While cryptocurrency may have reached peak hype just a few short years ago, the concept of digital currency is still going strong.
And another interesting platform in the blockchain and crypto game is BlockFi.
What’s interesting about BlockFi is it’s not just another crypto trading platform. While that is an option, BlockFi offers over 8% interest on your digital currency, which is huge compared to most savings accounts in today’s economic climate.
Personally, I’ve been hesitant about investing in cryptocurrency but it still is very intriguing and something I’ve been researching a lot more lately. And when I stumbled on BlockFi, my intrigue grew even more.
In the below BlockFi review, I’ll cover more about the company, its offerings, how it works, and much more.
Quick Review: BlockFi is a solid crypto investing platform that offers high interest with trading features. I give it a 7.8/10 score. You can sign-up here to claim up to a $250 deposit bonus.
What Is BlockFi?
BlockFi is an account that allows you to earn interest on your cryptocurrencies. It works as both an exchange and a high-interest account: you can sell and buy various cryptocurrencies, and earn higher interest at the same time – higher than with normal savings and checking accounts.
BlockFi was founded back in 2017 by Zac Prince and Lori Marquez in New York. It’s described as a wealth management service to help crypto investors earn interest on their money, and aims to imitate the role of banks but in the cryptocurrency industry.
The management team comes from different crypto and banking backgrounds and the CEO is very active on social media and podcasts.
The company received over $150 million in funding since 2018 and has investors including SoFi, Winkelvoss Capital, Galaxy Digital Ventures, Avon Ventures, and a few others.
Through your BlockFi account, you can add various crypto wallet addresses so you can choose which wallets to pick when you are withdrawing crypto.
Each investor will have their own unique wallet address to buy and sell crypto with.
On the BlockFi end, they hold all the cryptocurrencies in the exchange in a secure storage hardware wallet on their Gemini infrastructure.
What Does BlockFi Offer?
Although I alluded to their product offerings a bit, let’s dive a bit deeper into their three main features.
The main product BlockFi offers is an account that earns interest. This account allows you to earn interest on BTC, LTC, ETH and other cryptocurrencies.
If you don’t own any cryptocurrencies, you can simply transfer some USD onto the platform and you can then convert it into cryptocurrencies.
You’ll be able to pick which cryptocurrency you want your interest paid and diversify across various types. According to BlockFi, you can earn an annual interest of 8+% with their account.
If you are wondering how you can earn interest on crypto, BlockFi has a whole article about how it works.
Borrow And Hold
If you’re looking to take out a loan or need money now, you can now back it with crypto. With BlockFi, you can borrow USD and use cryptocurrencies as collateral.
You can borrow up to 50% of the value of your crypto and use the money for anything including a house, a mortgage, etc.
When you borrow from BlockFi, you’ll receive your money on the same day and you can pay off portions or the entirety of your balance as early as you want. There are no prepayment penalties or fees!
The minimum loan amount is $5,000 and has a duration of 12 months, with an interest rate of 4.5%.
Since it’s also an exchange, you can also use BlockFi to trade crypto. You can trade some of the major digital currencies like BTC, ETH, LTC, USDC, USDT, GUSD, PAX and PAXG.
And you’ll still be earning compound interest while you’re trading. This means you’ll be able to buy and sell crypto without missing out on any currency gains.
Lastly, when you trade on BlockFi, you only pay the price displayed for each trade, and nothing else.
What Are The BlockFi Fees?
Although you can withdrawal your money at any time, BlockFi offers one free withdrawal every month. After that time period, BlockFI charges a flat withdrawal fee.
Here are their overall fees taken directly from their website (which may change in the future):
|BTC||100 per 7-day period||0.0025 BTC|
|ETH||5,000 per 7-day period||0.0015 ETH|
|LTC||10,000 per 7-day period||0.0025 LTC|
|Stablecoins||1,000,000 per 7-day period||$0.25 USD|
|PAXG||500 per 7 Day period||0.0025 PAXG|
There are also withdrawal minimums. For example, you need to withdraw a least 0.003 BTC and 0.056 ETH. They reserve 7 days for withdrawals, but it usually takes them just 24 hours.
So what makes BlockFi an attractive investment platform? Besides being able to put your crypto to work, trade crypto, and get loans — here are some main features that might make this a great option for you.
BlockFi recently launched an app, which means you can now trade cryptocurrencies, track your interest and account rates, and take out loans directly from your phone.
You can find the app on Google Play and the Apple Store.
