BlockFi Review: Is BlockFi Safe, Legit, and Worth Your Time?
With 6% annual returns on BTC and 8.6% on Stables, the BlockFi Interest Account (BIA) is one of the most competitive crypto-currency interest accounts on the market. Valued at over $3 billion in the latest Series D, the company is attracting the attention of both crypto-currencies and traditional non-crypto audiences.
Let’s take a look at how BlockFi (and other crypto-currency interest accounts) work and if it’s worth your time in our BlockFi review.
Quick reference to the number of percents in BlockFile
Founded in 2017, BlockFi is a private lending platform based in New Jersey. BlockFi’s interest-bearing account is one of the few cryptocurrency storage options that offers competitive interest rates compared to most non-interest-bearing cryptocurrency accounts.
BlockFi allows users to earn compound interest on cryptocurrencies such as BTC, ETH, LTC, USDC, USDT, GUSD and PAXG.
This ensures the safety of deposits in cryptocurrencies. BlockFi’s cryptocurrency holdings are held by Gemini Trust Company, which is regulated by the New York Department of Financial Services.
It is available worldwide, outside sanctioned and control-listed countries.
This allows you to withdraw money at any time. However, it should be noted that users only receive one free recording per month.
It offers simple and easy registration, with all the basic know-your-customer (KYC) features you’re probably used to.
BlockFi is a pretty good option for people who own entry-level or intermediate-level digital assets. The platform now offers direct ACH deposits, which require a minimum of crypto knowledge.
Screenshot of the BlockFi interest calculator. With 100,000 USDC you can earn 8,600 USDC in 1 year.
Compared to more traditional investment accounts, BlockFi offers 43 times the interest of a high-interest savings account at Ally Bank (0.2%) and 4.7 times that of WealthFront (1.82%). However, it should be noted that BlockFi deposits are not FDIC insured, so a BlockFi account should not be considered a savings account. It is an investment account with a unique set of risks that traditional bank savings accounts do not have.
BlockFi also offers loans secured by your cryptocurrency with a 50% LTV ratio.
The following BlockFi report includes an exclusive interview with the BlockFi team. It was written and regularly updated primarily for the BlockFi interest account, and not for credit products, the BlockFi credit card or the stock market.
BlockFi’s management has years of experience in the traditional world of financial services and banking. The company says it is taking a cautious approach to regulation to position itself for long-term sustainable growth and expansion.
BlockFi management team, including founders Zach Prince and Flory Marquez.
Founder and CEO Zac Prince has executive experience in many successful technology companies. Prior to founding BlockFi, he led the business development teams at Orchard Platform, a brokerage and RIA in the online lending space, and Zibby, an online consumer lender.
Co-founder and Vice President of Operations, Flori Marquez, has experience in managing alternative lending products. As head of portfolio management, she helped build and expand a $125 million portfolio for Bond Street (acquired from Goldman Sachs). Management of all transactions, including initiation, default and litigation.
Renee Van Kesteren, Chief Risk Officer, has been with BAML for over 15 years as Managing Director of ML Professional Clearing Prime Brokerage. It has created a platform for structured equity credit, including a risk management and compliance framework. Rene has also worked as an equity derivatives trader in Caxton’s Strategic Quantitative Investments division.
Block financing : How much money did BlockFuy raise?
BlockFi has raised a total of $508.7 million, valuing the startup at $3 billion. BlockFi’s revenue has increased tenfold in the past year, meaning the company could reach $100 million next year. With over $1.5 billion in assets on its platform and a 0% loss on its loan portfolio, BlockFi has a good chance of establishing itself as a dominant entity in the emerging and growing FinTech space.
Recently, BlockFi raised the lion’s share of $350 million in a Series D funding round led by new investors Bain Capital Ventures, Pomp Investments, Tiger Global and partners DST Global. BlockFi said in a press release that it plans to use the influx of capital to explore new innovations in its product line, accelerate entry into a new market and potentially fund new acquisition opportunities.
BlockFi has raised $50 million in its Series C round led by Morgan Creek Digital. Investors include Valar Ventures, Winklevoss Capital, Kenetic Capital, CMT Digital, Castle Island Ventures, SCB 10X, HashKey, Avon Ventures, Purple Arch Ventures, Michael Antonoff, NBA player Matthew Dellavedova and two university foundations.
Prior to the recent Series C round, BlockFi raised $18.3 million in a Series A funding round led by Peter Thiel, with participation from Winklevoss Capital, Galaxy Digital, ConsenSys Ventures, Akuna Capital, Avon Ventures, Susquehanna, CMT Digital, Morgan Creek and PJC.
BlockFi Fundraising 15. March 2021. (Source: Crunchbase)
BlockFi also benefited from initial funding rounds from SoFi and Purple Arch Ventures.
The team notes that it plans to raise additional capital in the future to enable further product development and rapid growth.
