Want to start earning with BlockFi? Open an account here.
The decentralized finance (DeFi) explosion in 2020 was driven in a large part by decentralized applications (DApps) with astonishing annual percentage yield (APY) estimates for cryptocurrency staking. Some of the newer platforms advertised 1000%+ yearly interest, but of course, these unreal estimates eventually nosedived towards more reasonable figures.
The insane APYs offered by DApps have mostly collapsed, and many investors are moving to centralized platforms like BlockFi. Interest-bearing accounts are not the only service BlockFi provides. You can also purchase cryptocurrencies on the platform and even get a USD loan backed with your tokens. BlockFi and Binance Exchange’s tweaked copy of Ethereum, Binance Smart Chain (BSC), prove that complete decentralization isn’t always the best solution.
What Is BlockFi?
BlockFi is a cryptocurrency exchange and lending platform available in nearly every U.S. state and most countries worldwide. Few platforms apart from BlockFi have both digital asset trading and lending services. It’s probably the closest thing to a cryptocurrency bank you can find. Unlike regular banks, however, it offers high interest rates on your holdings.
You can fund your BlockFi account with USD via an ACH deposit or wire and purchase supported cryptos. Immediately after your purchase, you start earning passive income, compounded monthly. Compound interest helps grow your wealth, especially when the staked assets are rising in value too.
BlockFi employs immense security measures to keep its users’ cryptos secure. The platform’s primary custodian is Gemini, one of the safest cryptocurrency exchanges in the world. Gemini keeps most of the cryptos it custodies in air-gapped (offline) cold storage.
Cold storage is the safest storage solution because it is basically invulnerable to cyberattacks and hardened against physical attacks as well. BlockFi also lets you activate 2-factor authentication on your account to prevent login breaches. Your money is safe and always growing when it’s in your BlockFi Interest Accounts.
Services on BlockFi
BlockFi’s flagship service is its BlockFi Interest Accounts. Users can deposit 12 different cryptocurrencies to earn interest. Hundreds of different platforms offer interest for crypto staking, but most lack security and consistency compared to BlockFi. Interest rates vary significantly depending on the asset staked and the amount staked. For example, BlockFi offers 4% APY for Bitcoin deposits less than 0.25 BTC, and between 0.25-5 BTC, it decreases to 1.5%. Take a look at BlockFi’s breakdown on each asset’s rate on its website.
BlockFi has an amazing loan service where users can put up cryptocurrencies as collateral and get a 12-month term loan in USD or stablecoins. This feature can be extremely useful because you can unlock liquidity in USD or stablecoins without having to sell or swap your cryptos, which are both taxable events.
It is a method somewhat similar to how billionaires with their money locked away in stock shares live lavish lifestyles and push back taxes without selling their positions. Banks offer them loans backed with some of their shares, and they only have to sell a few off to pay the interest.
BlockFi’s loans require at least a 50% loan to value (LTV) ratio, which means you need to collateralize twice the amount of the loan or more. Interest on the loan decreases as the LTV decreases, and a 20% LTV loan will currently cost about 4.5% (in the U.S.).
You can also sign up for the waitlist for BlockFi’s Bitcoin credit card. Purchases with the card will earn you 1.5% back in Bitcoin automatically invested into your BlockFi Interest Account.
Using the card incurs no annual or foreign transaction fees. The only possible fees arise from late payments. When you sign up for your card, you get an extra 1.5% on purchases in Bitcoin for the first 3 months. All of BlockFi’s services can be useful to the average crypto investor, and everyone should at least check it out.
Best Interest Rates on BlockFi
The interest rate you earn depends on which cryptocurrency you decide to stake on BlockFi. Let’s take a look at how much annual interest you can earn with different cryptocurrencies through BlockFi’s
USD Coin (USDC) at 7.5% APY (for up to 50,000 USDC): USDC, a stablecoin pegged to the USD, is fully backed 1:1 with USD and issued by regulated financial institutions. It is touted as one of the safest stablecoins to own.
Tether (USDT) at 7.5% APY: USDT is the most popular and very first stablecoin with a massive $61.8 billion market capitalization.
Dai (DAI) at 7.5% APY: DAI is another popular stablecoin minted by the MakerDAO protocol. It’s backed by Ethereum instead of USD.
GUSD, BUSD and PAX at 7.5% APY: All 3 are USD stablecoins backed 100% with USD. GUSD is made by Gemini, and BUSD (on the BSC) and PAX are from Paxos Trust Company LLC.
Litecoin (LTC) at 4.5% APY: The developers of Litecoin said that their intention was for Litecoin to be the silver to Bitcoin’s gold. It uses a different mining algorithm and transactions with it are faster.
Bitcoin (BTC) at 4.5% APY: Bitcoin is the largest crypto by market capitalization and acts as a store of value for millions of people around the world.
Ethereum (ETH) at 4% APY: Ethereum is the second-largest crypto and is the home to decentralized finance platforms using smart contracts.
High volatility may be one of the most well-known aspects of the cryptocurrency market. Generally, cryptocurrencies have lower available liquidity and fewer measures to reduce volatility than traditional markets. Breaking news related to cryptocurrencies that might seem trivial if it were about the stock market can be massively influential.
Celebrities like Elon Musk can crash or pump the entire cryptocurrency market with 1 tweet as he proved in May. Unlike fiat currencies, cryptos can also be banned by entire countries, significantly lowering the possible number of current and future users.
