BlockFi vs Crypto.com — which has the best crypto interest account in 2020?
Crypto interest accounts are all the rage recently, with more and more coverage coming into the mainstream press. So, wait, people think, I can get paid to HODL Bitcoin? Or paid even more to hold stablecoins? Yes, indeed you can! And two of the leading companies offering this service are BlockFi and Crypto.com. So, let’s take a look at both and work out which one is the best.
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Contents
· BlockFi
∘ The Signup Process
∘ Funding the Account
∘ Interest rates
∘ Withdrawals
∘ Security
∘ Overall
· Crypto.com
∘ The Signup Process
∘ Funding the Account
∘ Funding the account — to stake or not to stake?
∘ Interest Rates
∘ Withdrawals
∘ Security
∘ Overall
· BlockFi vs Crypto.com — The Verdict
∘ Security
∘ Ease of Use
∘ Best ROI for Bitcoin
∘ Best ROI for Stablecoins
∘ Our final recommendation
∘ How to Signup
BlockFi
The Signup Process
The signup process is very easy for BlockFi. You can do it on their website …
which I personally find much easier than an app.
You have an option to enter a referral code. I googled around a little when I saw that and found some referral codes on reddit. Using someone’s referral code gives both them and you a bonus. I chose a random person to send a little bonus their way! If you’d like to use our code, it’s bd76f4f5.
After signup there’s the obligatory KYC (Know Your Customer) process. This was actually very simple with BlockFi and worked perfectly the first time — something that doesn’t always happen with KYC. It’s possible I just got lucky though!
Funding the Account
After you’ve signed up, you’re met with a very simple home dashboard.
There are not a huge amount of options, so just click “Deposit” in the top navigation bar. Doing so launches a modal window with an option to choose which currency to deposit in.
As you change the selection, it displays a different wallet address to deposit in. You can also choose USD (as stablecoin) to deposit in USD via bank wire. If you select this option your deposit will automatically be converted to the Gemini USD stablecoin.
This part is pretty straightforward, although it would have been nice to have the interest rate you’re getting on each currency type displayed here. As it stands, I couldn’t find anywhere to get that info once you’re logged in. To get that info, you need to go here: https://blockfi.com/rates/
Once your wallet address is displayed, you can copy it and make a crypto transfer in the normal way. Personally, I transferred over from Kraken.com. Soon after I’d made the transfer, I received a nice email from BlockFi confirming it, which was great.
Once the transaction had been fully confirmed, my home screen was updated accordingly:
Just under 2 weeks later, and the home screen has updated again with some information about accrued interest:
Nice, I’ve accrued $2.29 in interest!
So, overall, full marks here in terms of the funding process and the simplicity in presenting all the relevant info.
Interest rates
So, let’s talk about the interest rates that BlockFi offers. Here they are as of October 2020:
To see current rates, please go here: https://blockfi.com/rates/
These rates are subject to change, and you can read about how that works in a blog post from the founder: https://blockfi.com/rate-adjustments-blockfi-founder
Some things to note:
- You get 6% on your BTC only for the first 2.5 BTC
- The rates are annual percentage yield, based on monthly compounding interest
- The top rate (8.6%) is only available for stablecoins. This means that whilst you may benefit from a great interest rate, you won’t benefit from any increase in the value of a particular coin
Have a look at the concluding part of this article to find out how these rates stack up against the Crypto.com rates.
Withdrawals
BlockFi are pretty good with withdrawals. They offer one free crypto withdrawal per month and one free stablecoin withdrawal per month. If you’d like to go above that, you will need to pay a fee as follows:
Security
There’s an old saying in crypto — not your keys, not your coins. This applies here — when you have crypto with BlockFi, you’re entrusting the security of your coins to them. In the case of BlockFi, they say (https://blockfi.com/securely-stored-assets) that client assets are stored with their primary custodian Gemini. Gemini, they say, “has digital asset insurance coverage and is SOC 2 Type 1 security compliant on its exchange and custodian platform” and “is a fiduciary under §100 of the New York Banking Law and held to specific capital reserve requirements and banking compliance standards.” You can read more about Gemini’s security here: https://gemini.com/security Nevertheless, BlockFi deposits (as digital assets) are not insured by the FDIC, so you can never be entirely sure.