As of March 2021, the platform has more than 265,000 retail customers and 200,000 institutional customers, with reported monthly revenue of $50 million in 2021, up from $1.5 million in monthly revenue in 2020.
Overview of Block Fi interest accounts and Block Fi interest rates
BlockFi’s interest rates are above average in the market for interest-bearing cryptocurrency accounts and much better than cryptocurrencies on an interest-free exchange or in a wallet, which is inherently riskier.
Bitcoin: 6% APR on deposits up to 1 BTC, 2% on all BTC from 1 to 20, and 0.5% on 20 BTC and above.
Ethereum: 5.25% up to 100 ETH, 2% between 100 and 1000 ETH, and 0.5% above that.
Litecoin: 6.5% on all deposits.
Chain: 5.5% on all deposits.
Gemini (CISD): 8.6% on all deposits in CISD.
US dollars (USDC): 8.6% on all USDC deposits.
PAKS: 8.6% on all PAKS deposits.
PAXG: 5% on all PAXG deposits.
USDT: 9.3% on all USDT deposits.
BUSD: 8.6% on all USDT deposits.
The interest is paid in nominal crypto currency. For example, you earn 0.06 BTC for 1 BTC throughout the year, as long as the interest rate remains the same.
If you’ve been familiar with cryptocurrencies for a while, you’re no stranger to the ins and outs of owning a volatile asset. Your 0.06 BTC may be worth more or less than the dollar equivalent at the time of deposit, so plan accordingly.
However, an 8.6% gain on a stable fund like Gemini eliminates some of the volatility risk. With $10,000 in CISD, you get $860 for the whole year. And because it’s pegged to the US dollar, you don’t have to worry about the price changing dramatically (assuming nothing catastrophic happens to the Twins or their CISD).
Please note that BlockFi charges a fixed withdrawal fee, which is deducted from the total amount of the withdrawal. Users get one free recording per month.
How does BlockFi make money?
BlockFi is a distribution company that makes money by lending capital at a certain interest rate (the interest rate it pays to users) and waiving a higher interest rate (the interest rate it offers on BTC/ETH/GUSD loans). BlockFi’s blog post states that the company primarily works with institutional counterparties to provide them with liquidity. These borrowers consist of. :
Traders and investment funds seeking arbitrage opportunities in a fragmented market. They borrow cryptocurrencies to bridge price differences between exchanges or dissimilar markets. Margin traders borrow to finance their trading strategies.
Creators of OTC markets that bring together buyers and sellers who prefer not to trade on an exchange, often at a significant premium. These parties need to store crypto-currency to meet demand. Because owning cryptocurrencies is capital intensive and carries risks of price volatility, OTC market makers borrow from lenders like BlockFi to meet their needs.
Other companies that need to hold cryptocurrencies to provide liquidity to their customers. This category includes businesses such as cryptocurrency ATMs, which store most of their cryptocurrency assets in cold storage and require a certain level of liquidity to operate on a daily basis.
Is BlockFY safe? Is your money safe on BlockFi ?
According to our research and interviews, BlockFi passed the security test. That’s about as safe as the Twins are, his head custodian. Gemini keeps 95% of its assets in cold storage and 5% in hot purses insured by Aon.
Gemini is a licensed custodian and is supervised by the NYDFS. Gemini recently received SOC2 certification from Deloitte for its storage solution.
While BlockFi’s interest rates are attractive, it’s natural for crypto fans to be skeptical – and rightly so, we tend to be a paranoid breed. That’s what this blokfi magazine is for!
What happens to user resources during each of these scenarios? How are they protected?
Even if we trust a company with little evidence that BlockFi is untrustworthy, the doomsday scenario occupies a prominent place in our brains.
We asked the BlockFi team some questions about the apocalypse:
What happens if BlockFi gets hacked? Gemini is BlockFi’s primary custodian and BlockFi does not own the private keys directly. The twins keep most of their belongings in a cold room and are insured by Aon. Gemini is a licensed custodian and is supervised by the NYDFS. They recently received a SOC2 Type 1 audit from Deloitte for their storage solution. We recommend that users inform themselves about the safety of Gemini.
What happens if a user account is compromised? BlockFi has not lost any money from customers since its inception. If a user account has been compromised and our security protocols have intercepted it in the past, we will suspend the user account for one week. We then organise a video conference with the person concerned in order to verify their identity. We can then change their email address and password to give them back control of their account.
What happens when everyone can’t pay back their crypto-currency loans? When we lend crypto assets for yield, we have a very thorough risk management and credit analysis process. We only lend to large, well-capitalized institutional borrowers or to counterparties that are willing to provide collateral and ensure that the collateral is marginally available 24 hours a day.
In other words, if we make a $1 million loan to XYZ Company, XYZ Company guarantees the loan (usually ~120%), giving us ~$1.2 million. If the loan is subsequently marginalized and the borrower cannot provide additional collateral (defaults), we use their dollar collateral to purchase cryptocurrencies.