BlockFi pays its users interest on their cryptos by lending them to institutions for higher rates. When volatility is high, institutions may not want to borrow as much due to the increased risk. BlockFi has to adjust interest rates during stretches of high volatility in the markets to respond to decreased demand.
For example, on June 25, 2021, it lowered rates on a few supported cryptos by between 0.5% and 2% after Bitcoin dropped to about $31,000. BlockFi’s interest rates are still some of the highest in the market.
Track Your Cryptocurrency Portfolio
Many cryptocurrency investors like to check their portfolios often, especially when volatility is high. The market is always open and prices can move extremely quickly. In the age of DeFi, crypto portfolios are often decentralized across multiple platforms. It can be frustrating to check all your wallets, exchanges and DApps, just to figure out how much your coins are worth.
CryptoPro Portfolio Tracker has a perfect solution for this problem, and it’s available on iOS and Mac computers. It lets you track your favorite cryptos with the option to import account information from wallets and cryptocurrency exchanges. You can also track your precious metals and fiat currency holdings in the app. You could save a lot of time by concentrating all your portfolios into 1 powerful but simple interface.
Where to Buy Cryptocurrency
Nowadays it seems like there are too many fantastic cryptocurrency exchanges to choose from. Benzinga has great breakdowns of the advantages and disadvantages of each of the top trading platforms. The best exchanges we have found include Coinbase (NASDAQ: COIN), Gemini, eToro, Crypto.com and Voyager. These exchanges offer trading with Bitcoin, Ethereum and most of the other cryptos supported by BlockFi Interest Accounts.
After you set up your exchange account, you need to verify your identity before you can start trading. This process usually entails providing your address, Social Security number and a picture of your driver’s license or other valid ID. Once your identity is verified, you can purchase crypto and send it over to BlockFi to start earning interest.
Coinbase is one of the Internet’s largest cryptocurrency trading platforms. From Bitcoin to Litecoin or Basic Attention Token to Chainlink, Coinbase makes it exceptionally simple to buy and sell major cryptocurrency pairs.
You can even earn cryptocurrency rewards through Coinbase’s unique Coinbase Earn feature. More advanced traders will love the Coinbase Pro platform, which offers more order types and enhanced functionality.
Though Coinbase doesn’t offer the most affordable pricing or the lowest fees, its simple platform is easy enough for complete beginners to master in as little as a single trade.
- New cryptocurrency traders
- Cryptocurrency traders interested in major pairs
- Cryptocurrency traders interested in a simple platform
- Simple platform is easy to operate
- Comprehensive mobile app mirrors desktop functionality
- Coinbase Earn feature rewards you with crypto for learning about available coins
- Higher fees than competitors
eToro, headquartered in Cyprus, England and Israel, has provided forex products and other CFD derivatives to retail clients since 2007. A major eToro plus is its social trading operations, including OpenBook, which allows new clients to copy trade the platform’s best performers. Its social trading features are top notch, but eToro loses points for its lack of tradable currency pairs and underwhelming research and customer service features
- U.S. based cryptocurrency traders
- Social and copy traders
- Simple user interface
- Community engagement and following other traders
- 25 cryptocurrencies
- Expansive network of social trading features
- Large client base for new traders to imitate
- U.S. traders can only buy cryptocurrency
Gemini is a cryptocurrency exchange and custodian that offers investors access to 26 coins and tokens. Founded in the US, Gemini is expanding globally, in particular into Europe and Asia. Offerings include both major cryptocurrency projects like Bitcoin and Ethereum, and smaller altcoins like Orchid and 0x.
Gemini is 1 of the only brokers with multiple platform options based on skill level. New investors will love the streamlined interface of Gemini’s mobile and web apps, while advanced investors might appreciate all the tools that come with ActiveTrader.
In addition to a host of platform choices, Gemini users also have access to insured hot wallets to store tokens without worrying about digital asset theft. Learn more about what Gemini can do for you in our review.
- New investors looking for a simple mobile and web app
- Experienced investors who need a more advanced platform with more tools
- Users looking for a 1-stop-shop to buy, sell and store all of their coins
- Easy and quick signups — can get started in as little as a few minutes
- Multitude of platforms to accommodate traders of all skill levels
- Hot wallets include insurance to protect your from theft and hacking attempts
- Charges both a commission and a convenience fee for users buying and selling through the desktop or mobile app
Should you Use BlockFi?
BlockFi is a fantastic platform for investors looking to earn passive income on the side with their cryptocurrencies. Investors who only hold their cryptos without staking or lending them for interest often lose out massively over time. BlockFi provides 1 of the best tools in finance, compound interest. It’s useful because it grows your crypto gains at no cost.
Prospective risk-averse users can also earn up to 7.5% on stablecoins pegged to the USD. You don’t even need to have exposure to volatile cryptos to earn far higher interest than regular bank accounts. Anyone looking for a platform with crypto staking for great rates, crypto collateralized loans and more should absolutely check out BlockFi.
Benzinga crafted a specific methodology to rank cryptocurrency exchanges and tools. We prioritized platforms based on offerings, pricing and promotions, customer service, mobile app, user experience and benefits, and security. To see a comprehensive breakdown of our methodology, please visit see our Cryptocurrency Methodology page.
Gemini builds crypto products to help you buy, sell, and store your bitcoin and cryptocurrency. You can buy bitcoin and crypto instantly and access all the tools you need to understand the crypto market and start investing, all through one clear, attractive interface. Gemini Crypto Platform offers excellent account management options. You can manage your account at a glance, view your account balance 24-hour changes and percent changes. Get started with Gemini now.