The Cryptocurrency Industry has greatly expanded in the past few years, with many Crypto exchanges making their way into the space. Blockfi is one such new Crypto trading platform that entered the Crypto industry in 2017 with the aim to bridge the gap of complexity between investors and blockchain technology. In early 2012, Coinbase began providing users with the ability to buy Bitcoin online and is now one of the leading cryptocurrency platforms worldwide. Can you list the differences between Coinbase vs BlockFi? Blockfi gives users an alternative option to buy or sell any asset and earn interest on their holdings.
An Overview of Coinbase Crypto exchange:
Coinbase is one of the prominent cryptocurrency exchanges in the United States of America. It was launched in the year 2012 as the brainchild of Brian Armstrong, just after three years of the Bitcoin launch. Coinbase crypto exchange is publicly traded under the ticker symbol COIN.
The crypto-assets trading platform supports approximately more than 141 cryptocurrencies and altcoins, and it is supported by more than 100 countries worldwide. Coinbase has a quarterly traded volume of over $309 billion in the first quarter of 2022 and an active user base of 8.8 million worldwide.
Furthermore, Coinbase users can purchase cryptocurrencies via an Automated clearing house network (ACH), wire transfer, and PayPal. Moreover, the users can exchange or trade the fiat currencies for altcoins. The exceptional feature why investors prefer Coinbase crypto exchange is because of the educational resources it provides to its investors, with a wide range of cryptocurrencies so that investors can diversify their investment portfolio.
The educational platform of Coinbase rewards its users in various cryptocurrencies in exchange for watching an educational video or learning about any particular crypto asset.
Coinbase is soon rolling out a Visa debit card for Coinbase users. According to the statement given by Coinbase, there won’t be any annual fees applied to the Visa debit card, and users can earn up to 4% as cashback rewards on every purchase. Purchases can be made in cryptocurrency where ever Visa card is accepted.
Additionally, the Coinbase cryptocurrency exchange has its own Native coin, referred to as the USD coin or USDC, and users can earn a 0.15% annual percentage yield (APY) for holding the coin.
However, Coinbase works on the Maker and Taker fees model. It charges a spread fee of 0.50% per trade and a fee of 1.49% for bank account purchases or Coinbase wallet. Also, it charges a fee based on the payment method. For instance, if you buy a Bitcoin worth $199 by utilizing the deposited funds, you will have to pay a fee of $2.99. However, if you make the payment via debit card, you will be charged a variable fee of 2%.
An Overview of Blockfi Crypto Exchange:
Blockfi was founded in the year 2017 by the duo Zac Prince and Flori Marquez. Blockfi is a privately owned U.S. cryptocurrency exchange that also acts as a crypto bank and a new class of financial services company. The crypto bank states that their company is trying to build a bridge between cryptocurrencies and traditional financial and wealth management services.
The company offers loans to individual and institutional investors by holding their crypto assets. In other words, Blockfi offers collateralized USD loans using Crypto-assets as collateral. A simple example would be an investor can give their cryptocurrency holdings as security for repayment, like Bitcoin (BTC) or Ethereum (ETH), and in exchange get funds directly in their bank account in USD, Gemini dollar or GUSD, and USDC.
Moreover, Blockfi supports eight currencies, and the transaction fees are very low in comparison to Coinbase. The most significant rationale why investors choose Blockfi over other cryptocurrency exchanges is because of the Blockfi interest account (BIA). A Blockfi interest account or BIA means you can store your crypto assets in the Blockfi interest account and earn an interest in crypto up to 15% annual percentage yield (APY).
Additionally, Blockfi converts your fiat currencies into Gemini dollar or GUSD.
However, Blockfi sells or markets itself as a fee-free platform, but it charges a spread fee of up to 1% per trade. Many users purchase crypto assets from other cryptocurrency exchanges and then deposit the crypto assets in Blockfi interest accounts to gain from the accrued compound interest paid monthly in terms of crypto.
