BlockFi Review: The Most Reliable Way to Earn Interest on Your Crypto?

BlockFi was one of the first examples of the financialization of Bitcoin and other crypto assets. Much like a traditional bank, BlockFi allows users to either take out a loan or earn interest on their crypto holdings. Additionally, BlockFi has a trading platform that allows users to easily manage their crypto asset portfolio.

Blockfi Overview

Blockfi Logo

BlockFi

  • Relatively high interest rates for your cryptocurrency
  • Not required to lock up crypto for a set period
  • Reliable platform based in the USA
  • Particularly good earn rates for Bitcoin and ETH

Pros & Cons

The Benefits PRO's
  • Integrated exchange platform makes it easier for users to manage their crypto holdings
  • Lenders can earn compound interest
  • Gemini (a trusted and regulated exchange) is the platform’s custodian of crypto funds
  • Users can choose the cryptocurrency in which they earn their interest
  • Some users are able to earn more than 8% interest on their crypto asset holdings
  • No minimum or maximum deposit limits for interest accounts
The Downside CON's
  • Each withdrawal is charged a flat fee, with the exception of one free withdrawal per month.
  • Launched in 2019, BlockFi is still a relatively new player in the cryptocurrency space
  • BlockFi supports a limited number of cryptocurrency

BlockFi at a Glance

Built-in exchange: Yes
Products: Interest accounts, trading, loans
Max interest available: 8.6%
Headquarters: Jersey City, NJ, USA
Year established: 2019
Proprietary credit card: Coming
Minimum loan amount: $5,000
Maximum loan amount: Uncapped
FDIC insured: No

Funding Methods

Funding Method Deposit Withdrawal Speed
Bank Account (ACH) No No n/a
Credit Card No No n/a
Debit Card No No n/a
Wire Transfer Yes Yes 1-3 business days
Cryptocurrency transfer Yes Yes Nearly instant

BlockFi Overview

Due to its affiliations with the What Bitcoin Did Podcast and The Pomp Podcast, BlockFi is one of the most well-known crypto lending platforms on the market. In fact, crypto lending wasn’t really a topic of conversation before BlockFi hit the market in 2019.

Zac Prince is the CEO and founder of BlockFi, and the company was able to raise more than $60 million in funding before it launched. Some of the biggest names in Bitcoin and cryptocurrency, such as Morgan Creek Capital and Consensys Ventures, have invested in BlockFi.

For their custody solution, BlockFi tapped Gemini, which is based in New York and may have the best relationship with regulators out of any other cryptocurrency exchange on the market.

In short, BlockFi offers the same services as a bank for cryptocurrency holders. Users are able to either take out a loan (after putting down some crypto collateral) or lend their cryptocurrency holdings to BlockFi to receive interest payments.

Crypto Loans

Crypto Loans are the name of the game when it comes to BlockFi. Users are able to deposit their cryptocurrency on the BlockFi platform in order to gain access to a collateralized loan. Currently, users are only able to borrow against their Bitcoin, Ether, or Litecoin holdings. In most cases, it will only take a few hours to take out a loan with BlockFi.

Once a user has made a deposit, they are able to borrow up to 50% of the value of their cryptocurrency from BlockFi. In other words, if a user deposits $100,000 USD worth of Bitcoin onto BlockFi, they will be able to take out a loan up to $50,000 USD. Once the loan has started, the user can make monthly interest payments. The principle of the loan can be paid back at the end of the loan.

BlockFi holds the user’s cryptocurrency deposit for the duration of the loan to protect themselves against possible defaults. In a situation where a user doesn’t pay back the loan, BlockFi is able to seize the user’s cryptocurrency deposit. The user’s loan is denominated in U.S. dollars.

Interest Accounts

On the other side of every loan there is a lender, and that’s where the BlockFi interest accounts come into play. When users deposit their cryptocurrency into a BlockFi Interest Account, they can earn up to 8.6% interest on a yearly basis. Notably, the interest is compounded, meaning users earn additional interest on their interest earnings (as long as they’re left on the platform).

BlockFi currently supports interest accounts for Bitcoin, Ether, Litecoin, USDC, GUSD, and PAX. It should be noted that users are able to receive their interest payments in whatever cryptocurrency they prefer. Payments are made monthly.

Extras

In addition to their lending platform, BlockFi also allows users to trade cryptocurrencies. That said, the list of available trading pairs is somewhat limited.

BlockFi is also expected to release a credit card in 2020 that will allow users to earn cashback rewards denominated in Bitcoin. There are also additional services available to institutional investors on the BlockFi website.

History of BlockFi

BlockFi was originally founded back in 2017; however, the platform did not launch until 2019. There was also a beta version of the platform available in 2018. The basic idea behind BlockFi was to bring traditional banking services, such as savings and loans, to the crypto arena.

In early 2018, BlockFi received funding from some well-known names in the crypto industry such as SoFi, and Kenetic Capital. Later that year, Galaxy Digital Ventures invested $50 million in the company. By April 2019, BlockFi had more than $50 million worth of crypto deposits on its clients’ accounts. August 2019 is when Morgan Creek and Winklevoss Capital decided to invest in BlockFi.

BlockFi launched a trading platform in December 2019, and they are expected to release a credit card that allows users to earn crypto rewards by the end of 2020.

BlockFi Frequently Asked Questions

About the Author

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CryptoVantage Staff