Crypto savings accounts have literally taken the world by storm. Which brings us to the question of if BlockFi is worth the risk in 2022. Now personally I’ve had an account for a while and experienced only good things. However, there are risks involved with using a service like BlockFi which we will go over. So let’s begin.
Why Get Involved in Cryptocurrency?
Even if you are not internet savvy, you must have seen it on the news, ads on your phones, or you must have heard your friends talking about it. Digital currencies like Ethereum and Bitcoin have seen their values skyrocket in the last few years, and you are probably wondering if you should get involved in the crypto market or not.
Cryptocurrency is plagued by volatility, it would be wicked not to tell you that, but you could also become rich overnight. The possibilities for blockchain technology are endless. They are significant, but conventional companies’ adoption of blockchain technology takes the cream. And by the next decade, cryptocurrency will be much bigger than it is today.
Benefits to Staking Crypto
At the launch of Bitcoin, the method it uses to provide security on its platform and mine more coins are the proof of work method, which involves; using computer hardware to solve mathematical equations. The proof of stake method is an alternative to the proof of work method. It also provides security for blockchain networks while increasing their effectiveness and the scale of transactions they can handle.
Instead of using computer hardware, the proof of stake method uses staked coins. Validator nodes will be assigned to users of a cryptocurrency platform depending on the number of coins they stake. These validators provide security and verify and approve transactions. Staking is not a free venture; it offers rewards and incentives to participants. Another benefit of staking is the opportunity to be selected as a validator node. Users in this position earn rewards for their stakes and transaction fees for the transactions they process. Many cryptocurrency platforms designate their validator nodes randomly to prevent a monopoly over the governance of the network.
Where to Stake Crypto? — BlockFi
Staking can be done on various cryptocurrency platforms. One of those platforms is the cryptocurrency financial institution regulated by the New York Department of Financial Services, BlockFi, which was founded in 2017, and is headed by Zac Prince. Staking on BlockFi is straightforward. You can stake ETH on BlockFi, and it remains liquid. On other platforms like Coinbase, your staked ETH is locked away for an unknown duration. However, BlockFi offers a compounding interest rate of 4.5% on the amount of ETH you stake, and you are free to move or trade your stake whenever and whenever you like.
Benefits to Using BlockFi
Why should you use BlockFi over other cryptocurrency platforms? You will get to know why in a moment. For a beginner who is looking to make an entry into the crypto market, BlockFi is just right for you. Opening an account is easy and simple. The platform itself is very easy to navigate. BlockFi is registered in the United States. This should put your mind at rest about possible regulatory sanctions that might affect you or the security of your crypto assets.
BlockFi does something most cryptocurrency platforms do not offer. It offers loans that are backed by your crypto assets. With BlockFi Interest Account, users earn interest on their deposits. BlockFi offers interest rates that are above average in the crypto market.
BlockFi is great for investors looking to make passive income from their crypto assets. There are no monthly fees to be paid, and the required minimum deposit is $0. You can also receive up to $250 in bonuses using BlockFi referral codes and promotions.
Is it Safe?
So is BlockFi worth the risk when it comes to your crypto being safe? Well, Gemini is the primary custodian for BlockFi. It is licensed as a custodian and regulated by the New York Department of Financial Services. Gemini is regarded as one of the safest cryptocurrency platforms. About 95% of the assets under Gemini’s control are kept in cold storage, while the remaining 5% are kept in safe wallets insured by Aon. With such a custodian, BlockFi couldn’t be any safer.
Interest Rates for Ethereum & Other Coins
BlockFi offers interest in crypto assets in its BlockFi Interest Account (BIA). The interest rate on Ethereum is 5% up to 1.5ETH. The rate drops to 1.5% when you pass that threshold until you get to 50TEH. For deposits higher than 50ETH, the interest rate is 0.25%.
BlockFi also offers interest on the stablecoins that are supported on its platform. It offers an interest rate of 9% for USDC Dollars (USDC), Gemini Dollars (GUSD), PAX, PAXG, BUSD, and 9.5% for USDT. The 9% interest rate applies to deposits under 40,000. For deposits above that amount, the interest rate is 8%. The platform also offers an interest rate of 4.5% up to 0.1 BTC. The rate drops to 1% for deposits from 0.1 BTC to 0.35 BTC. For deposits greater than 0.35 BTC, the interest rate is 0.1%.
Borrowing Money on BlockFi
Another thing you might want to consider when it comes to BlockFi being worth the risk is the borrow feature. You can borrow cash on BlockFi with interest. The special thing about this is that you don’t have to sell your cryptocurrency assets every time you need cash; you can receive credit from BlockFi and hold your crypto assets as collateral. BlockFi makes money from this process. They lend money to users who need it, use part of that interest to pay the interest on their BlockFi interest accounts, and use the rest to run the platform.
There is a borrow option on top of the platform, right next to trade. Click that and fill out the application for the loan. You must pick the collateral type in the application, so BlockFi knows you are not going anywhere with their cash. After picking the collateral type and the amount you want to borrow, BlockFi shows you the collateral amount, Loan-To-Value Ratio (LTV), and the interest rate. The highest LTV is 50%; this means that if you are borrowing $10,000, you must lock up at least $20,000 in crypto assets. LTV affects your interest rates. If you reduce the LTV rate to, let’s say, 20%, you must lock up more crypto assets, but your interest rate can be cut in half. Your collateral amount will be locked up by BlockFi, only to be released after you have paid off the loan and interest accrued.
So is BlockFi worth the risk in 2022? Absolutely. The crypto market is huge and getting bigger. The possibilities are endless with cryptocurrency financial institutions like BlockFi coming onto the scene. BlockFi provides HODLers of crypto assets with diversified revenue streams. BlockFi’s rate might look to be too juicy for the market, but they can be trusted.