What is BlockFi and How Does it Work?

Estimated reading time: 5 minutes

BlockFi is a centralized crypto-finance company from the United States. It was founded in 2017. It provides several financial services for institutional and private clients.

What Is BlockFi and Some Frequently Asked Questions

What are BlockFi Interest Accounts?

A BlockFi Interest Account (BIA), allows its customers to earn interest on their cryptocurrency, up to 7.5% per year. The earnings are then deposited directly into each individual account. You can choose to earn interest in the same cryptocurrency (ie, Bitcoin earns interest in Bitcoin, Ethereum earns interest in Ethereum, etc.) or consolidate all your cryptocurrency interest into one (ie, Bitcoin, Ethereum, Litecoin, etc. all earn in interest in Bitcoin.)

Not ready to risk it all on Bitcoin yet? BlockFi lets you earn interest on stablecoins such as USDC, USDT, and GUSD. See more on stablecoins later in this article.

How Does BlockFi Work?

BlockFi lends its users’ money to institutional and corporate borrowers, who pay BlockFi an interest rate, which it then returns to its customers.

Users’ deposits are prioritized above other business shares to decrease risk, but they are not insured by the FDIC or SIPC.

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What are BlockFi’s Other Services?

1. Borrowing Services

BlockFi allows users to deposit cryptocurrency as collateral and borrow money up to 50% of the collateral value in US dollars. With only an annual percentage rate of 4.5%.

Users could get cash very quickly using this service without having to trade their cryptocurrency at the same time avoid trouble, costs, and taxable events.

2. Trading Services

Zero % trading Fees. Yes, there is no fee for availing of the trading services in cryptocurrency. But, there are complaints by some users that even if this may be true, The final exchange rate isn’t as good as it might be.

3. Refer-a-Friend Services

The Refer-a-Friend service allows you and your friend to receive $10 each in Bitcoin (BTC) for each individual who registers using your referral code and deposits $100 or more into their BlockFi Interest Account (BIA).

As if that wasn’t enough, You’ll start earning a $20 BTC bonus for any additional referrals after the 5th referral. After their qualifying deposits, your recommended friends will continue to receive $10 BTC incentives.

All you need to do is sign into your BlockFi account. Click the “Refer A Friend” on the upper right button on your dashboard. And then send the URL link to your friend and ask them to use that whenever they register.

What is the BlockFi Partner Program?

Another way to earn passive income is by becoming a BlockFi Partner. You just have to maintain a $100 plus the crypto balance as a first-ever depositor up to the 14th of the month for a certain time frame to remain eligible for the program.

All you need to do is to introduce the connecting your audience to cryptocurrency financial tools.

What is a Credit Card Advantage in BlockFi?

Imagine using your credit card and earning Bitcoin at the same time. Yes. On every purchase using your credit card, you’ll get an infinite 1.5 percent back in Bitcoin – without any annual fee.

There are no costs for international transactions. “Just bitcoin back on every purchase.”

Does BlockFI have Support and Security?

Customer service and security appear to be excellent, with the only major criticism being the long withdrawal process. which can oftentimes reach up to 7 days.

Being a centralized company, BlockFi has control over your funds. This was most likely done to lessen the chances of a security breach.

If you’re hesitant to purchase cryptocurrency, you can ease into BlockFi by converting your US dollars to one of the following stablecoins:

• USDT – Tether. A cryptocurrency that is USD-pegged
• GUSD – Gemini Dollar. This is one of the first U.S. dollar-backed stablecoins to receive regulatory clearance in the United States.

These “stablecoins” seek to keep a 1:1 ratio with the US dollar, preventing them from fluctuating as much as other cryptocurrencies like Bitcoin or Ethereum.

Overall, BlockFi is a fantastic alternative to traditional financing and decentralized finance (DeFi) services, allowing you to earn interest on your cryptocurrency and obtain super-fast loans. Plus, the company has now made it available on iOS and Android devices, so you can do your trading anytime and anywhere.

However, the centralized structure of the firm and also its short track record is a bit of a risk for some. Regardless, it’s a good platform to passively increase your crypto holdings.