BlockFi brings two traditional finance services to the crypto world: interest accounts and loans.
In short, BlockFi enables you to earn interest on your crypto, and also to obtain USD without having to sell your crypto through a collateralized loan.
In this BlockFi review, we will be analyzing the pros and cons of this lending platform to help you find out if it’s a good fit for you.
Let’s get started!
What can BlockFi be used for?
BlockFi is one of the first companies to bring traditional finance services to the cryptocurrency space. At the time of this review, BlockFi offers a crypto interest account and crypto collateralized loans.
The crypto interest account enables anyone to put their crypto to work by lending it to BlockFi at a fixed annual rate.
This is especially interesting for long-term holders that are not planning to sell their coins for several years, so they might as well lend them to generate an additional return.
This return is compounded and added to the original capital, which leads to a significant appreciation over the course of the years.
The crypto collateralized loans service enables anyone to borrow USD (or other fiat currencies) against their cryptocurrency holdings.
The main reason why many don’t want to sell their cryptocurrency holdings to buy things is because they fear to miss out on a potential massive up move.
BlockFi solves this problem by enabling you to obtain fiat money without having to sell your cryptocurrencies.
Crypto interest account on BlockFi
With high returns and a very intuitive user experience, BlockFi offers what we found to be the best crypto interest account available at the moment.
- Over 6% annual interest
- Backed by some of the brightest minds in the crypto world
- Enables its users to compound the earned interest
- BlockFi launched in 2019 and is hence still a very young company
- Only supports 3 cryptocurrencies (Bitcoin, Ether, and Litecoin)
How much interest can you earn?
BlockFi currently pays an annual interest of 6.2%. On the contrary to other lending platforms, BlockFi enables its users to easily compound the interest over time.
Is Blockfi safe?
BlockFi is paying interest on over $50M worth of crypto and is backed by reputable industry players.
The fact that BlockFi has investors like Coinbase Ventures and Consensys onboard, and advisors like Chris Ferraro from Galaxy Digital, is a powerful vote of confidence from some of the brightest minds in the cryptocurrency space.
That being said, although BlockFi has proven to be trustworthy so far, it is important to note that the company just launched in 2019 and hasn’t been around for very long just yet.
Which cryptocurrencies does the interest account support?
At the time of this review, BlockFi only supports Bitcoin, Ether and Litecoin.
The reason behind the limited availability of digital assets is likely linked to the availability of custodial solutions and liquidity.
Furthermore, it is important to note that unlike competitors like NEXO, BlockFi does not require you to buy any “ICO Token” just to get access to the platform.
How do I open a crypto interest account on BlockFi?
Opening a BlockFi crypto interest account is simple and will take you less than a few minutes. See below for a step-by-step guide.
STEP 1: Create account on BlockFi
The first step when opening a crypto interest account on BlockFi is to create an account. To do so, head over to the sign up page and type in your email and your desired password.
After you did so and hit continue, you will receive a verification email which you need to confirm before your account can be approved.
STEP 2: Select “Interest account”
Once your email is confirmed, sign into your BlockFi account and select “Interest Account”.
STEP 3: Verify your identity
To be fully compliant, BlockFi requires all users opening an interest account to verify their identity. This process is simple and all you have to do is provide information like your Name, Age, and Location of residence, together with an ID document.
STEP 4: Deposit Bitcoin or Ether
After you submitted all the required information, the final step is to deposit Bitcoin or Ether into your interest account. BlockFi stores most of its customers funds in cold storage, so the risk of your holdings getting compromised is low.
Crypto loan on BlockFi
From our research, BlockFi offers the lowest APR (annual percentage rate) loans in the crypto space. BlockFi’s lending service also stands out for its simple loan application process.
- At 6.5% APR, BlockFi offers the cheapest crypto loans on the market
- BlockFi offers 3 collateral level options
- KYC and loan application process is very straightforward
- Minimum loan amount is $10,000
- Only 3 cryptocurrencies are supported (BTC, ETH and LTC)
How does a BlockFi crypto loan work?
In order to obtain a loan on BlockFi, the borrower has to put up cryptocurrency as collateral.
At the time of writing, there are 3 different different collateral levels on BlockFi: 20% LTV, 35% LTV and 50% LTV.
LTV stands for “Loan To Value” and is the percentage of capital that you will have to put up as collateral to obtain a loan.
Example: If you pick 20% LTV and want to loan $10,000, then you will have to deposit $2,000 worth of BTC, ETH or LTC as collateral.
One thing to keep in mind is that the lower the LTV, the higher is the price where you will be forced to add additional collateral to avoid the risk of partial collateral sale.
Example: If you choose the 50% LTV option and use Bitcoin as collateral, that means that you would have to add more collateral to your loan if Bitcoin dropped by approximately 50%.
Finally, it is also important to note that at the moment the minimum loan amount on BlockFi is $10,000.
How much interest do I have to pay?
BlockFi charges a 4.5% annual interest rate and a 2% origination fee.
So this results in a total APR (Annual Percentage Rate) of approximately 6.5%. This is surprisingly low in light of the fact that other competitors charge up to 16.1% APR.
How do I get a crypto loan on BlockFi?
Before obtaining a loan on BlockFi, the company needs to do a quick background check first. The loan application process is simple and only takes a few minutes, here’s a step-by-step guide.
STEP 1: Create account on BlockFi
The first step to obtain a crypto loan on BlockFi is to create an account at the platform. To do so, all you need is an email address and a strong password.
STEP 2: Select “Crypto Loans”
After you clicked on the verification email sent by BlockFi to confirm your email address, you now need to log-in and select “Crypto Loans” from your dashboard.
STEP 3: Submit loan application
Next comes the loan application process. Here you will have to enter the amount you want to borrow, select your margin cryptocurrency of choice, and also answer some compliance related questions.
Please note that it may take up to 3 days for your loan application to get approved after you submit it.
STEP 4: Fund your margin and wait to receive the funds
After your loan application got approved, the final step is to deposit the required margin / collateral needed. In the example of the screenshot above, that requirement would be 3.889 Bitcoin.
Less than 48 hours after that deposit is made, you will receive an email from BlockFi’s loan servicer “Scratch” with information on when your borrowed amount is expected to arrive.
CoinDiligent Staff Writer