There are plenty of ways to make money from your cryptocurrency, including lending, crypto savings, or investment accounts. BlockFi is one of the available solutions to help you earn or use cryptocurrency. Take a closer look at the platform in our BlockFi review.
Basics of Crypto Lending and Borrowing
Crypto lending and borrowing give you the chance to make money from cryptocurrency that you are not actively using. Instead of letting your crypto sit in your wallet, you can lend it to someone who only needs cryptocurrency for a short period. In exchange, you earn interest.
The opposite is also possible. If you need cryptocurrency but don’t need to keep it long-term, you could borrow cryptocurrency from someone or a platform. You would pay a fee or interest rate in exchange for this service.
What Is BlockFi?
BlockFi is a cryptocurrency platform that offers the ability to earn interest, borrow cash using cryptocurrency, and trade cryptocurrency. The platform prides itself on being low cost and not having any hidden fees. If you use it to trade, the trades are completed instantly.
BlockFi offers a range of services, several of which you don’t usually find on a single platform. Our BlockFi review found that you can earn up to 8.6% interest with the BlockFi Interest Account (BIA). The interest compounds daily but is paid out monthly. It also doesn’t have any minimum balance, something we appreciate in our BlockFi interest account review.
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BlockFi also offers BlockFi Trading Accounts that let you buy, sell, and exchange cryptocurrencies. Trades are instant, and the prices are competitive.
There is also a BlockFi Loan Account. Our BlockFi loan review found that the interest rate on loans can be as low as 4.5%, although rates can also be higher. This type of account lets you deposit cryptocurrency and borrow cash against it. Essentially, BlockFi offers cash loans where your crypto serves as collateral.
BlockFi also has plans to launch a credit card without annual fees or foreign transaction fees. That card will give you 1.5% cash back in Bitcoin with every purchase. However, the fine print notes that the fees are subject to change. This means that our BlockFi review cautions that the card may end up with fees or restrictions that are not currently obvious.
How Does BlockFi Make Money?
BlockFi makes money in several ways. The primary method we found during the BlockFi review is via spreads on the BlockFi Trading accounts. Every time you buy or sell cryptocurrency, the platform makes a small profit from the spreads between the rates they give you and the market rates they facilitate.
Although it isn’t clear, BlockFi may also make money from the interest accounts. Preparing for our BlockFi interest account review showed that the interest rate you earn never goes above 8.6%. Given that BlockFi is in control of your cryptocurrency during that time and other platforms offer variable rates that can be much higher, this seems like another area where BlockFi makes a profit.
Essentially, BlockFi uses the cryptocurrency deposited in interest accounts to make a profit via its own methods. Then, it gives account holders just a fraction of that profit. Keep in mind that most platforms will use a similar method. The difference to think about when asking, “Is BlockFi legit?” would be how much of the profit BlockFi shares with you via interest.
Is BlockFi Legit
Yes, BlockFi is legit. Our BlockFi review confirms that the company is based and regulated in the United States. This should reassure you about its legitimacy.
Risks With BlockFi
Most people searching for a BlockFi review want to know about the risks of using this platform. BlockFi does not entail more risks than other similar platforms.
If you use BlockFi for trading cryptocurrency, you will always have to deal with the volatility of cryptocurrency and the associated risk.
If you use BlockFi for the interest account, the main risk would be that you may be missing out on better opportunities to earn profits. For example, BlockFi offers interest rates of up to 8.6%; “up to” are the keywords. When we reviewed the BlockFi rates, we noticed that most cryptocurrencies have lower rates. While most other platforms use similar terminology, it is important to note that you could get better rates elsewhere.
There is also the fact that anytime you deposit your cryptocurrency on a platform, there is a risk. Remember that cryptocurrency is not insured by the FDIC like fiat. Additionally, all cryptocurrency transactions are final. This means that if something were to happen to BlockFi, you could lose your cryptocurrency.
Is Your Money Safe on BlockFi?
That last point is the biggest consideration to keep in mind when you wonder if BlockFi is safe. The potential for a hack is particularly concerning for some people, given that the platform has been hacked in the past. That hack happened in May 2020. While no funds were lost, some people still feel that it was too close of a call for them to be comfortable.
What Haru Invest Can Do for You – Let Experts Handle Your Crypto
If, after reading the BlockFi review, you find yourself searching for an alternative with better interest rates and more security, consider Haru Invest.
Haru Earn Plus offers interest rates between 7.6% and 15.5%. Given that BlockFi only offers up to 8.6%, this is a significant improvement. Haru Earn Plus does involve a lockup period, but you get the freedom to choose exactly how long you want it to be. If you choose a longer lockup period, you get a higher interest rate. If you prefer no lockup period, Haru Earn is a good alternative.
In addition to the higher interest rate offer, Haru is more secure, stable, and easy to use. The platform gives biweekly notice for variations in interest rates. You can even look at the past weekly earn rates to see how consistent and stable they are.