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How to earn crypto with BLOCKFI in 2022

Blockfi users can earn crypto and passive income with the Blockfi monthly compounding interest on cryptocurrencies, stable coins and fiat.

Additionally, new Blockfi users may be elegible to earn some Bitcoin by opening a Blockfi account and users from a number of countries can earn some Bitcoin by using the Blockfi credit card.

As Blockfi users, from our own knowledge and experience, on this page we are going to:

– Explain how to earn interest on crypto with Blockfi.

 – Provide an overview of the Blockfi services so you can have a better understanding of the benefits and the risks.

Blockfi user account dashboard

But before we start, you need to be aware that higher rewards have a higher risk

Blockfi offers high interests because their business model has higher risks.

The safest would be to store your digital assets and cryptocurrencies on a cold wallet, but even a cold wallet has the risk of being lost or stolen. 

There are no risk free options and the more you learn, experience and research, the better you will be prepared to understand the risks and avoid or minimize their impact.

Do your own research

Our content is intended to be used and must be used for informational purpose only and it is not intended to provide investment, financial, accounting, legal, tax or other professional advice.

It is very important to do your own research and verify any information you find on this website, or take independent financial advice before making any investment based on your own personal circumstances.

What is Blockfi

Blockfi is a blockchain based platform for instant crypto loans. This is: 

– Blockfi lends the digital assets that the users have deposited in their accounts.

– In return for allowing Blockfi to lend their digital assets, the users do earn interest or can access crypto loans.

Additionally, Blockfi is also an exchange where the users can buy, sell and swap digital assets like crypto.

And like any other exchange, Blockfi collects a fee every time a user makes a transaction on their exchange. 

HOW TO EARN INTEREST IN CRYPTO WITH BLOCKFI

Blockfi users do earn interest on the assets they have deposited on their Blockfi account. 

Open a Blockfi account >> Deposit assets >> Earn interest.

Blockfi has a crypto yield calculator that can give you an approximation on the yield based on the assets.

But the calculated yield must be taken just as an approximation because the interest is calculated based on variable factors like the currency market value and the Blockfi loyalty levels.

Blockfi interest calculator

The Blockfi interest rates vary depending on the type and the amount of assets that a user has deposited in the account.

Blockfi interest rates

And the interests are paid at the beginning of each month on the currency deposited by the user.

As an example, the user from the picture below has BTC, USDC and GUSD deposited in his account so the interests are paid monthly on BTC, USDC and GUSD.

Blockfi interest payment

And because the monthly paid interest, it compounds, which increases the yield over time. 

blockfi interest balance

Crypto loans

Blockfi users can take out a fiat loan by staking their digital assest like cryptocurrencies, stablecoins or fiat to serve as collateral.

As Blockfi explain on their crypto loans web page:

– With a Blockfi loan, you can borrow up to 50% of the value of your crypto

– The loan applicant will receive the funds the same business day that Blockfi has received the collateral.

– There are not prepayment penalties or fees if the user decides to pay off a portion or the entirety of the loan balance.

Getting a Blockfi loan

With Blockfi it is a very simple and fast process to apply for a loan and receive the funds.

But note that Crypto loans have a VERY HIGH RISK. 

If the collateral was to decrease very quick in value, the user may lose part of the total amount deposited as collateral.

Is Blockfi safe

According to the Blockfi investors web page:

”BlockFi is the only independent lender with institutional backing from investors that include Valar Ventures, Galaxy Digital, Fidelity, Akuna Capital, SoFi, and Coinbase Ventures. 

The BlockFi team consists of professionals with a deep bench of expertise across financial services and technology with offices in New York, New Jersey, Poland, and Argentina. 

Additionally, Gemini Trust Company, LLC, a New York trust company regulated by the New York State Department of Financial Services, is BlockFi’s primary custodian.”

But in general this is the kind of information that similar entities do provide and while the security measures give some level of relief, still the question remains:

Are our digital assets really safe?

