BlockFi Review: Bitcoin and Crypto-Backed Loans

in LeoFinance •  2 months ago  (edited)

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Over a month ago, I found the Bitcoin collateral loan product by BlockFi and decided to give it a try. Collateral loans have spiked in popularity with the latest DeFi boom in crypto. Now, everyone seems to be trying to collateralize their crypto positions to take out a loan and gain instant liquidity.

There are pros and cons to every collateral loan product - whether you’re using a centralized or decentralized protocol. BlockFi offers a professional experience and feels more like using a new-age bank than using a decentralized protocol to collateralize crypto.

With my experience in decentralized loan protocols, I decided to give a centralized loan protocol a shot and see what the pros and cons are. After using BlockFi’s loan product, I can say that there are clear reasons for using either decentralized or centralized loans. For my personal portfolio, using a mix of the two types of loan products makes perfect sense. In this episode, I explain the BlockFi loan product, how it works and the pros and cons between CeFi and DeFi.

In This Episode:

  • Why get a loan
    • Liquidity Without Selling - participate in gains of your collateral + use liquidity to generate other returns
    • Tax advantages
    • Use Cases
  • How the loan process works
    • General process
    • My experience
    • Interest payments and paying off the loan with your collateral
  • How Much BTC Do You Need?
    • Minimum loan amount - $5,000 USD
    • Recommended LTV - 50% (so if BTC is $10k/BTC and you want a $5k loan, you should have at least 1 BTC as collateral)
  • Pros and cons for CeFi
    • Customer service (professional)
    • Safety net (margin call grace period)

Sign-Up For BlockFi and get a $20* Signup Bonus

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Margin looks mighty appealing in a bull market. But when markets turn not so much.

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I like what blockFi is doing since you don't have to lose your position when you require cash and I think this concept is here to stay, just hope non-custodial versions will come out soon, I see flash loans are already trying to do that, but its pretty opaque at the moment

I was telling a friend the goal of BTC is never to have to sell and projects like this show that soon we won't have to, we can use this as leverage as you would extract cash our of your home. That's why I have no problem accumulating and converting as much fiat as I can afford into BTC

I've been using Celsius instead of BlockFi, after BlockFi got hacked and lost user data I don't really like them that much, but I guess it's better to get the user data hacked than crypto hacked...

Using a service like BlockFi is a must! Investors shouldn't sell assets, especially scarce assets like bitcoin that should go up in price long-term... much better to get a loan and use fiat which is always losing value than to spend Bitcoin or sell Bitcoin...

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