Overall
Putting your crypto to work using BlockFi is a very simple process. The signup is easy and the KYC is quick. There are some hidden gotchas in the interest rates (such as a lower rate for more BTC) and the rates could be clearer when making a deposit. The security is good, although you can never be 100% sure that your funds are totally safe.
So, how does that compare to crypto.com? Let’s find out…
Crypto.com
The Signup Process
Crypto.com is app only, so no nice easy website signup is available at all. That’s a shame. Personally, I prefer a nice big screen and a keyboard when I’m doing website signups. Others may think differently though of course. So, initially you need to head over to the Play Store or App Store and download the app. In fact, don’t do that and you may well find the wrong one by searching. Instead, head to https://crypto.com/ and click the links there.
If you like you use our referral code so we both get a $50 bonus (with 1000 CRO staked) then it’s u45zbe687r (or you can use this direct link: https://crypto.com/app/u45zbe687r)
Once you’ve downloaded the app, it’s time to signup and go through the KYC process.
For me, this didn’t go so smoothly. Firstly, the verification email didn’t arrive. I waited, got bored, and tried a different email address. I managed to get it to come through (and the original one arrived the next day at 6am…). Then, the KYC wasn’t so smooth.
It worked, eventually, but it was fiddly. You’ll know what I mean if you’ve ever been frustrated by KYC not working properly. But, after some persistence, I managed to get through that hurdle too.
It also completed much quicker than the 2–3 business days it told me (around 10 mins).
Funding the Account
After you’ve signed up, you’re met with a home dashboard with lots going on.
It seems crypto.com is about more than just crypto interest accounts! It could all be a bit confusing if you’re just there for the interest, but I managed to work out that you should click Accounts then Crypto Earn.
There’s a long list — much longer than BlockFi — of coins that you can start earning on. You should note that those rates are for people with 10,000 or more CRO staked.
Funding the account — to stake or not to stake?
Wait, what’s staking? Quite simply, it just means holding the tokens in your crypto wallet for a certain amount of time. In this case, it means holding CRO in your crypto.com wallet for 180 days.
Currently, CRO tokens are at $0.104, so 10,000 tokens will cost just over $1000. The value of those tokens is, of course, subject to change. So you could either profit from that investment … or not. It should also be noted that these staked tokens cannot be used in the interest account. So, it’s an enforced HODL that comes with rewards. One of the rewards is better interest rates.
The other reward is benefits on the CRO visa card.
So, if you decide to stake the 10,000 CRO you also get a 3% cashback on card spending and rebates on your spotify and netflix. It should be noted though that these cards are not being send out straight away. A quick check through the community forums on reddit, reveals lots of people are suffering through long waits to receive their card.
Having reviewed all this info, I of course checked the recent price action of the CRO token.
Interesting chart, with quite a big recent drop. I decided to stay away from staking 10k CRO for the moment. If it drops further, it would become a very interesting deal though. 3% cashback is pretty tasty!
So, without the extra staking, I’m looking at these rates:
So, 4.5% on Bitcoin or ETH. Hmmm, that does beat BlockFi on BTC if I have more than 2.5 BTC invested. It doesn’t beat it for ETH. But 10% on the stablecoins is good. So I decided to invest a small amount to test it out.
To deposit, you need to go into a different part of the Crypto.com app — the transfer section. From there, it’s a simple process of choosing which coin to deposit in, and being presented with an address.
Sure enough, after depositing to that address, within a few minutes I received a notification from my phone that a deposit had been made.
I also received an email. So, with the funding completed, it was now just a case of transferring my USDT into the earn system … except … I was below the minimum deposit amount!
Grrr. OK, so that’s where I left this one. The funding process isn’t too tough, although you will probably spend a lot of time working out if you should stake the CRO or not. And if you do decide to go ahead, make sure you have enough to make the minimum requirements. They are currently as follows:
Interest Rates
So, we looked at the interest rates above. They differ greatly depending on whether you have CRO staked or not. Without CRO staked, you’re looking at these rates:
So, the headline rate for BTC is 4.5%. This seems low, but it doesn’t reduce as you put more in. For stablecoins, you have a 10% rate, which is great. And with CRO, the rate is 6%. But bear in mind, this is not paid out on CRO that you’re staking.
