BlockFi, a provider of high-interest crypto savings accounts and crypto asset-backed loans, is adding the trading of bitcoin, ether, and the Gemini Dollar to its growing suite of crypto financial services on Thursday.
CEO Zac Prince said the decision to build a trading function was a response to feedback from existing users interested in buying and selling crypto assets on the same platform they already keep their funds, rather than transferring money across multiple platforms and apps. It’s also part of the preparations for a big marketing push in early to 2020 to new-to-crypto investors. Before now, BlockFi has generally catered to existing and even experienced crypto investors.
“We’re evolving as a company into a new phase,” Prince told Cheddar. “We want to be able to market to people that don’t have cryptocurrency yet, convert someone from not owning any bitcoin into owning some bitcoin. We want to be a place where they can take that first step into the crypto ecosystem.”
In 2020 the company is also launching a payments product Prince said will cater to everyone, whether or not they are already crypto investors.
At launch, BlockFi Trading will only execute trades of one cryptocurrency for another. Early next year the company will add the ability to connect bank accounts or wire funds in dollars or other fiat currency onto the platform, Prince said.
Trading on BlockFi is fee-free and the company says it will execute trades immediately based on current market prices. Prince compared the user experience to that of bitcoin buying on the Square Cash App.
“We’re not building an exchange where we match orders, like a Coinbase or Bitstamp. Each transaction is between BlockFi and the client. The user experience is very simple and intuitive, two clicks and you’re done.”
It also allows users to move funds off of the trading platform and back into their Interest accounts, which are custodied by Gemini, if they want to.
“You could have bitcoin sitting in your Interest account and trade it for ether or GUSD. That entire trade and transaction process takes a couple seconds. If, based on your preferences, you want the asset you purchased to go right back into your interest account you can do that, it’s completely integrated into the existing product functionality.”
Prince said the company built the system internally over “three to six months” rather than partnering with a third party to provide it with the technology; that it doesn’t have an exchange or liquidity provider on the back-end for order routing.
BlockFi has grown its headcount from 15 in January to 60 today. More than half of them are engineers.
The evolution of custody offerings has come a long way in the 10-year life span of the cryptocurrency industry. Bitcoin, the mascot of the cryptocurrency industry, may have roots in anti-establishment ideals — why trust the banks when you can be your own bank? — but for most consumers, having reputable places to hold their assets and feel secure that they’re insured against theft is the preferred option, Prince said. And ultimately the industry is working collectively toward mainstream adoption of cryptocurrencies.
Crypto exchanges have made major headlines over the years for their relative vulnerability to theft and hacks. At least $3.1 billion has been stolen at cryptocurrency exchanges in 2019 alone, so far, accordion to CipherTrace. Just last week $49 million worth of ether was stolen from the crypto exchange Upbit.
“You still hear a lot about self-custody because a lot of the hardcore crypto folks are strong advocates for it, but as the space grows and you see mainstream adoption increasing it won’t be the primary method for how people hold their assets. They’ll be holding them with a reputable third party,” said Prince.
BlockFi raised an $18.3 million in Series A funding round in August from Valar Ventures, Winklevoss Capital, Galaxy Digital, ConsenSys Ventures, Akuna Capital, Avon Ventures, Susquehanna, CMT Digital, Morgan Creek, and PJC.