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Cryptocurrency

What is BlockFi

By David Krug 7 minute read

Using this powerful fintech platform, cryptocurrency investors can unlock additional earnings and flexibility with their investments. Investors in cryptocurrency who want more control over their funds may want to take a closer look at BlockFi. A credit card that earns Bitcoin on every transaction is offered by this fintech platform that pays interest on balances. When you need money, you don’t have to sell your coins. You can even borrow against your crypto.

A number of industry heavyweights have lent their support to BlockFi, which is constantly improving its product. Continue reading if you’re a cryptocurrency investor or if you’re thinking about becoming one.

About BlockFi

With BlockFi, you can use your credit card to earn points on your purchases and earn interest on your balances, just as you would with a traditional bank account. Zac Prince and Flori Marquez, the company’s co-founders, launched it in 2017.

With more than $2 billion in assets under management, BlockFi has received over $100 million in stock since its inception. Some of the most well-known names in the business have put money into this project, including Akuna Capital, Coinbase Ventures, SoFi, Valar Ventures, Winklevoss, and Bain Capital Ventures, among others.

What services does BlockFi offer?

As one of the leading crypto exchanges, BlockFi offers a wide range of investment options, with the primary focus being on the cryptocurrency market. For example, you may earn interest, borrow money, and get incentives on your credit card transactions using these services.

Buy, Sell, and Exchange Crypto

Using BlockFi to learn how to buy Bitcoin can be an option if you’re new to the world of cryptocurrencies. Only a restricted number of cryptocurrencies may be purchased, sold, or exchanged, or you can move a certain amount of cryptocurrency from another platform to your BlockFi account. BlockFi supports the following cryptocurrencies:

  • Bitcoin (BTC)
  • Binance (BUSD)
  • Ethereum (ETH)
  • Gemini (GUSD)
  • Chainlink (LINK)
  • Litecoin (LTC)
  • Paxos (PAX)
  • PAX Gold (PAXG)
  • Tether (USDT)
  • USD Coin (USDC)

Some of the cryptocurrencies and stable coins offered by other exchanges aren’t available on this one due to its restricted selection.

Earn interest on your balances

With BlockFi, you can earn interest in your cryptocurrency holdings. On the first business day of the month, the interest is paid. It is possible to earn different amounts of interest depending on how much money is deposited and in what currency.

Zero trading fees

Trading cryptocurrencies is easy with BlockFi Trading, as there are no fees or delays involved. Due to the fact that transactions are carried out immediately, the most precise pricing is provided. Transactions can be conducted manually or set up to happen automatically with recurring trades.

If you make several withdrawals in a month, you’ll be charged a fee. Free crypto and stable coin withdrawals are permitted once each calendar month. You will be charged a fee for any further withdrawals dependent on the type of asset you are withdrawing.

Mobile app

BlockFi has a mobile app for both iOS and Android smartphones so that you can keep track of your account and conduct transactions. Create a new account, send and receive cryptocurrencies from other platforms, borrow funds, and more using the app. There are always new features being added to the app. According to BlockFi, you’ll be able to use the app to trade cryptocurrencies, send money, and log in with face recognition in the near future.

BlockFi security

Customers of BlockFi may use Google Authenticator to add an additional degree of security to their accounts by enabling two-factor authentication (2FA). Allow listing is an optional, self-service tool offered by BlockFi. With this system, you can rest assured that only the known withdrawal addresses will receive your money. Withdrawals can even be blocked completely if you choose, or they can only be made to certain locations on a list.

In addition, BlockFi employs analytics to monitor client transactions and estimate their risk level. Even if you have 2FA and Allowlisting enabled, withdrawals may trigger a PII (personally identifiable information) verification.

Special features offered by BlockFi

Borrowing against your crypto

BlockFi allows you to borrow up to 50% of the value of your account instead of selling your bitcoin and paying capital gains tax. On the same business day, the money is placed into your account and you may spend it as you like. Prepayment penalties or fees are not applied to loans, so borrowers can pay them back whenever they choose.

Depending on how much money you borrow, the interest rate on these loans might be as high as or as low as possible (your loan-to-value ratio, or LTV). Every loan has a 2% origination charge added on top of that. This translates to a $600 origination charge on a $30,000 loan.

You should be aware that if the value of your cryptocurrency decreases, you may be subject to a margin call on your crypto-backed loan.