Also note that the interest rates shown above are simple (so not compounded). If you compound the interest manually, you can improve on that listed rate. This means that you will need to reinvest the interest manually every 3 months.
Interest accumulates weekly.
Withdrawals
There are 3 different lockup periods that you can go for — 3 months, 1 month and flexible. 3-month and 1-month totally lock up your funds for that period of time.
The flexible account allows you to withdraw whenever you like. There are no withdrawal fees.
Security
Crypto.com has a great page that lists all their security features: https://crypto.com/en/security.html It’s worth a read. They are partnered with Ledger (https://www.ledger.com/) for their cold storage solutions, and says that 100% of user cryptos are held offline in cold storage. Of course, they do use hot wallets for day to day transactions, and these use multi-key sigs. They have a total of 360M in crypto currency insurance.
For US residents, the fiat currency you have in your wallet is FDIC insured. That not so relevant when talking about crypto interest accounts, but it is nevertheless a good sign.
When talking of security, I think we should also take into account the stability of the company itself. And a quick read through the Crypto.com community forums on reddit https://www.reddit.com/r/Crypto_com/ does reveal a community that is suffering and loudly complaining about the decisions of those running the company. The price of CRO has tanked in recent times. The signs of instability and an unhappy community are there.
Overall
So, what’s the bottom line with crypto.com? The signup process is OK, if a bit fiddly on the app. Funding the account is easy, even if you do need to navigate through the app. But what about the interest rates? To start with, it has to be said that in order to get the best interest rates you will need to stake CRO. Without staking, the rate on BTC isn’t amazing … but is still better than a straight HODL with no interest. For stablecoins, the 10% rate is very good (and beats BlockFI). The security situation is good, with some real heavyweight backing and significant amounts of insurance.
BlockFi vs Crypto.com — The Verdict
Security
OK, so … let’s talk first about the security. This has to be the most important aspect when you’re considering putting your crypto into the hands of a 3rd party. Both score well, although neither has government back insurance for digital assets. I would say that neither really wins in this field. However, if we take into account company stability then some question marks are raised with Crypto.com. Their community isn’t happen, some controversial decisions have been taken and the price of CRO tokens is dropping rapidly. So in terms of community contentment, BlockFI is the clear winner.
Ease of Use
Then easy of use. BlockFI is the clear winner here. Their offering is clear, simple and not confusing. Crypto.com on the other hand, isn’t so much. They offer much more than just crypto interest accounts, which means that you’re presented with lots of options in the app. That said, finding what you need is pretty simple. BUT once you’re in the right section, you then need to deal with confusion around the different interest rates depending on staking CRO or not. They don’t explain what staking means or what it entails, so I imagine there are lots of users scratching their head, saying … “what’s staking?”
Best ROI for Bitcoin
Of course, one of the main questions people will be asking is … which one can give me the greatest return on my investment? The answer depends, of course, on how much you have to invest and what your appetite for risk is! Let’s take a few examples:
The average Bitcoin HODLer
According to BlockLink, the average Bitcoin holder has 0.04 BTC. They’ve probably just bought a bit to see what happens … and they intend to hold it for the foreseeable future. Just in case. Maybe one day it’ll be worth a fortune, right? This person doesn’t have enough BTC to stake 10k CRO tokens, so their choices are just between BlockFI and Crypto.com. Let’s do the maths:
BlockFi: (0.06 * 0.04) = 0.0024
Crypto.com Unstaked: 0.045 * 0.04 = 0.0016
So, in this case, BlockFI is the clear winner.
