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New and Savvy Crypto Investors are Coming to BlockFi to Digitize Their Dollars

May 12, 2021 3:56 pm
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New and Savvy Crypto Investors are Coming to BlockFi  to Digitize Their Dollars

It’s safe to say that BlockFi has been one of the biggest gateways to appear in years for people taking their first jump into cryptocurrency investment. With its easy web and app interface and competitive terms, BlockFi has no doubt given crypto-doubters a reason to give the investment a look. But the company has also become one of the most competitive crypto-financial institutions in the business and is also drawing experienced and savvy investors in droves. 

Founded by Zac Prince and Flori Marquez in 2017, BlockFi is a crypto-native financial institution. But while BlockFi is for crypto investors, it’s not decentralized. It has over 700 employees, a headquarters in Jersey City, and is regulated. 

See also: How to Buy Cryptocurrency

There are other tools available to buy and sell cryptocurrencies, but BlockFi is geared toward giving customers an easy and effective way to build up deposits that the company can lend, offering trading only in the coins it lends. It also offers lower fees than its biggest competitors by not charging transaction fees, but rather taking a cut on trades, averaging around 1%. 

The company offers earnings of 8.6% APY, as well as the ability to borrow cash against your crypto holdings and buy or sell crypto. If you’re looking for minimum balances and hidden fees, you won’t find it at BlockFi, which is also giving away up to $250 in free Bitcoin for first-time users depending on the amount of the purchase. 

BlockFi, which just announced a $350 million Series D led by Bain Capital Ventures, Pomp Investments, Tiger Global, and partners of DST Global, is building a full-fledged financial institution for crypto investors, offering four products to retail investors: 

  • BlockFi interest accounts (at rates up to 8.6% APY)

  • Trading accounts

  • Crypto-backed loans

  • Credit cards

It also acts as a prime broker for institutional clients, with custody, financing, execution, and margin. BlockFi is also building SoFi plus JP Morgan’s prime broker desk for crypto.  In other words, these folks are serious players and with a current valuation of around $3 billion, others are taking notice, because their current results have earned it. 

  • $50 million in monthly revenue, up from $1.5 million in 1 year

  • $15 billion in assets on the platform, up from $1 billion in 1 year

  • 0% loss rate across its lending portfolio 

  • 50% month-over-month growth 

So to fully understand where BlockFi gets its money to lend, you have to understand what a stablecoin deposit is. Stablecoins are cryptocurrencies that often base their value on the U.S. dollar (USD), allowing funds to dollar-denominated trades on the blockchain, in other words, tokenized dollars that are actually backed by actual dollars in an account. This is why BlockFi is able to pay 8.6% on stablecoin deposits because it turns your USD into stablecoins when you deposit money via Automated Clearing House (ACH).  

Not satisfied with its current access to research, BlockFi also just announced a collaborative research partnership with Arcane Research, which provides data-driven analysis and bespoke research in cryptocurrency and digital assets. 

BlockFi is a vehicle making the same bet as its users that crypto, or at least digital currency, is just better than our existing financial system.

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