  • You will have 72 hours to respond to a margin call if your LTV rises to 70% as a result of a change in the value of your currency. Additional assets may be required or your loan may be lowered below the 70% LTV limit if this occurs.
  • BlockFi will automatically sell a piece of your portfolio if your LTV exceeds 80%, bringing your LTV back down to 70%.

This is quite similar to how a standard margin account operates. Because of the volatility of cryptocurrency values, the ideal borrower should have a diversified portfolio of assets they can utilize to meet a margin call. Otherwise, you may be forced to sell your crypto holdings at values that are lower than your expectations if you face a margin call. Crypto-backed loans are ideally suited for short-term loans that can be repaid quickly because of the volatility of their value.

Bitcoin Rewards Credit Card

Bitcoin Rewards Credit Card offers a 1.5% cashback reward in bitcoin for every transaction. Your BlockFi Interest Account is credited with your monthly rewards. As soon as they’re deposited, cashback rewards begin accruing interest, just like all of your other cryptocurrencies.

Spending $3,000 in the first three months qualifies cardholders for a $250 bitcoin welcome bonus. As a bonus, you’ll earn 3.5 percent on all purchases made in months four through six of car ownership, with a maximum bonus of $100 in bitcoin. Your daily average stable coin balance, up to a maximum of $200, earns an additional 2.00 percent APY on your deposits. In addition to the standard BlockFi referral program, you’ll get $30 in bitcoin for every referral.

The Bitcoin Rewards Credit Card is not yet available, but you can get on a waiting list to be the first to know when it does become available. In order to apply, you’ll first need to provide your email address on their website.

When does BlockFi pay interest?

BlockFi’s potential to generate money is a big draw, but how does it work? Once a cryptocurrency account is set up with BlockFi, it begins collecting income instantly. On a daily basis, interest accrues and is paid out to account holders every month.

A crypto asset’s daily interest rate is determined by its kind and the amount you own of it. Those with larger balances earn less interest than those with smaller ones. Depositing three bitcoins would provide a 6.0% APY for the first one, while the remaining two would yield a 2% rate of return.

Depending on the kind, amount, and number of days you have in a given cryptocurrency, your interest will fluctuate during the month whether you are a trader or exchanger. You may put money in bitcoin on May 1 and then exchange it for ether on May 15. You’ll get 14 days of bitcoin interest and 16 days of ether interest at the end of the month.

Because they are lending your assets to businesses and institutions, BlockFi pays interest to users in a manner similar to a bank. BlockFi earns money by charging interest on the money it lends to other people. As a result, the cryptocurrency in your account is replaced with an obligation to return the asset if you so want.

Pros and Cons

Pros

  • Low-cost, immediate transactions
  • Amounts held in cryptocurrencies can earn interest.
  • As much as 50% of your investments can be borrowed.
  • Card that rewards you with cryptocurrency
  • Both you and your friend may earn bitcoin by referring others.

Cons

  • Not all cryptocurrencies are supported.
  • Rates of interest are lower when you have a larger bank account.
  • In New York, this product is not available.
  • On crypto loans, there is the possibility of a margin call.
  • Obligation to return the asset replaced the actual asset.

Who can open an account with BlockFi?

Individuals and organizations alike may register an account with BlockFi, one of the top investing applications for cryptocurrencies. You can also set up a trust or a self-directed IRA to manage your money. A joint account can’t be opened at this moment, though.

You cannot designate beneficiaries on accounts, but you may input this information and BlockFi will save it in its backend until that functionality is launched. BlockFi Owners of BlockFi accounts must be at least eighteen years old and live in one of the countries where the service is available. Most nations in the globe have BlockFi interest-bearing accounts. Except for New York, account holders in the United States are free to live wherever they like.

A BlockFi account is ideal for investors who own or plan to acquire cryptocurrencies and want to be rewarded for having their crypto assets in one location. In order to borrow against their assets without having to sell them and incurring capital gains taxes, investors might also consider BlockFi. Low fees, interest on balances, plus an upcoming credit card that lets you earn bitcoin on your purchases make it an excellent choice for cryptocurrency newcomers.

How much money can you make with BlockFi?

BlockFi has three key ways for you to make money: interest on your account, market returns, and referring new customers.

David Krug

Author