BlockFi Review: Is BlockFi safe, legal and worth your time?

BlockFi
Logo BlockFi

BlockFi Review: Is BlockFi safe, legal and worth your time? Interest Account (BIA) is one of the most competitive cryptocurrency interest accounts on the market. The APY of BTC is 4%, and the APY of stable coins is 7.5%. Company’s recent round D valuation exceeded $3B and attracted the attention of cryptocurrency and traditional non-cryptocurrency audiences.

Let’s explore how BlockFi (and other cryptocurrency interest accounts) works and whether it is worth your time in our BlockFi review.

BlockFi interest account quick summary

Is a privately held New Jersey lending platform established in 2017. BlockFi interest accounts are one of the only cryptocurrency storage options that offer interest rates that are competitive with most non-cryptocurrency accounts.

  1. BlockFi allows users to earn compound interest in BTC, ETH, LTC, USDC, USDT, GUSD, PAXG and other cryptocurrencies.
  2. Ensure the security of cryptocurrency deposits. The cryptocurrency held by BlockFi is held by Gemini Trust Company, which is regulated by the New York Department of Financial Services.
  3. It is available worldwide, outside of the sanctioned or concerned country/region.
  4. Allow withdrawal at any time. However, it is worth noting that users can only withdraw money for free once a month.
  5. It provides easy-to-use registration and all the basic «know your customer» KYC content you may be used to.

 

BlockFi interest accounts
BlockFi interest accounts

 

Compared with more traditional investment accounts, the «high interest» savings account provided by BlockFi is 43 times that of Ally Bank (0.2%) and 4.7 times that of WealthFront (1.82%). However, it is worth noting that BlockFi deposits are not FDIC insurance, so BlockFi accounts should not be considered savings accounts. This is an investment account with unique risks, while the traditional statutory savings account in the bank does not.

  • Minimum deposit: 0 USD
  • Stable currency interest rates: USDC, USDT, GUSD up to 7.5%
  • Bitcoin interest rate: The annual interest rate for deposits within 0.25 BTC is 4%, any BTC between 0.25 and 5 is 1.5%, and 20 BTC and above is 0.25%.
  • Ethereum interest rate: 4% to 5 ETH, 1.5% 5 to 50 ETH, higher than 0.25%.
  • Monthly fee: 0 USD
  • BlockFi referral codes and promotions: When you click and fund a new BlockFi account with at least $500, you can get a USDC bonus of up to $250 (from $25). Terms apply.

BlockFi also offers loans backed by your cryptocurrency, with an LTV ratio of 50%.

The following BlockFi review contains an exclusive interview with the BlockFi team. It has been written and updated regularly, and is mainly for BlockFi interest accounts, not for loan products, BlockFi credit cards or exchanges.

The Team

BlockFi leadership ensemble has decades of experience in the banking world and mainstream financial services. The company claims to take a conservative approach to regulation to position itself favorably for long-term sustainable development and spread.

BlockFi team
BlockFi Team

Principal creator and CEO, Zac Prince has leadership experience at multiple successful technology companies. Prior to starting BlockFi, she led business advancement teams at Orchard Platform, a stockbroker and RIA in the online lending space, and Zibby,

an online consumer lender. Flori Márquez, Co-Founder and VP of Operations, has a background in management alternative loan products. Assisted in building and scaling a $ 125 million portfolio for Bond Street (acquired by Goldman Sachs) as director of portfolio management. He managed all operations, aggregate point of origin, default and litigation.

Director of Hazards Rene Van Kesteren spent well over 15 years at BAML as Managing Director of ML Professional Clearing Prime Brokerage. Developed the structured equity loan interface, including compliance and commitment frameworks. Rene also worked as a stock derivatives trader in Caxton’s Strategic Quantitative Investments Division.

BlockFi Funding: How Much Money Has BlockFi Raised?

