BlockFi review

What is BlockFi?

BlockFi is more of a wealth management platform that was founded in 2017. The forum came about when Prince and Marquez realized that they could integrate their expertise in lending into the blockchain industry. This platform features NYC-based lending that focuses more on cryptocurrencies and crypto investors. BlockFi focuses on assets such as Ethereum, USD stable coins, Litecoin, and Bitcoin.

BlockFi aims at offering its users three primary services, which include but are not limited to: Crypto trading. This allows users to trade different cryptocurrency pairs such as GUSD, BTC, ETH, LTC, and USDC. Also, it offers crypto interest accounts for the users. With these interest accounts, users can deposit their crypto via BlockFi then receive a certain amount of interest every month. However, the interest rates are determined by the crypto coins you deposit.

Lastly, BlockFi offers crypto-backed loans. So, instead of selling the cryptos you have in your account, you can get a crypto-backed cash loan for it. With BlockFi, you get up to 50% value of the crypto asset you have in USD. And the best part is that BlockFi has such an incredible team that helps to facilitate everything.

BlockFi received a $18.3m series A funding in August 2019, and by February 2020, the platform had raised $30m more on the series B funding. In August of 2020 they secured another $50 million in a series C funding. Some of the most famous investors for BlockFi include Akuna Capital, Peter Thiel’s Valar Ventures, the Winklevoss brothers Winklevoss capital, and Novagtatz’s Galaxy.

As we have seen, BlockFi is backed by some heavy hitters in the crypto world and the world of technology. That is why the company grew its revenues 20X more in 2019. In current times, BlockFi can boast of over $650 million in their deposits.

Why Choose BlockFi?

BlockFi is always looking for more comfortable and convenient ways for its users to access financial services. That said, here are some of the reasons why you should choose BlockFi over other crypto lending platforms.

• The quick and easy signup: With BlockFi, you will get started in just a few minutes hence allowing you to earn your interest, borrow money, and also access your portfolio through a seamless platform.
• Interest-Earning Accounts: At BlockFi, you can open an interest-earning account that helps you to earn interest on your cryptocurrency. The best part is that there are no fees, and you get a 8.6% annual return on the more popular cryptos and the USD-backed stablecoins. As soon as you make your deposit, you start earning and get a compounded interest every month. It is an easy way, without any trading skills, to make a profit with crypto.
• Market Expertise: BlockFi has a team that has a rich background in finance with a proven track record that the users can rely on. That means as long as you are part of the BlockFi family, you will always be informed of the most recent market changes in the crypto market.
• Crypto-backed Loans: Using the cryptocurrency in your account as collateral, you can borrow money. If you want same-day loans, you will get cash without being triggered to sell your crypto or other taxable events. That means that you will take care of your finances without having to liquidate your crypto assets. With the loans, you get interest-only monthly payments and no penalties.

Continue reading this BlockFi review to learn more about this platform.

How do you create a BlockFi account?

Getting a BlockFi account is relatively easy. It only takes a few minutes. To begin, follow these steps:

1. Go to the BlockFi Website.
2. Click the Open your account option on the homepage or Get Started in the menu.
3. To create your account, enter your email and a strong password.
4. Enter the verification code sent to your email.
5. Verify your identity by entering your personal information.
6. You need to upload an identification card such as a national ID, passport, or driver’s license.
7. Verify your identity with a selfie.

Checking and verifying your data does not take more than a few minutes. It appears to be an automated system. After verification, you can immediately start lending your cryptocurrency or borrowing crypto via the platform.

How does BlockFi work?

On BlockFi, you can get a crypto loan or receive an interest on your crypto holdings.

Earn interest with BlockFi

Most people use the services of BlockFi to lend their crypto and earn a passive income. This way you can hold crypto and let it grow automatically, without trading.

You can use the crypto interest calculator on the website to calculate your estimated earnings based on the current interest rates.

1. Go to the Blockfi website.
2. Make sure you have an account and verify it.
3. Calculate the potential interest of your desired coin(s).
4. Go to your portal, click Deposit and select the crypto your want to deposit.
5. Send you crypto.

Keep in mind that BlockFi can adjust interest rates and it depends on multiple factors, including the current market status. Check the website for the current interest rates: https://blockfi.com/rates

Any withdrawal will require a 7 day processing time to transfer it back to your account.

Don’t have Bitcoin yet? Check this overview here where you can buy Bitcoin.

Crypto loan

First, you will need collateral in terms of LTC, BTC, or ETH. The collateral needs to be enough to de-risk the loan for the platform. The collateral comes to 50% of the loan amount. For instance, to obtain a loan of 2BTC, you will need to offer 4BTC.

With enough collateral on loan, you will pay interest on the loan. In most cases, the loan will have a minimum duration of 12 months. And the best thing is that there is no penalty incurred if you want to repay your loan early.

