Remember cryptocurrency? No? Let us refresh your memory ... it’s a digital asset mostly used to buy drugs and facilitate murder-for-hire whose entire existence has been marred by controversy. Still doesn’t ring a bell? At Thanksgiving dinner 2017 your uncle assured you that it was “going to the moon.”
Crypto-fiends have more or less returned to the holes they crawled out of during the coin's meteoric rise and mainstream media has all but forgotten about bitcoin, Ether, dogecoin and the like … unless of course, it is to report on a crypto founder who took his password to the grave.
That is until a crypto exchange did something so vanilla, so bank-like that even the WSJ couldn’t overlook it. Coinbase, a platform for buying and selling the e-currency plans on paying interest on some accounts going forward. Desperate times call for desperate measures.
What does it all mean?
In (most) crypto's case (i.e. not bitcoin), this pseudo interest will be earned via a process called "staking." Payments in the 5% to 8% range will be based on what users put into the crypto network (assets and "helping validate decisions about which transactions and blocks should be added to the network" aka computing power) and as such, the interest payments will be made in the respective cryptocurrency. Right now the only currency eligible is Tezos' XTZ and the complex transactions will be reserved for institutional investors.
Aside from marking a major milestone in crypto’s march towards mainstream acceptance, the program stands to help Coinbase expand its revenue streams and incentivizes crypto investors to stay the course despite wild volatility.
Coinbase’s New Customer Incentive: Interest Payments, With a Crypto Twist [WSJ]
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