BlockFi and Celsius are cryptocurrency lending platforms, and in this article, we will take the time to compare them.
At the beginning of 2022, Blockfi was in the news several times. Sometimes because of their new releases and others because authorities flagged them. Celsius isn’t too far behind, as we’ve seen it kick out unaccredited Americans from its rewards program.
And that’s just recent news. Several years have passed since they have been the subject of much cryptocurrency debate – especially those trying to conclude which is best.
In our article, we will discuss similar things, analyze the similarities and differences, and see what makes one better than the other. Even though there are similar cryptocurrency lending platforms, there are some key differences that make one better than the other. But before we get to the bottom of it, let’s understand cryptocurrency lending platforms and how they differ from banks.
What are cryptocurrency lending platforms?
Cryptocurrency lending platforms are exactly what they claim to be. They lend cryptocurrencies to potential borrowers at a fixed interest rate. When these principal and interest amounts are returned, they use them to pay users who deposited or locked their cryptocurrencies with the company in the first place. This is done at an annual interest rate.
Locking crypto assets with these centralized exchanges is a way to generate passive income. However, the company will charge you a fee to help you earn extra income!
Another understandable thing about cryptocurrency lending companies is that they have complete control over their cryptocurrency assets because they are centralized institutions! So it takes a lot of trusts to lock a certain amount with these privatized companies.
What is BlockFi?
Blockfi is a US-based company established in 2017. It is primarily known as a cryptocurrency lending company but also does many other cryptocurrency-related businesses. It has private and institutional clients. The operating mechanism of Blockfi is similar to that of our banks. We deposit some money as savings. Banks use our money to provide services to other borrowers, and when those borrowers pay interest, the bank uses that money to pay us the full amount!
Blockfi offers its users popular Blockfi interest accounts, such as BIA. Users can earn up to 11%APY in profit on a cryptocurrency deposit.
The amount deposited by users is borrowed from other institutional and corporate borrowers. These borrowers pay back BlockFi with a certain interest rate. Whatever the earnings, BlockFi uses them to pay its original users. But like banks, BlockFi is a centralized business, so the money you deposit over time is controlled by the business at that time.
What is Celsius?
Celsius is also a cryptocurrency lending platform that allows users to deposit money with the company and expect interest to be returned at a certain rate. Also, it allows borrowers to borrow money at relatively lower collateral rates.
In Blockfi and Celsius, we see that the interest rate they offer is much higher than that our central banks offer.
Celsius vs. BlockFi: Which one is the best crypto lending platform?
Origin and Growth
Blockfi is based in New York and New Jersey (although New York has one of the strictest rules regarding cryptocurrency jurisdictions). It is backed by several major investors such as Galaxy, Sofi, PJC, Avon Ventures, Akuma Capital, Arrington Capital, etc.
As of December 2021, Blockfi had over $10.4 billion in BIA investor assets. The largest cryptocurrencies held were Ethereum and Bitcoin. Its APY can reach 8%.
Celsius is headquartered in Europe but also has offices in the United States, with headquarters in Lithuania and London. Lithuania is now becoming a strategic option here, as Lithuania has favorable banking conditions for cryptocurrencies in the east. Thus, Celsius also intends to gain access to the Eastern market.
Celsius has the feature to share your stats directly in your app. Daily AMU updates, among other essential stuff, are delivered daily to the app.
Celsius has around 16 billion AMUs under management, with around 300,000 active wallets and over 800,000 members. In August 2021, Celsius was the first to surpass 20 billion AMU in the CeFi (centralized finance) or DeFi (decentralized finance) category.
Ethereum is its most widely used cryptocurrency, and the company has earned over $450 million in interest on its cryptocurrency so far. The APY in Celsius can get as high as 18.63%.
A major difference between Blockfi and Celsius is that Celsius has its utility and a native CEL token, and it works well at interest rates, as we will see later in the article.
Blockfi vs. Celsius: Deposit Fees
Speaking of deposits and commissions, neither Blockfi nor Celsius charge commissions for depositing money with them. So if you already own a crypto wallet, you must find the wallet address in the app and initiate a withdrawal from the other wallet. But when you send cryptocurrency to the blockchain, you have to pay blockchain fees that are not controlled by any platform!
To buy cryptocurrency on Blockfi, you will need to pay in dollars. You must send this amount by bank transfer.
When you use USD to buy cryptocurrencies by bank transfer, you will get credited a 1:1 stablecoins in the form of GUSD, which can be traded for Bitcoin or any other cryptocurrency you want. But this process involves paying a commission.
Blockfi has a feature that lets you buy cryptocurrencies at set intervals, weekly or monthly.
Coming to Celsius, this platform supports all types of fiat purchases. Unlike direct bank transfers on Blockfi, Celsius uses a payment partner called Gem, and you will pay a fee as a commission. These fees vary depending on the currency used. For example, the euro is much cheaper than the US dollar.
Credit card purchases are also allowed on the Celsius platform. But it also involves a third party to whom you only pay a 3.5-5% commission.