The above average Bitcoin HODLer
Around 20% of holders have 0.5 BTC. So is this person is better off in BlockFi receiving a 6% annual return or should they spend some of their crypto staking CRO to get the 6.5% rate? Let’s do the maths for them:
BlockFi: (0.06 * 0.5) = 0.03
Crypto.com Unstaked: 0.045 * 0.5 = 0.02
Crypto.com Staked: 10,000 CRO = 0.0849 BTC (current prices), interest = 0.065 * 0.4151 = 0.026
So, in this case, BlockFi wins again, but it’s getting closer. It should also be noted that with the Crypto.com staked version, you have 10k CRO tokens, which may be worth less at the end of the year than they started out at. Let’s take than into account in the next calculation…
A top 5% Bitcoin HODLer
So, you have 4 BTC and you’re looking to invest it. Now things become a little trickier. With BlockFi you can get 6% on the first 2.5, and 3.2% on the rest. With Crypto.com you can get 4.5% on it all OR stake 10,000 CRO and get 6.5% on it all. So which one works out the best over a year? Time to pickup the handy calculator…
BlockFi: (0.06 * 2.5) + (0.032 * 1.5) = 0.15 + 0.048 = 0.198
Crypto.com Unstaked: 0.045 * 4 = 0.18
Crypto.com Staked: 10,000 CRO = 0.0849 BTC (current prices), interest = 0.065 * 3.9151 = 0.254
So, the clear winner here is Crypto.com. BUT, let’s take into account that with Crypto.com staked we have 10k CRO tokens. After the year is out, we need to swap them back. Let’s take a scenario in which their value depreciates 50% against BTC. What are we left with overall?
BlockFi: 4 + 0.198 = 4.198 BTC
Crypto.com Unstaked: 4 + 0.18 = 4.18 BTC
Crypto.com Staked: 10,000 CRO = 3.9151 + 0.254 + (0.0849/2) = 4.21155 BTC
So, in this case Crypto.com staked does come out ahead. What if CRO were to lose all it’s value? Well, in that scenario the company would be in deep trouble and who knows what would happen, but from a purely mathematical perspective, it looks like this:
Crypto.com Staked: 10,000 CRO = 3.9151 + 0.254 + (0) = 4.1691 BTC
So, we’re not doing as well as BlockFi — but we haven’t lost money either.
Where are the sweet spots?
First up, let’s compare BlockFI with CRO unstaked. At low BTC values, BlockFI easily wins. However, CC unstaked does catch it up, eventually — when you get to 5.5 BTC investment.
With CRO staked, it gets more complicated. It very much depends on what happens to the value of the CRO tokens. If they lose their value completely, then they still beat BlockFI, but not until you get to a 2.4 BTC investment.
Best ROI for Stablecoins
Of course, not everyone want to hold just Bitcoin. Some people will want to diversify their portfolio and hold stablecoins, enjoying the lack of volatility. So, which one provides the best ROI for stablecoins?
This one is much simpler — Crypto.com will always beat BlockFi. This is because the best rate you can get for stablecoins on BlockFi is 8.6%, whereas the unstaked rate on Crypto.com is 10%.
So, the real question becomes — can crypto.com staked, beat crypto.com unstaked? If we assume a 50% depreciation of the CRO tokens, then the staked Crypto.com account will beat unstaked for investments above $18,000 USD. If there’s a 100% depreciation (they lose all their value), then it still works out viable for investments above $32,500 (but, again, if they lose all their value then there are probably deeper troubles afoot). If they were to keep all their value, then it’s best to stake for investments above $10,500.
Our final recommendation
So, after all this research and experimentation, which one of the two would we recommend? Well, in ease of use and security, BlockFi is the winner. Really, in security they are both pretty close but the unease of the community around Crypto.com management decisions is some cause for concern. CDC seems more likely to make sudden policy changes.
In terms of ROI for BTC … it’s complicated. You can’t really go much wrong with BlockFi, but if you fancy taking a risk and have more to invest then Crypto.com can beat it. Still, we’d recommend just sticking with BlockFi. It’s simpler, and less worry.
If it’s the less volatile stablecoin investment that you’re after, then … crypto.com gives you best ROI. The only question then is should you stake or not? It’s riskier and the price isn’t stable, so for the moment we’d recommend staying away from that.
So, in a few words, our recommendation is BlockFi for BTC, Crypto.com for stablecoins.
How to Signup
If you’d like to signup, we’d very much appreciate it if you do so via our referral code. Then we both get a bonus :-)
BlockFi: https://blockfi.com/?ref=bd76f4f5
Crpto.com: https://crypto.com/app/u45zbe687r
Much appreciated!
And there you have it — our exhaustive look at which has the better interest account in 2020.
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