BlockFi Review: 7 Things To Know Before Using in 2020

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blockfi review

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 lending platformBlockFi is one of the first companies to bring traditional financial 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.

PROS

  • Over 6% annual interest
  • Backed by some of the brightest minds in the crypto world
  • Enables its users to compound the earned interest
CONS

  • 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

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”

select interest account Blockfi

Once your email is confirmed, sign into your BlockFi account and select “Interest Account”.

STEP 3: Verify your identity

verify identity blockfi interest account

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

deposit crypto to interest account blockfi

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.

PROS

  • 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
CONS

  • 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

create account on blockfi

The first step to obtaining 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”

select crypto loan blockfi

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

apply for loan blockfi

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.

pascal thellmann

Pascal Thellmann is an algorithmic trader mostly focused on market making. You can get in touch with Pascal on LinkedIn or Twitter.

Comments

  1. Hello,
    BlockFi.com locked my account with $25,000 inside, around 80 days ago, and they are not willing to process a refund. They are asking for a court order just for them to process a refund.

    After seeing a bunch of info about the products BlockFi offers that seemed attractive at first glance, I decided to open an account. Within minutes the account was ready to take the money out from my bank. No photo identification required, by the way.
    I started depositing money, and seemed easy compared to other services of this kind.

    After a while, I thought it would be a good idea to secure some funds by processing two Crypto withdrawal requests.
    I’ve been waiting for two days (the minimum waiting time offered for a Crypto withdrawal), but instead of processing my requests they asked me for verification via ID/Passport, photos/video using my phone..(a regular request of any CEX), but what’s strange, it’s that they will ask for Verification after they allow you to deposit large amounts of money, and not before, as any other service does. I wonder what would happen with your money in a strange scenario where (for some reason) you can’t successfully pass the Verification.

    But… that was Ok. I successfully processed the verification within minutes.
    Then, surprise….. Because I had two pending withdrawal requests for two different Crypto coins, even if one of them was for a very small amount being executed just for me to understand their withdrawal process, BlockFi asked me to get Verified once again. Not a different Verification process. Just the same one I had successfully executed minutes ago.

    No problem! I did it again “You’re all set !”.
    Within minutes, I got an email notifying that my BlockFi account was locked. No explanation other than asking to read their TOS, and the following notice….. “Should you be unable to retrieve funds through your bank, you must wait 60 days from receipt of this email before requesting a manual wire withdrawal to the source bank account. Please note that we may require identity verification to process the withdrawal. Note: Any requests made to BlockFi about your account funds will be ignored until we can process a return of funds which will only be eligible after 60 days. Do not reach out to BlockFi until after this date. ”

    The 60 days have passed and even though I used every possible method to contact BlockFi, it doesn’t seem like anyone’s going to reply. (Several support tickets or by sending any kind of message using any possible form on their Help/Support pages, trying to call them using the phone number listed over their Help page, sending message via some of the previous support tickets that were used around two months ago to communicate with them..and more..

    Let’s not forget that a considerable amount of money is still with BlockFi, and my account is still blocked.

    If that can’t be called an extremely frustrating situation, I’m curious to hear another 🙂 .

    ——— UPDATE
    Finally I’ve been contacted, being informed that they will return my money…soon.

    This is definitely good news, but … I still find myself in a “strange” situation.

    Let me explain: When BlockFi locked my account they said: “At this time, we are not able to return any funds to you directly. We’d recommend that you contact your bank and request that any ACH transfers you made to your BlockFi account be canceled and reversed. Should you be unable to retrieve funds through your bank, you must wait 60 days from receipt of this email before requesting a manual wire withdrawal to the source bank account. ”

    I thought it would be faster to follow BlockFi’s advice by asking the bank to proceed as per their instructions,but a nightmare was about to start.
    Shortly after asking the bank to return transfers made by me (no scam or hack involved), they decided that something is not right, ending by closing my bank accounts. PERMANENTLY.
    So BlockFi will not be able to send a Wire Transfer as it will be automatically returned.
    But when they blocked my account, part of the money was in Crypto balances. I wonder what are the terms used to close my positions. Crypto coins rates have changed in the past 70 days. Maybe they will process my original withdrawal requests via crypto? Or will they accept my request to send my money to another bank account in my name? Also I wonder how they could have sent a Wire Transfer to an account that does not accept wires (if they were sent to BlockFi from a NeoBank). Not the case here, but just wonder…

    — UPDATE

    BlockFi’s final word is: “Any funds on the account will remain locked until BlockFi receives a court order to refund the funds”
    $25,000 of my money are locked and they also refuse a refund to the source bank account

    Reply

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