Due to the increasing demand for cryptocurrencies, several crypto startups emerge. Despite the global pandemic wreaking havoc in the economy of many countries, cryptocurrencies remain strong and booming, creating new multi-millionaires around the world.
Along with the expansion of cryptocurrencies comes the need for a reliable crypto account that is capable of producing good interest to account holders. And that’s where BlockFi comes in.
To grow your cryptocurrency, BlockFi offers services like borrowing fiat currency against cryptocurrency holdings, as well as crypto deposits. Let’s take an in-depth review of this US-based centralized cryptocurrency company that offers several financial services.
What is BlockFi?
The crypto space is swiftly evolving, and BlockFi is riding that wave.
BlockFi, founded in 2017, is a crypto management platform that allows users to leverage their cryptocurrency. It broadens people’s opportunities by offering credit services to people and markets who are chained to limited options— breaking the conventional services in finance.
The very first funding of BlockFi was a seed capital round of $1.6 million in February 2018. After that, the company was granted more than $150 million more in funding.
Carrying the desire to render bank-like services to all crypto investors, BlockFi started to provide fiat currency loans, having crypto deposits as collateral. Eventually, they expanded their assistance in delivering interest-bearing cryptocurrency savings.
Users can earn up to 8.6% interest per year on their cryptocurrency holding. This big was made possible because BlockFi lends the user’s deposits to corporate and institutional borrowers to earn interest which they will use to pay users. Even though the deposits of users are given more importance over other company equity to reduce risk, they are not SIPC, or FDIC insured.
BlockFi Services
There are three primary services offered at BlockFi: Cryptocurrency Trading, Interest-bearing crypto savings, and Crypto-backed USD loans. Let’s take a glance at each in detail.
Cryptocurrency Trading
BlockFi’s cryptocurrency trading offers users no fee or “free” trading services, which permits users to change between the platform’s supported cryptos swiftly. Although there is no direct fee charged, be mindful of trades. Always check the spread of trades through the confirmation screen when you’re going to finalize a trade.
Interest-bearing savings accounts
A savings account accepts a selection of major stablecoins and cryptocurrencies as a deposit. It pays back a competitive interest rate every month– similar to how savings accounts work in traditional banking.
By default, interest is being paid using the same currency that the user used to deposit. However, BlockFi allows users with an option to receive interest in any of their supported currencies. With just a deposit of $25 in crypto, you can earn up to a $250 bonus.
Crypto-backed Loans
Crypto-backed loans are BlockFi’s longest-standing product. Although BlockFi claims that users can apply for a loan in less than 2 minutes with as little as 90 minutes of waiting for approval, it actually takes them one business day to approve the loan.
These loans are paid out using stable coins (fiat currency) and are collateralized by the user’s crypto deposits. This enables every cryptocurrency holder to get fiat currency without selling their holdings in case of emergency.
To qualify for this loan, borrowers must hold up a greater value of crypto in their account than the loan itself. Over-collateralizing your loan will give BlockFi an assurance that it can be repaid in full amount, giving a defense against any risk and price volatility.
At the closing of the borrower’s loan term, the principal amount of the loan is paid in a single payment. And the borrowers only need to pay interest every month. Depending on the crypto used as collateral for the loan, users may borrow up to 50% of the value of their crypto holdings in their BlockFI account.
Because of this loan service, users can get access to cash without needing to trade the crypto they currently have. This helps them avoid the hassle, big taxes, and fees. BlockFi users also have access to other bank-like services, serving as an all-in-one cryptocurrency bank.
BlockFi Currencies
At the time of writing, BlockFi renders support deposits in the following stablecoins and cryptocurrencies.
- Litecoin (LTC)
- Bitcoin (BTC)
- Tether (USDT)
- Ether (ETH)
- Gemini Dollar (GUSD)
- Paxos Standard (PAX)
- USD Coin (USDC)
- Paxos Gold (PAXG)
BlockFi is still expected to add more tokens and coins to the list. However, there’s a rigorous vetting process that awaits new currencies.
BlockFi Payment Methods
Loans made at BlockFi are paid directly into the borrower’s bank account, and repayments of loan and interest can be made using crypto or dollars.
Repayments with crypto are possible with stablecoins USDC, PAX, or GUSD. A borrower can also decide to pay using crypto by liquidating their collateral at its market value. This could require borrowers to pay around 1% of the trading fee.
On the other hand, repayments made in fiat currency can be made using ACH or wire transfer. Wire transfer results in 1-2 days return of collateral and 5-10 days for ACH transfers.
BlockFi Mobile App
BlockFi is available on mobile apps— both in Android and iOS. The mobile app provides users all core services, providing a sleek user experience. Using the app, users can monitor and manage the balance in their accounts and even sign-up for loans.
Institutional Services
Through BlockFi, institutions can enjoy cryptocurrency trading while lending or borrowing cryptocurrency, bridging the gap between the institutional and crypto spaces.
BlockFi interests other institutions with its very own inventory, enterprise-grade regulatory compliance, and institutional backing. These features enable BlockFi to offer traditional financial services to the crypto industry.
BlockFi offers margining, reporting, executing, shorting, and other services that people can access through traditional financial spaces like banks. Some of the institutions that work along with BlockFi include investment funds, crypto businesses, and market makers. There are some that utilize it for loans, and some use it to gain powerful returns in the crypto market.
HashKey Digital Asset Group, Morgan Creek Capital Management, Akuna Capital, CMT Digital, and Susquehanna are just some of the institutions that are backing BlockFi.
Even though retail customers don’t have much idea regarding these institutional services, they make income for BlockFi, which retail users benefit from, through interest.
BlockFi Minimum Account Balance
There is no minimum account balance required in BlockFi to earn interest. Regardless you have 10,000 ETH or 1ETH in your account; you are eligible to earn interest. However, BlockFi has a minimum withdrawal of 0.056 ETH and 0.003 BTC, and withdrawals for accounts with smaller balances than these could take up to 30 days or more to process.
BlockFi Customer Reviews
BlockFi receives several good reviews on the platform, commending them for their great services and customer support.
On the other side, some users are expressing frustration due to the long withdrawal process. Moreover, although requiring identification documents are great security before users could withdraw their funds, this is quite a hassle and hard work for those involved.
BlockFi is notable for linking cryptocurrency and traditional finance– this goes especially for interest accounts and crypto-backed loans.
Interest rates offered on BlockFi accounts are higher compared to banks. Moreover, their crypto-backed fiat currency loans are also extremely helpful as it helps user immediately get loans at short notice, without the need to sell their cryptocurrency holdings.