Let’s study the differences between the top two crypto exchanges in terms of a few select factors:
To grasp the concept followed by both Coinbase and Blockfi as cryptocurrency exchanges and note down the pros and cons of both the exchanges, we have determined a few factors based on which we will study the difference:
- Trading fees
- Ease of use
Let’s get started and study the differences between the two top-notch cryptocurrency exchanges in the United States of America.
Coinbase vs BlockFi: Trading Fees
There is a clear difference between the fees of the two prominent cryptocurrency exchanges. Furthermore, as mentioned above, Coinbase works on a maker/taker fee structure or model. Coinbase charges a spread fee of up to 0.50% per trade, plus users have to pay 1.49% extra fees to send the money to their bank account or Coinbase wallet. Coinbase fee depends on various factors, including location and payment method. Moreover, it charges a convenience fee or a variable payment-related fee.
The convenience fee charged by Coinbase consists of:
- A fee of $0.99 for $10 or less than that
- Charges a fee of $1.49 for $10 to $25 or less
- A fee of $1.99 for more than $25 but less than $50
- A fee of $2.99 for more than $50 and less than $200
To explain the above fee calculation with an example, consider you are purchasing $199 of Bitcoin by using your deposited funds. In this case, you will be paying a flat fee of $2.99. Whereas, if you make the payment via debit card, you have to pay a variable fee of 2%.
Moreover, Coinbase Pro, the robust platform that supports Coinbase, charges a spread fee of up to 0.50% and a maker-taker fee, in which maker fees range from 0% to 0.50% and taker fees range from $0.04% to 0.50%.
Coinbase Pro fees according to the pricing tiers:
- For the amount of up to $10,000: Taker/Maker fee is 0.50%/0.50%
- For the amount between $10,000 to $50,000: Taker/Maker fee is 0.35%/0.35%
- For the amount between $50,000 to $1,00,000: Taker/Maker fee is 0.25%/0.15%
- For the amount between $1,00,000 to $1,000,000: Taker/Maker fee is 0.20%/0.10%
- For the amount between $1,000,000 to $10,000,000: Taker/Maker fee is 0.18%/0.8%
Suppose you compare Coinbase and Coinbase pro based on the fee charges. Coinbase Pro charges a lower amount of fee in comparison with Coinbase.
Blockfi Trading Fees:
As mentioned above in the Overview section, Blockfi markets itself as a fee-free platform. In other words, it does not charge any transaction fees. On Blockfi, it is free to send money via an Automated clearing house network or ACH, wire transfer, and it’s free for investors to connect their bank accounts.
However, while purchasing a cryptocurrency from Blockfi, investors pay up to 1% more than the current market price. That means the crypto exchange platform charges a margin of 1% per trade.
Furthermore, Blockfi charges a withdrawal fee just like Coinbase does. The difference is that Blockfi offers one free crypto withdrawal per month and one free stablecoin withdrawal per month. After the one free withdrawal per month of a user gets exhausted, the platform charges a withdrawal fee that differs according to the cryptocurrency:
- Bitcoin (BTC): 0.00075 BTC withdrawal fee
- Ethereum (ETH): 0.02 ETH withdrawal fee
- Chainlink (LINK): 0.95 LINK withdrawal fee
- Litecoin (LTC): 0.0025 LTC withdrawal fee
- Stablecoins: $10.00 USD withdrawal amount
- PAX Gold (PAXG): 0.015 PAXG withdrawal fee
- Uniswap (UNI): 1 UNI withdrawal fee
- Basic Attention Token (BAT): 35 BAT withdrawal fee
Mostly the fee charged by Blockfi is less than Coinbase but more expensive than Coinbase Pro. Also, the number of cryptocurrencies supported by Blockfi is limited to the number eight, which is why investors prefer to take advantage of the interest-bearing feature of Blockfi.
