Updated: Oct 20, 2021
All You Need to Know About BlockFi
BlockFi is a private exchange company that provides services such as selling and buying cryptocurrencies, as well as trading of cryptocurrencies.
They stand out as they provide additional services that include allowing its customers to borrow a loan and have excellent bearing accounts; they serve as a crypto bank.
Although BlockFi supports only eight currencies, they are still a top pick for beginners and ambitious traders who would like to have their share of cake from the cryptocurrency world.
Types of accounts
There are two types of accounts you can open with BlockFi:
Personal cryptocurrency interest account.
Business cryptocurrency interest account.
In choosing the account type to run, either personal or business-oriented, you're required to complete a KYC (know your customer) process.
For a business cryptocurrency interest account, the following entities are eligible:
Sole business - the owner of the business must complete the KYC.
Cooperative business - individuals having a 25% share in the company must complete the KYC
General partnership - all individuals owning 25% are eligible to complete the KYC.
Limited partnership - persons with shares of more than 25% are deemed fit to do the KYC.
Limited liability company; having 25% or more of the business qualifies you to complete the known customer process.
Trust account - every trustee must do the KYC; the Grantors are required to complete the KYC too.
Self-directed IRA; - individuals with a 25% share or more of the company are required to complete the KYC.
For all business cryptocurrencies interest accounts, proof of ownership or proof as belonging to a particular group and having the minimum share percentage must be presented for documentation. In the Trust account, this is exempted; rather a Trust agreement is presented.
Note - These are not the only required proofs for documentation, but these are the major ones. Others vary depending on the region or location.
How BlockFi operates
Ideally, BlockFi is open to individuals and institutions or business organizations offering an account that earns compound interest, has access to loans and trading with no fee required.
On BlockFi, the accepted funding currencies include US dollars, cryptocurrencies, and stable coins, almost the same as other cryptocurrency exchanges
The BlockFi Interest Account
Any coins you deposited or purchase on the BlockFI account accrue interest over time, just like the normal backing system, only that you do not have SPIC insurance or FDIC insurance protections enjoyed by brokerage account and bank accounts respectively.
You have restrictions on your withdrawal; a crypto withdrawal and a stable coin withdrawal are allowed in a month. Any other withdrawal within the same month will incur a fee.
A business or corporate account is also allowed on BlockFI, and it is similar in function to the personal BlockFI interest account. However, this account is set up in the business name or the cooperation name; it requires major investors or individuals with a certain percentage of about 25% or more to complete the KYC (know your customer) process, and valid proof of identification is also required for documentation.
Interest on each cryptocurrency is paid at the following rate:
Bitcoin (up to 2.5 BTC): 6%
Bitcoin (more than 2.5 BTC): 3%
PAX Gold: 5%
Paxos Standard: 8.6%
On your first successful deposit, interest starts to grow and compound monthly. This can be viewed on your dashboard.
The way by which BlockFi pays interest involves loaning assets to individuals, institutions, and even corporate bodies with large and quantifiable collaterals.
The interest made from these loans is made available to cater for your withdrawal. No wonder withdrawal is controlled, to ensure almost everybody is paid in a month.
Trading on BlockFi is very simple; here are the steps;
Fund your BlockFi interest account
Utilize the fund from your BlockFi account to either buy or sell
Login to your BlockFI account
Enter the currency you would like to trade with and the amount
Confirm and execute your trade
Why choose BlockFi?
Are you stuck between choosing an exchange? Are you muddled up in your thinking process as to whom you want to commit your hard-earned money to? Then think no further, as BlockFI is a place you can rest assured that your money is in safe hands.
Below are reasons you should choose BlockFi
1. When it comes to interest; running a BlockFi interest account qualifies you to earn a 3 - 9% compound interest on your cryptocurrencies; whilst opening a BlockFi account requires no minimum amount, there are no fees attached.
Again, you have the option to choose the currency you would like your interest to go into.
2. You can obtain a loan; in case of emergency. You can decide to opt for a loan instead of selling your crypto assets with an interest playback rate of 4.5%.
The good thing with borrowing is that whatever reason you are borrowing either to start up a business or any other reason, your capital would not be recorded. As a result, you pay less tax.
3. Interest in credit card usage; for every bitcoin purchased with your credit card, a 1.5% interest is rewarded and goes straight to your BlockFI interest account.
4. Automated trading means you can set your account to buy or sell cryptocurrencies at a particular given time and conditions. This could be hourly, daily, weekly, or even monthly. It saves you the stress of staying actively online.
BlockFI Pros and Cons
Based and regulated in the United States
Ability to execute your trade within a delay
No extra fee or charges
Zero balance required
People from around the world can open a BlockFi, except those people from blacklisted countries or regions.
No joint or custodial accounts
Limitation on withdrawal
APY and loan rate volatility
No protection to your savings in the case the system fails.
BlockFi is one of the cryptocurrency exchanges you can trust to do your buying and selling. However, as stated earlier, be wise and don't put all your money in it, as there are no protections should the system fail.