BlockFi has raised a total of $ 508.7 million, valuing the young company at $ 3 billion. BlockFi’s capital has increased tenfold over the past year, putting it on track to achieve $ 100 million in capital over the next year. With well over $ 1.5 billion in interface assets and a 0% loss rate on its loan portfolio, BlockFi has announced a strong case to establish itself as a dominant entity in the new global FinTech space.

BlockFi raised the majority of the funds in a $ 350 million Series D, led by new investors such as Bain Capital Ventures, Pomp Investments, Tiger Global and DST Global partners. In an official report, BlockFi said it plans to use the capital inflow to examine more creations in its suite of products, hasten the spread of novel business destinations, and likely fund novel purchase opportunities.

BlockFi raised $ 50 million in its C-led Series. by Morgan Creek Digital, with competing capitalists such as Valar Ventures, Winklevoss Capital, Kenetic Capital, CMT Digital, Castle Island Ventures, SCB 10X, HashKey, Avon Ventures, Purple Arch Ventures, Michael Antonov, NBA player Matthew Dellavedova, and two college donations – Prior to its recent Series C, BlockFi raised $ 18.3 million in Series A funding led by Valar Ventures, backed by Peter Thiel, with participation from Winklevoss Capital, Galaxy Digital, ConsenSys Ventures, Akuna Capital, Avon Ventures , Susquehanna, CMT Digital, Morgan Creek, and PJC.

BlockFi about
– Highlights –

BlockFi has also raised previous rounds from SoFi and Purple Arch Ventures.

The team notes that in the future it expects to raise additional capital to enable continued product development and rapid growth.

As of March 2021, the platform has over 265,000 residential customers and 200,000 institutional customers with reported monthly revenue of $ 50 million in 2021, compared to $ 1.5 million in monthly revenue in 2020.

BlockFi Interest Account Review and BlockFi Interest Rates

BlockFi interest rates are {above | above} the market average for cryptocurrency interest accounts, and {much | quite} {better | higher} , although {inherently | essentially} riskier, than cryptocurrencies in an interest-free exchange or wallet.

  • Bitcoin: 4% annual interest on deposits up to .25 BTC, 1.5% on {any | some} BTC between .25 and 5 , and 0.25% for 20 BTC and above.
  • Ethereum: 4% up to 5 ETH, 1.5% between 5 and 50 ETH, and 0.25% {above | above} that.
  • Litecoin: 3% on the first 750, {later | after} 0.5% on 750 +.
  • Chainlink: 5.5% on all deposits.

All {stable | balanced} coins receive 7.5% interest on all deposits {below | below} 50,000 and 5% on {any | some} higher amount.

  • Gemini Dollars (GUSD): 7.5% interest on all GUSD deposits.
  • USDC Dollars (USDC): 7.5% interest on all USDC deposits.
  • PAX: 7.5% interest on all PAX deposits.
  • PAXG: 2% interest on all PAXG deposits.
  • USDT: 7.5%% interest on all USDT deposits.
  • BUSD: 7.5%% interest on all USDT deposits.

Interest rates are paid in your face cryptocurrency, so take present the volatility of the asset: Your earned cryptocurrency could be has a chance of being greater or less than its equivalent in dollars at the moment of deposit, for that, plan consistently.

However, earning 7.5% on a stablecoin such as Gemini Dollar eliminates some of the volatility risks. $10,000 in GUSD will earn you $750 in GUSD for the full year, and since it’s pegged to the U.S. Dollar, you won’t have to be concerned about its price being drastically different (provided something catastrophic doesn’t happen to Gemini or its GUSD.)

Please note that BlockFi charges flat withdrawal fees. which are subtracted from the total withdrawal amount. Users get 1 free withdrawal per month.

BlockFi Whitdrawal fees
– BlockFi Whitdrawal fees –

How does BlockFi get money?