The straight answer may be disappointing but… it depends on your personal situation and your risk tolerance.

Learning from the past

If you have a Blockfi account or you are considering opening one, you must realize that you are giving ownership of your digital assets to Blockfi.

If Blockfi goes bankrupt or has major problems, like a serious hacking, you may lose part of the full amount of the assets you have deposited.

As an example, Mt. Gox was a bitcoin exchange that at the time was handling 70% of all Bitcoin transactions worldwide and was the largest bitcoin intermediary and the world’s leading Bitcoin exchange.

And then, in February 2014 Mt.Gox suspended trading, closed the website and filed for bankruptcy. Approximately 850,000 Bitcoins in custody by Mt. Gox went missing and it has been a long process for the owners to try to recover even a part of those missing Bitcoins.  

Please, now go ahead and do your own research about Mt.Gox, similar cases or the so called ‘rug pulls’ in the crypto world.

Lessons learnt

Once you give ownership of your digital assets to a centralized blockchain  platform like Blockfi, you must realize that:

– Your control over your digital assets it is decreased because you are trusting your crypto to a third party.

– Therefore the risk of losing your crypto does increase because the third party is in possession of the private keys.

But even having digital assets stored at home in a cold wallet are also at risk. 

It may happen that the house may burn down, or someone may break into it and stole your wallet or seeds, or a natural disaster may destroy your wallet and seeds, or someone may find out you wallet seeds, …

Even having your assets stored in a cold wallet in a bank safe box has it’s risks. Probably the risk is low, to and extend, but there are risks.

So, having a part of your digital assets stored in Blockfi may be a good way to manage risk, by not having all your digital assets in one single place and exposed to a single point of failure. 

And if this is the case, having part of the digital assets in Blockfi has the advantages of receiving interest or being able to apply for a loan.

In the end, it is up to the personal circumstances of each one of us, and each particular person must decide if having the digital assets in custody of a third party is worth the risk or not.

You must ask yourself:

– Are your digital assets safely stored? Is it safe to keep all your digital assets in one single location? For example, your house, apartment or room.

– As an alternative to keeping my assets in one single location, do you have easy and cheap access to an alternative like a bank safe box. And, if so, is it a bank that you trust?

– Do you trust Blockfi?* 

– Are there any other companies that provide the same or similar service and they are safer than Blockfi?*

*And here come into play the additional research that your are going to do into Blockfi and some alternative platforms like Nexo, Celsius,…

All in all, you are the only person who can decide if your digital assets are safe.

How to use Blockfi

Blockfi has made sure that the platform it is very user friendly so creating an account, depositing funds or buying digital assets are simple processes.

HOW TO OPEN A BLOCKFI ACCOUNT AND EARN CRYPTO

To open an account with Blockfi it is quite a straightforward process.

Just make sure that you use a safe email address and a very safe password that you are not using anywhere else.

How to open a Blockfi account

If you use our referral link you will be eligible to get 10 USD in BTC if you top up the account with 100 USD, or equivalent, complete the advance verification and keep the funds for at least 30 days in your account.

Effiworkx referral link to Blockfi

If you think that the content we create is of value to you, we would appreciate if you use our referral link. Using our referral link does cost you nothing and your support will contribute to keep this website up and running.

How to deposit funds

If it is the first time buying cryptocurrencies, you can fund your Blockfi wallet with fiat but you must be aware that depending on the currency there are different conditions:

Deposit Euro: Only WIRE transfers are allowed with a minimum of 10 USD. But, there is a 1% fee and the EUR will be automatically converted to USD.

Blockfi international wire transfers

Deposit USD: Only WIRE transfers are allowed with a minimum of 10 USD

For those of use living in Europe rather than using WIRE it may be more advisable to fund your Blockfi wallet with crypto like BTC, ETH, BNB, USDC, DAI…

blockfi receive crypto btc

How to trade, buy and sell

Blockfi has made very simple to trade, buy and sell digital assets.