BlockFi bonus

BlockFi has a special bonus for selected partners. New users can receive up to 250 USD bonus and this is calculated based on your deposit. The more you deposit, the higher your bonus will be. The bonus is only applied when a deposit is made within 30 days after registration. Check out the table below for the current bonuses.

What are the risks of using BlockFi?

Once you have understood BlockFi, it is essential to understand the most significant risks of borrowing/lending from a platform like this.

Counterparty Risk

Counterparty risk is the default risk that you are exposed to whenever you are lending your money to anyone. And since BlockFi works just like a bank in terms of lending and borrowing.

And to keep the wheel going, they sometimes lend the money to institutional OTC desks. And with such scenarios, you are putting yourself in a scenario where you could lose it all. That is something you need to be aware of when using BlockFi.

Interest Rate Risk

The interest rate on BlockFi tends to fluctuate from time to time, depending on many conditions. For instance, if there is a competing platform that offers more favorable rates and trust, the users might opt to use the other forum instead.

However, so far, BlockFi has offered highly competitive rates. But the problem is that based on the supply and demand chain in the market, the borrowing rate and interest rate may fluctuate every other month.

The Withdrawal process

Another thing that most people complain about BlockFi is the tedious withdrawal process. The platform doesn’t offer instant withdrawals like other platforms. With BlockFi, it could take anywhere between 0-7 days for your withdrawal to be processed. This is, in fact, one of the biggest con that has been putting away a lot of potential customers from BlockFi.

Other platforms don’t seem to have such strict withdrawal restrictions. Probably the forum should be allowing instant withdrawals of a certain amount for accounts that have done their KYC. And for the more massive withdrawal amounts, the platform could be following the manual verification process to maintain the high-security standards.

Bankruptcy or hack

BlockFi as a company tries to keep its security as good as possible, but an online company can always fall victim to a hack. In addition, it is also possible that BlockFi will go bankrupt. These are all scenarios that you as an investor have to take into account and this is the risk you take when using this platform. It is therefore essential that you do not invest your entire crypto assets in BlockFi. In addition, it can also be smart to spread the risk by using different crypto lending platforms. For example, compare other platforms here.

In summary, BlockFi generally faces similar risks to most lending platforms.

BlockFi fees

Just like any other platform, BlockFi comes with certain withdrawal limits and fees that you need to take into account. If you have no plans of trading your assets from time to time, you will barely incur any fees. However, if you want to make regular withdrawals, then charges on BlockFi could add up rapidly.

• Bitcoin: Up to 100 per 7-day period with a fee of 0.0025 BTC.
• Ethereum: Up to 5K per 7-day period with a fee of 0.0015 ETH.
• Litecoin: Up to 10K per 7-day period with a fee of 0.0025 LTC.
• Stablecoins: Up to 1M per 7-day period with a fee of USD 0.25.
• PAXG: Up to 500 per 7-day period with a fee of 0.0025 PAXG.

With that in mind, you can make necessary adjustments that will prevent you from amassing unnecessary charges.

BlockFi hack

In this BlockFi review we also look at the bad side of this company. BlockFi experienced in May 2020 a security breach. According to the CEO, the attackers have been able to view customer data for about 1 hour. Until today there are no signs of that data was stolen and leaked. The attackers were able to see the account balances, corresponding email addresses and home addresses. No funds were stolen during this attack.

Is BlockFi safe?

I know you are probably wondering if BlockFi is safe with your cryptos. It’s essential to know because as soon as you give BlockFi custody of your crypto assets, it’s like you are entrusting the company to safeguard them then return your cryptos when you ask.

In the crypto industry, you will hear stories of people who lost their fortune through scams, negligence, or hacks. But the good thing is that BlockFi has a custodian policy supported by Gemini. Gemini keeps 95% of the assets in cold storages and the other 5% in hot wallets. The AON insurance covers 5% in hot wallets. Gemini is regulated by the NYDFS and recently received SOC2 compliance from Deloitte for their preservation solution.

A good thing is that BlockFi is regulated in America. BlockFi is registered with the US Department of Treasury Financial Crimes Enforcement Network (FinCEN) as a money service company (MSB). BlockFi is subjected to the Bank Secrecy Act and its implementing regulations (collectively referred to as the “BSA”), which set out the requirements that financial institutions must impose to implement policies and procedures reasonably designed to detect and prevent money laundering and terrorist financing.

BlockFi is headquartered and regulated in New York. They adhere to federal and state laws, which restrict or at least slow down some of their practices. This is a good thing in many ways. It provides protection for BlockFi customers and ensures that they are not closed due to illegal activities. This cannot be said for many of their competitors.

Finally, while BlockFi’s interest rates are attractive, it’s natural for cryptocurrency enthusiasts to be skeptical – and rightly so, but you don’t run much or less risk compared to other financial vehicles. Keep in mind that it is an online platform and can therefore be hacked. There is also always a threat of bankruptcy. The security breach of May 2020 is an incident that could question the safety of the platform.

Have you lent or borrowed assets with BlockFi and would you like to share your experience? This can be done via the assessment form below.