BlockFi is a spread business that gets money by borrowing capital at a certain rate (the interest rates it pays to users) and lends it a higher rate (the interest rates it gives for BTC loans / ETH / GUSD). A BlockFi blog post notes that the company primarily works with institutional counterparties to provide them with liquidity. These borrowers consist of:

  • Traders and mutual funds seeking arbitrage trading opportunities in a fragmented market. They borrow cryptocurrencies to close erroneous cost gaps between scattered exchanges or markets. Margin traders will borrow to drive their trading tactics
  • Over-the-counter (OTC) market authors connecting buyers and merchants who choose not to transfer on public exchanges, often with a steep profit margin. These parties have to have an inventory of cryptocurrencies on hand to satisfy the demand. Since owning the cryptocurrency is very capital intensive and involves the dangers of cost volatility, OTC market makers will borrow from lenders like BlockFi to simplify their claims.
  • Other businesses that require an inventory of cryptocurrencies to offer liquidity to its users. This category includes companies such as cryptocurrency ATMs that keep most of their cryptocurrency assets in cold storage and require a certain level of liquidity to work every day.

Is BlockFi safe? Is your money safe at BlockFi?

Based on our investigations and conversation, BlockFi passes the security test. Well, it’s as safe as Gemini, your primary custodian. Gemini holds 95% of its assets in cold rooms and 5% in hot wallets insured by Aon.

Gemini is a licensed custodian and is regulated by NYDFS, and recently received SOC2 compliance from Deloitte for their custodial solution.

While BlockFi’s interest rates are {attractive, it is only natural that passionate newbies cryptocurrencies are skeptical, and rightly so, we tend to be a paranoid race. That’s what this Blockfi review is for!

What about the funds of individuals across all these levels? How are they protected?

Even if we trust a company, which there is little indication that BlockFi is not being trusted, the end-of-the-world «what ifs» keep primary real estate in our brains. We did the group. From BlockFi Some Doomsday Questions:

What If BlockFi Is Hacked ?: «Gemini is BlockFi’s primary custodian and BlockFi does not own private keys directly. Keeps the vast majority of its assets in cold rooms and is insured by Aon. Gemini is a licensed custodian and is regulated by NYDFS. They have recently received a SOC2 Type 1 compliance audit from Deloitte for their custody satisfaction. We encourage individuals to read more about Gemini’s security.

«What if Is a user’s account compromised?: “From the beginning, BlockFi has not lost user funds. In the situation where a user’s account is compromised, which our security protocols detected in the past, we freeze the subject’s account for a week. Afterwards, we do a Videoconference with the affected person to verify their identity. Afterwards, we have the possibility to change their email and password, so that they can regain control of their account.

«What happens if everyone suddenly defaults on their cryptocurrency loans?:» When we lend crypto assets to create performance, we have a credit examination development and incredibly thorough hazard management. We only lend primarily to large, well-capitalized institutional borrowers, or to counterparties who are willing to suggest collateral and give them the ability to make margin calls all day long, 7 days a week. »

“What that means is, if we find ourselves lending $ 1,000,000 in BTC to company XYZ, company XYZ guarantees the loan (usually ~ 120%) by offering us ~ $ 1.2 million USD. If the loan entered a margin call and the borrower was unable to provide an aggregate collateral (default), we would use their dollar collateral to purchase cryptocurrencies. » volatility, no losses across our entire loan portfolio. BlockFi is required by NDA to discuss particular borrower / rate terms. »

How do I apply for a BlockFi account?

Signing up for a BlockFi account is very simple and can be done in less than two minutes.

  1. You can start from this BlockFi review. Go to the BlockFi website. With this code, get $10 in bitcoin added to your BlockFi accounts when you sign up, fund your account, and maintain a $100 balance for 30 days.
  2. Go to the alternative «Earn Interest» in the slider on the homepage, or «Get Started» in the menu.
  3. Enter your email and create a password to create your account.
  4. Enter the verification code sent to that email
  5. When you have logged in, select «Deposit» to verify your identity and make your first deposit.
  6. Enter your personal information for verification (part 1)
  7. Upload a form of identification, such as a passport, driver’s license, or ID card, and wait for it to be approved.