When shopping in Celsius, you can choose which cryptocurrency to buy. But the Celsius app does not currently support trading. Then, once you have chosen the cryptocurrency, you transfer it to another exchange, trade it, and deposit it again in Celsius.
Winner: Since Celsius does not offer a trading platform, I would declare BlockFi the winner here. However, BlockFi should consider reducing the spread, which is currently on the high side.
Blockfi vs. Celsius: Withdrawals
In terms of withdrawals, BlockFi offers users one free cryptocurrency withdrawal per month and one free stablecoin withdrawal per month. This is usually enough for some, but not for all.
On the other hand, Celsius has a feature that allows you to pay blockchain fees. So regardless of the fees, if you are on Celsius, you will be saving the blockchain fees, ranging from $5-10 per Bitcoin transaction and going up to $23-25 per Ethereum.
Winner: BlockFi is the winner because it offers free monthly withdrawals.
Blockfi vs. Celsius for Cryptocurrency Loans
Well, this field shows stark differences between the two platforms.
Blockfi only allows you to borrow USD in cryptocurrencies. It offers a minimum loan amount of approximately $10,000 for 12 months. Celsius also allows you to borrow cryptocurrencies in addition to fiat currency. It offers a minimum loan amount of $500 for 6 months.
In any case, you will need to deposit twice as much cryptocurrency as the amount you wish to borrow. The lower the loan-to-value ratio (LTV means that your loan amount cannot exceed the value of the cryptocurrency you have pledged), the lower the interest rate. Blockfi’s annual share varies between 4.5 and 9.75% and charges a 2% origination fee.
Although Celsius fees can vary from 0.75% to 8.75%, it does not charge an origination fee. Moreover, if you decide to deposit CEL tokens, you will get even better interest rates.
Winner: Celsius is a clear winner when it comes to crypto lending. If you want to get a loan, consider Celsius.
BlockFi vs. Celsius Interest Rate
BlockFi interest rates don’t change very often, and interest is paid monthly in the cryptocurrency of your choice. And here, the rates depend on the number of coins you deposit. It’s strange in some ways. The more you stake to earn, the lesser reward you will receive.
This is BlockFi’s new interest slab.
For example, 0-0.10 Bitcoin would earn you a return of 4%, and greater than 0.10 earns you around 1%.
Similarly, Ethereum earns 4%, and Litecoin is around 5%.
Another feature of Blockfi Interest is that you can choose which currency you prefer to receive interest in.
For example, you deposit Bitcoin for a certain period of time. Now, in the preferences selection section, you can choose to receive interest on Bitcoin, Gemini USD, or even Ethereum.
This is useful because it provides greater stability and, to some extent, reduces currency risk due to the volatility of cryptocurrencies.
When it comes to Celsius, it’s a wider range for users to choose from. While Blockfi offers exchanges with 13 digital assets, Celsius offers over 40 cryptocurrencies.
Celsius now has its CEL token, allowing users to increase their interest income. How is it? You need to keep a certain percentage of your CEL currency portfolio to raise your interest rates. Also, you can choose to receive interest on CEL tokens. You can also convert it to another currency if you need to.
Another difference between Celsius and Blockfi is that Celsius pays interest every week. And those weekly payments keep changing based on the market and loan demand.
Another feature that Celsius allows is that it allows you to send crypto to different users. Winner: For anyone with less than 0.1 BTC, BlockFi is the winner. For anyone with more than 0.1 BTC, Celsius is the clear winner.
BlockFi vs. Celsius: Security Measures
Blockfi uses Bitgo, Coinbase, and Gemini as gatekeepers. Gemini offers up to $200 million in insurance.
Celsius uses Fireblock and Prime Trust. They offer up to $30 million in insurance.
Note: No platform has insurance; as the value of the cryptocurrency you deposited plummets, you will need to deposit more cryptocurrency until it matches the amount borrowed.
Otherwise, your collateral will be liquidated, and your investment will be refunded! Therefore, you must be prepared for risk if you decide to invest in these platforms.
Winner: In terms of security, BlockFi seems way ahead of Celsius.
Celsius vs. Blockfi: Which is better for earning more interest?
With this article, we hope to provide you with information and data to help you make better decisions when deciding which platform to choose in 2022.
However, please note that we are not your financial advisor. We are here to give you an idea of market and product trends. Always consult your financial advisor before investing or doing anything risky, such as locking up money with someone else. And never forget to do your diligent research on the subject to better understand everything!
It is advisable to use both platforms. Risk diversification is essential.
Haley Hayward is an experienced writer at gblogo.com, where she’s credited with more than 200 articles covering everything from entrepreneurial stories to mental health at work.
She also oversees the Comment&Questions, which poses important admission questions to experts in the field, and regularly hosts webinars on various aspects of the business school experience.
Prior to joining gblogo.com, Haley honed her skills as a freelance writer, tackling a wide array of topics from petcare to car maintenance.
Haley holds a Master’s degree in English Literature from the University of Edinburgh, Scotland.