I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.
See all posts Frank GogolWhat is BlockFi? The Crypto Exchange Explained
Updated on April 9, 2024
Written by
Written by
Reviewed by
Rohit Mittal
Reviewed by
Rohit Mittal
Rohit Mittal is the co-founder and CEO of Stilt. Rohit has extensive experience in credit risk analytics and data science. He spent years building credit risk and fraud models for top U.S. banks. In his current role, he defines the overall business strategy, leads debt and capital fundraising efforts, leads product development, and leads other customer-related aspects for the company. Stilt is backed by Y Combinator and has raised a total of $275M in debt and equity funding to date.
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At a Glance: BlockFi is a cryptocurrency exchange and lending platform that allows users to trade and earn interest on their cryptocurrencies. It offers services such as the BlockFi Interest Account, where users can earn interest on their holdings, BlockFilets for borrowing against crypto assets, automatic trading, a reward credit card, a partner program, and a mobile app. The platform has advantages such as being based and regulated in the US, no minimum deposit or monthly fee, and attractive interest rates. However, it also has limitations such as no custodial or joint accounts, limited free withdrawals, and potential risks associated with the volatile market and lack of investment guidance.
Nowadays, making money with cryptocurrency has grown quite a bit in popularity. By investing in the right crypto at the right moment, you can see the value of the crypto growing. And one popular option for trading Crypto is BlockFi. But what is this BlockFi, and what can it do for you? Well, you are about to find out in this article.
What Is BlockFi?
BlockFi is pretty much a cryptocurrency exchange, where you may trade and earn interest on your cryptocurrencies. This lending platform is a private New Jersey business, founded in 2017 with the flagship product BlockFi Interest Account (BIA).
The purpose of BlockFi is to be accessed by individuals all over the world. This way, whether you are dealing with traditional currency or digital currency, you should be able to make earnings in interest.
BlockFi allows you to trade several cryptocurrencies, from BTC and ETH to LTC, USDC, and GUSD. The platform is fairly simple to use, which eventually led to an increase in its popularity. To this day, BlockFi has raised a total of $158.7 million, reaching Series C.
How Does BlockFi Work?
BlockFi is a spread business that makes for a more inclusive financial service. This means that it works by borrowing money at a certain interest rate and then offering the same money on a loan at a higher rate. Users will borrow cryptocurrency that has close mispricing, selling it once more when the time is right. This action, used with the right strategy, can earn you money in interest over time.
BlockFi works on a reward system. As you are borrowing and exchanging, you earn a certain percentage of money from that exchange. The earnings will fall into the BlockFi reward accounts, which will be connected to visa credit cards.
BlockFi Key Features and Services
BlockFi has several services and features that you may reap. Here is what the platform offers its users:
BlockFi Interest Account
Earning interest for the funds that you have in holding is a good way to make some passive income – and BlockFi can help you with that. You just have to open a BlockFi interest account. With this account, you can earn anything between 3% and 8.6% interest.
Bitcoin has a volatile value, and this applies to pretty much any cryptocurrency out there. This means that as the value of the currency will increase, so will the earnings. The interest will also accrue monthly on your account, which will allow you to earn extra cash.
BlockFilets
If you wish to borrow against your portfolio, BlockFi allows you to use BlockFilets. Simply put, with BlockFilets, you may borrow USD against crypto assets you may have in your portfolio.
As you will be borrowing the money rather than selling, you won’t have to report the resulting capital gains. In the end, this should work in your favor, as you will save on tax money. It might be considered as “debt,” but the feature makes it easier for your budget.
Automatic Trading
Not everyone is a trading expert. Even if they do know their trades, it doesn’t mean that they have the time for them. When dealing with cryptocurrency, you need to carefully watch the changes in the market and make your daily trades. This is the only way for you to not fall behind, causing you to lose interest.
That being said, BlockFi resolves this problem with its automatic trader. Users may automatically set it to buy cryptos at the preferred rate (some prefer daily, others monthly). This way, your interest rate may continue to grow steadily with time.
Reward Credit Card
BlockFi is probably the first platform of this type to ever release a credit card for Bitcoin Rewards. This visa card will earn its users around 1.5% in their purchases, using the Bitcoin value. Said interest will be sent straight into your BlockFi interest account, which will allow you to save money in the long run.
These reward credit cards have only begun to ship in spring 2021, which means that not every country may have gotten them. Still, as a client, you can request the card and then receive credit approval.
Partner Program
BlockFi also allows you to become a partner. This means that for every referral that you make through your content, you will receive a certain commission. In a way, you may see this as an affiliate program, where you may earn up to 0.5% on the deposits. There is also a Refer-a-Friend program for those who do not want to go full partners.
Mobile App
To promote convenience, BlockFi also provided its users with a mobile app. In terms of functionality, the app itself is not very different from the website. You may easily trade and borrow crypto and currencies from both of them. The app can be downloaded on both iOS and Android devices, giving you access to all the features.
Pros and Cons of BlockFi
BlockFi has some pros and cons that everyone may want to be aware of. This will help you determine whether BlockFi is a good option for you or not.
Pros
BlockFi has a series of advantages that its users may be able to enjoy. These advantages include the following:
- It is based and regulated within the United States
- It does not ask for a minimum deposit or a monthly fee
- No commission fees are charged
- The interests earned are quite advantageous
- It is available throughout most of the world, aside from a few countries that were either watch-listed or sanctioned
You may earn anything between 3% and 8.6% in compound interest, depending on the currency type and its fluctuation on the market. Needless to say, if the cryptocurrency gains value, you will start reaping more profit in interest.
The crypto trading platform is a good option for both beginner and intermediate investors, who do not have much experience in trading cryptocurrency. It can close the gap between crypto trading and traditional finance, making the trading process much smoother and easier to understand.
Cons
BlockFi may have advantages, but there are also a few downsides. This is what users should know about BlockFi before creating the account:
- There are no options for a custodial or joint account
- Free withdrawals are limited, as you can withdraw for free only once a month
- Should the bank fail, your savings are not protected
- The APU is fairly volatile
- Withdrawal transfers are slow
While BlockFi does attempt to streamline the process, there are still some areas where the platform is lacking – and might appear, as a result, fairly risky. While the platform does cater to beginners, they won’t have much investment guidance. This means they will have to find their strategy information somewhere else, which kind of puts them at risk.
Read More
- How to Make Money with Cryptocurrency
- How to Withdraw from Binance
- How to Transfer From Coinbase to Coinbase Pro
- How to Transfer from Coinbase to Binance
- How Does Cryptocurrency Gain Value?
- How to Read Crypto Charts
The Bottom Line
BlockFi is a good option for you if you are a beginner in terms of cryptocurrency investments. The platform is straightforward, and it allows you to borrow against your holdings. This means that you can earn interest without worrying too much about taxes.
Frank Gogol
I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.