We have actively made loans since January 2018, including during several periods of high volatility, with no losses in our loan portfolio. BlockFi requires NDAs to negotiate borrower-specific terms/rates.
How do I register for a BlockFi account?
Registering a BlockFi account is quite simple and can be done in less than two minutes.
You can start right away with this BlockFi review. Go to the BlockFi website. With this code you can get up to $500 on your deposit as a sign-up bonus, starting at $25 when you deposit at least $500.
Go to the Earn Interest option in the home page slider or in the Home menu.
Enter your email address and password to create an account.
Enter the verification code that was sent to this email address.
After logging in, select Deposit to verify your identity and make your first deposit.
Enter your personal data for verification (part 1).
Upload an ID such as a passport, driver’s license or ID card and wait for approval.
How do I contact BlockFi support?
If you would like to contact customer service, you can reach them at [email protected].
So far, BlockFi’s support for is well above average. Let us know how your experience differs!
Is BlokFi insured?
Is BlockFi insured by FDIC? Well, since FDIC insurance does not cover digital assets like cryptocurrencies, your deposits at BlockFi are not covered by FDIC insurance. However, BlockFi uses a subsidiary of Gemini as its custodian, and Gemini has its own insurance for its deposits. However, this information should be taken with a grain of salt, as BlockFi has no experience hacking user funds yet – insurance is only good if it works, and that has yet to be established (and hopefully never will!).
How feasible is the proposed 6% interest rate for BTC?
The interest we can pay is based on the return we can get on the loan. This is directly related to market demand in this area (i.e. the interest rates that institutions are willing to pay to borrow certain crypto assets, as these vary from asset to asset). We are required to discuss the details (settings, specific rates, etc.).
How about an interest rate of 8.6% for twins? Can you say why twins?
We can use stabilization deposits to fund our consumer loans (average APR ~10-13%), so we can afford to pay higher interest rates on CISD / stablecoin deposits.
The BlockFi interest rate can change every month, can you explain why?
Upcoming changes are usually announced one to two weeks before the new month, giving customers ample time to prepare. The interest we can pay depends on the demand for the borrowed funds.
Base rates of BTC and CISD have not changed to date. You can read more about why we have variable rates and how the credit market works here and here.
What happens in the event of a BTC/ETH split? Is the forked document also credited to the user’s balance?
The twins are our guardians, and they have all the information about what happens in a twin net case. See their user agreement for more information on this.
What is the future of BlockFi? How will this BlockFi evaluation evolve in one year?
We are confident that we will become a very large and successful company, offering financial services on a global scale to millions of customers. We expect to go through three distinct growth phases, depending on our target market and our products:
Products for people who already own bitcoins or another cryptocurrency asset supported by the BlockFi platform.
Ability to receive an interest-bearing credit in USD, backed by your cryptographic key.
Expand the reachable market to include people who don’t already own cryptocurrencies.
Introducing the ability to buy and sell on the platform, as well as payment category products such as bitcoin credit card rewards.
Focus on global expansion and expand the market with users who may never want to own a cryptocurrency.
Heavyweight stables offer traditional banking products on blockchain rails.
BlockFi’s newest product is the BlockFi credit card (Source: BlockFi).
Final thoughts: Is BlockFy ready?
All of our indicators for this BlockFi survey (history, team, supporting communication, business model assessment) point to a yes: BlockFy is legal. There is very little evidence to suggest otherwise. There are some negative reviews online from disgruntled users, but they seem to be mostly based on misconceptions, such as. B. the assumption that interest will be paid in US dollars and not in BTC/ETH/GUSD.
Whether BlockFi is worth it or not depends on your risk profile and what you do with your cryptocurrencies. BlockFi’s interest rates are quite competitive for the industry and even the best in the industry for certain digital assets.
If it’s only in the stock market, you might as well reap the benefits of compound interest. 10 BTC would turn into 10.6+ BTC per year, which is a significant profit of about $36,000 per year. You can also gain or lose from bitcoin exchange rate fluctuations, so keep that in mind.
However, it’s worth remembering that your cryptocurrencies are at higher risk every time they leave your physical portfolios. If BlockFi or Gemini gets a catastrophic hack (highly unlikely), your crypto currency is at risk.
Our test of BlockFi was positive. After speaking with the team and customer support, we’re excited to see how BlockFi settles into this space. Projects like BlockFi simply provide cryptocurrency investors with much-needed revenue diversification, something that highly sophisticated HODLers have lacked in recent years.
Central value of the coins
BlokFi Reference code: Receive a $25 USDC bonus when you click and deposit into a new BlockFi account with at least $500. Conditions apply.
Editor’s note/warning: The above article is not investment advice. This review is written for educational and entertainment purposes.