How do I get in touch with BlockFi customer support?

If you want to be in contact with customer support, you can reach them at [email protected]. Until now, BlockFi’s support has been very above average. Please let us understand what your experience was like! Is BlockFi Insured?

Is BlockFi FDIC Insured?

Well, since FDIC insurance does not apply to digital assets like cryptocurrencies, your deposits in BlockFi are not covered by FDIC insurance. However, BlockFi uses the partner company Gemini as its escrow service, and Gemini has its insurance for its deposits. Take this with a grain of salt though, as BlockFi has yet to experience a trick to user funds: insurance is only as good as it works and has yet to be accurate (and hopefully never will be! )

BlockFi Interview: Does BlockFi work?

How is it sustainable to lend an interest rate of 4% in BTC?

it directly correlates with market demand in the space (that is, what rate institutions are willing to make payments to borrow particular crypto assets, as it varies from asset to asset). We are forced by the NDAs to discuss particular points (institutions, particular rates, etc.).

«How about the 7.5% interest rate in Gemini USD?

Can you comment on why Gemini?» We can use balanced coin deposits to fund our consumer loans (the average APR is ~ 10-13%) so that we have the ability to make payments more prominent interest to GUSD / balanced coin depositors.

«The BlockFi interest rate is subject to to changes per month, could you argue why?

«Next changes are commonly communicated between 1 and 2 weeks before a new month, which gives users plenty of time to prepare. The interest that we have the possibility of making the Payments is a utility of loan demand. To date, our top-tier BTC interest rate and GUSD interest rate have not changed.

«What happens in the situation of a BTC / ETH fork?

Will the balance of a user also be credited with the forked currency? “Gemini is our custodian and has all the information about what happens in the situation of a forked network.

«How does the future look for BlockFi? How is this review of BlockFi going to be different in a year?

We plan to go through three different development phases in terms of the functionality of our market and the products we are targeting:

  • Stage 1
    • Products for people who already have Bitcoin or another cryptographic asset that matches the BlockFio interface Opportunity to earn interest, request borrowed dollars guaranteed by your crypto
  • Stage 2
    • Expand the addressable market to integrate people who do not yet have cryptocurrencies. o Publish the ability to acquire and sell in the interface and products of category of payments like a credit card of rewards of Bitcoin
  • Stage 3
    • Focus on global spread and expand the addressable market to integrate individuals who may never want to be cryptocurrency or use mostly balanced currencies to provide common banking products on the blockchain rails
BlockFi Visa card
BlockFi Visa card

Final Thoughts: Is BlockFi Legitimate?

All of our indicators for this BlockFi review (history, set, supporting communication, and business model assessment) point to yes: BlockFi is legit. There is very little evidence to suggest otherwise. There are a handful of negative reviews online from disgruntled individuals, but for the most part they seem to be rooted in misunderstandings, such as suspecting that interest was paid in dollars and not BTC / ETH / GUSD.

Whether or not BlockFi deserves it is dependent on your engagement profile. and what you are doing with your cryptocurrency. BlockFi’s interest rates are very competitive for the industry and, for many digital assets, industry leader.

If you’re just sitting in a barter, you can also get the benefits of compound interest. 10 BTC would become 10.6+ BTC in one year, a not insignificant gain of close to $ 36,000 for the year. You could also receive the benefits or the disadvantages of the fluctuation of the price of Bitcoin, so keep that in mind.

However, it deserves to remember that whenever your cryptocurrency leaves your hardware wallets, it is exposed to a greater level of commitment. If BlockFi or Gemini were to experience any catastrophic attack (highly unlikely), your cryptocurrency could be compromised.

BlockFi Referral Code: Receive A $10 USDC Bonus When You Click And Fund A New BlockFi Account With At Least $100.

 

________________ Editor’s Note / Disclaimers: The previous article is not investment advice. This review is written for fun and academic purposes.

 

 

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