No deposit or balance requirements
You can open a BlockFi account without committing to a minimum deposit. Naturally, you’ll get better interest rates when you deposit more money but it’s not required.
So even if you just wanted to test a small amount of money first before jumping in, you can do that.
Bitcoin rewards credit card
Although not release yet in 2020, the BlockFi credit card will be out in 2021. The card will allow you to earn 1.5% back in bitcoin on every purchase. This is the first of it’s kind and is a pretty cool feature that will certainly interest many people.
With BlockFi, they do want to protect their users and their money. The company offers insurance against data breaches and other crypto security breaches.
They also work with some of the biggest names in the world and follow the U.S. rules to ensure everything is legit and following proper protocol.
As mentioned before, the interest rates on your digital currency is highly attractive. But there are some caveats to understand.
These interest rates will vary depending on the coin you are investing in and which tier you are in. Here is a summary from their website:
|BTC (Tier 1)||0 – 2.5||6%|
|BTC (Tier 2)||> 2.5||3.0%|
Pros and Cons of Using BlockFi
With any financial platform, you’ll find many different pros and cons. BlockFi is no different.
And the pros and cons of this depend on your view on cryptocurrencies and how you use them personally.
Your money isn’t just sitting there: If you’re just going to leave money on a crypto exchange, it might as well earn interest. With just 0.1 BTC earned in interest, that’s quite a significant amount when converted into dollars.
Advance notice if interest rates change: BlockFi gives you one to two weeks’ notice if interest rates are changing, which gives investors enough time to prepare and withdraw their crypto if they choose to do so.
No withdrawal penalty: You can withdraw your crypto at any time and won’t need to pay a penalty.
No minimum balance: you won’t have to commit to a specific amount in order to earn interest. If you just want to put in $1, no one will stop you!
Zero fees on trading: you can trade between various cryptocurrencies and you won’t have to pay trading fees.
Exchange rather than hard wallet: As is it the case with any crypto exchange, there is always a risk that it could get hacked. The best place to keep your crypto is in a hard wallet, but if you want to gain interest you’ll need to put it on an exchange.
Interest is paid once per month: they only add on your interest once per month, which may feel a little infrequent for many traders. Many competitors offer daily or weekly payouts so it may feel like a long time.
High withdrawal fees: although BlockFI offers many features for free, their withdrawal fees outside of the free withdrawal period are quite high compared to competitors.
Not protected by FDIC or SIPC insurance: although BlockFi offers various insurances and protections, the money is not back by FDIC or SIPC insurance like traditional brokerages will be.
Is BlockFi Safe?
BlockFi is a safe platform to exchange and deposit crypto. Its primary custodian is Gemini, a financial institution that is licensed and regulated by the NYDFS. 95% of assets are kept in cold storage (so offline) and 5% are in a hot wallet which is then insured by a company called AON. They also recently completed a Type 1 compliance audit by Deloitte.
BlockFi is also backed by some well-known companies such as Coinbase, Fidelity and Morgan Creek. They also rely on comprehensive risk management and analysis for any institutional investors that may default on loans.
Has BlockFi been hacked?
For just over an hour in May 2020, it was discovered that hackers were able to compromise the systems of BlockFi, and gained unauthorized access to users’ names, email addresses, birth dates, addresses, and activity history. However, no funds, social security numbers, or other financial data was lost.
Unfortunately, cryptocurrency and other financial institutions end up being targets of hackers and other data breaches. BlockFi quickly logged the cause and took action with more security measures to prevent this from happening again.
How Do I Open A BlockFi Account?
Opening an account on BlockFi is incredibly easy and does not take long to get set up. However, you will need a few things to get started.
First, you can visit the BlockFi website to open your account. You’ll want to hit the “Get Started” button on the top right.
From there you’ll fill out some basic info for your account creation.
You’ll then be required to upload a photo of valid identification. To ensure you are who you say and for financial records. From there, your account is typically approved by BlockFi within a few minutes.
Once you open an account, you can set up your bank account and transfer funds immediately via ACH. For new accounts, there is a daily limit of $500 deposit amounts and then $1,000 for established accounts.
BlockFi states that your deposits will take up to about five business days to clear. And then you can start investing in digital currencies!
- High-Yield Interest On Crpyto Deposits
- Can Borrow Against Your Crypto Assets With Low Interest
- Easily Able to Trade Crypto
- No Minimum Balance Required
- Not Backed By FDIC or SIPC insurance
- Interest Rates Could Change Based On Demand
- Only One Free Withdraw Per Month
- Crypto Is Very Risky Still With Uncertaintiies