! Together we can change the world and make it a better place. There is nothing better than feeling your existence on this planet matters and you can help make the world a better, more fair place.
Celsius Network is a democratized interest income and lending platform accessible via a mobile app. Built on the belief that financial services should only do what is in the best interests of the community, Celsius is a modern platform where membership provides access to curated financial services that are not available through traditional financial institutions. Crypto holders can earn interest by transferring their coins to their Celsius Wallet and borrow USD against their crypto collateral at interest rates as low as 5% APR.
Download the Celsius Network app and start earning interest on your crypto today ➡️ celsiusnetwork.app.link