In Blockfi it is possible to trade, buy and sell many different cryptocurrencies and you just need to chose the one that your are interested in.

And make sure that you carefully review the transaction to make sure that you agree with the exchange rate.

Blockfi cryptocurrency buy

How to withdraw

In Blockfi, it is possible to withdraw funds within the following possibilities:

– It is possible to withdraw USDC to a bank account and receive USD.

– It is NOT possible to withdraw USDC to an back account and receive EUR.

– It is possible to withdraw USDC to a cryptocurrency wallet.

– It is possible to withdraw any other cryptocurrency present in Blockfi to a cryptocurrency wallet.

Blockfi withdraw of USD Coin

HOW TO EARN CRYPTO WITH THE BLOCKFI CREDIT CARD

For selected countries, it is possible to apply for a Blockfi Visa Credit Card.

The great benefit of the Blockfi card is that for every purchase the user does receive a 1.5% back in crypto, which is a very good benefit.

Blockfi credit card

Unfortunately the Blockfi credit card is not available in Europe so we have not been able to test it.

Blockfi KYC

KYC stand for Know Your Customer.

KYC is a standard practice for companies that offer financial services and it is used to prevent money laundering and eliminate bad actors.

Most, if not all, of the reputable crypto exchange platform have KYC and Blockfi it is not different. 

If you decide to open a Blockfi account, you will be required to complete the KYC process.

blockfi user account verification

Blockfi and tax obligations

Most of us have to declare capital gains on our cryptocurrency holdings.

And because of the complexity, most of us have to use a cryptocurrency tax calculator service to be able to calculate our cryptocurrency taxes.

For Blockfi, when it comes to tax declaration, there are a few points that the users need to take into account:

In Blockfi, the interests are paid monthly so there is one transaction per asset per month

– Some tax calculation services that have plans levels linked to the number if transaction per year. The Blockfi monthly interest payments do keep the number of transactions to a very reasonable level.

– Blockfi allows the users to export and download the transactions history in PDF format. 

blockfi earning reports

Koinly tax calculator and tax report

Koinly is a tax calculation and tax report service that allows the user to keep tack of the capital gains, income, … 

The main advantage is that with Koinly the user is able to very easily keep track of the portfolio total value, the cost basis and the realized and unrealized gains.

Koinly also keeps track on important information like expenses and trading fees that they are tax deductible in some countries.

Note that to open a Koinly account and keeping track of the portfolio is a free service.

Koinly dashboard overview

But the most important part is that Koinly can generate a yearly tax plan that can be presented as part of the tax declaration.

Note that while keeping track of the portfolio is a free service, the tax plan is a paid service.

As an example, as shown on the picture above, this user had 3577 transactions in 2021 so that means that to get the tax plan prepared by Koinly, the user needs to chose the ‘Trader’ plan.

Koinly tax plans and cost per plan

Please go ahead and do your own research in order to make sure that you understand your tax obligations and decide if Koinly fits your needs.

If you decide to open a Koinly account and use our referral link you will be eligible to get 20 USD, or equivalent, on your first order.

Effiworkx referral link to Koinly

If you think that the content we create is of value to you, we would appreciate if you use our referral link. Using our referral link does cost you nothing and your support will contribute to keep this website up and running.

A note for beginners

When it comes to paying taxes for your crypto holdings, you may want to have into account the following:

– You need to know your crypto tax obligations. 

– You need to keep track of all your transactions and expenses to be able to calculate the capital gains, expenses, …

– Keeping track of your tax obligations by using tools like excel it may be OK if you don’t trade very often but it is not the best option if you trade often, receive frequent crypto interest payments, receive airdrops, receive frequent staking rewards,…

– Consider to use a tax calculation and tax report software. It is going to cost some money but you most probably will save on time, headaches and problems.

We hope that you have found this article of interest.

If you think that we should add more information or give more details for any specific  topic, please let us know in the comments.

We will be glad to hear from you.

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