Coinbase vs BlockFi: Security Comparision
Coinbase has a better track record when it comes to security measures and protecting the funds invested by the users because the platform has never been hacked. The United States-based security exchange follows strict protocols and standards set by the regulatory authorities. Coinbase strictly follows Know your Customer (KYC) and two-factor authentication technique to keep the account of the user secured.
In two-factor authentication or 2FA, a user follows two steps while logging in to the account. Firstly, they enter the password and then the security code generated in an authentication app on their smartphone.
Moreover, Coinbase is the custodian of its own funds. For instance, it keeps 98% of the deposited funds in the cold storage or also referred to as a cold wallet. The cold storage, better known as a cold wallet, is not connected to the internet, which upgrades the security quality and prevents any potential theft.
Also, it has an insurance policy for the funds stored in a hot wallet or hot storage against fraud or theft. Additionally, the Federal deposit insurance corporation (FDIC) provides an insurance cover of USD $250,000 per individual for the cash deposits.
Plus, Coinbase has another security feature known as whitelisting. If users enable this feature, the withdrawals done on their account will only be visible to the addresses that are whitelisted.
Blockfi is a new exchange in comparison with Coinbase. However, it follows the security protocols and measures set by the regulatory authorities. Blockfi follows the guidelines of Know your customer (KYC) and strictly follows two-factor authentication with the help of a user authentication app on the user’s smartphone.
The major difference between the security of both cryptocurrency exchanges is the custodian of the invested funds. Blockfi does not hold its crypto funds itself. Instead, it uses other custodians to store the funds. Gemini is Blockfi’s primary custodian, meaning Gemini holds most of the crypto funds.
Moreover, Gemini stores 95% of the funds in a cold wallet or cold storage and the rest of the funds in a hot wallet or hot storage with insurance to prevent theft or fraud. Hot storage or hot wallet is connected to the internet. This is the reason why it is more vulnerable to cybercrime attacks.
Moreover, Blockfi offers the whitelisting feature to its users but refers to it as to allowing listing. It works in the same manner as Coinbase whitelisting feature does.
Coinbase vs BlockFi: Features
Coinbase supports more than 141 cryptocurrencies, which offers a great scope of diversification to investors who wish to invest in different cryptocurrencies. Unlike Blockfi, Coinbase is a cryptocurrency exchange and a brokerage to buy, sell, and trade cryptocurrencies. In addition, it allows crypto trading and cash deposits using payment methods like PayPal, wire transfer, and automated clearing house or ACH.
One of the greatest benefits of using Coinbase is that the users can exchange fiat currencies for altcoins directly without any hassle. Coinbase Earn and staking are one of the ways through which investors and users can make money.
Under Coinbase earn program, if a user learns about a cryptocurrency, then he will be rewarded with the same cryptocurrency and can do whatever he wants with the reward. The cryptocurrency exchange focuses on educating the investors regarding different crypto assets.
Moreover, Coinbase has recently launched a Visa debit card with no annual fee applied, and users can earn up to 4% in rewards on every purchase they make. With Coinbase Visa debit card, users can spend their cryptocurrency where ever Visa debit card is accepted as a form of payment.
Unlike Coinbase, Blockfi accepts fiat currencies and then converts them into Gemini Dollars or GUSD instead of directly exchanging the currency for the altcoin. Blockfi supports eight currencies and stablecoins, including BTC, ETH, LTC, PAXG, USDC, USDT, GUSD, and PAX.
To start trading on Blockfi, you must transfer the funds using ACH or wire transfers. Then the funds you have transferred will be converted into a stablecoin, Gemini Dollar (GUSD), and get deposited into the Blockfi interest account. From Blockfi interest accounts, you can start purchasing cryptocurrencies.
Blockfi is more often used as a crypto bank than a cryptocurrency exchange. Hence, it provides a mind-boggling service to earn interest in your crypto holdings.
You can deposit your crypto holdings in a Blockfi interest account and earn an interest in terms of crypto up to 15% annual percentage yield (APY). This is one of the most influencing features of Blockfi, and investors do take advantage of the BIA feature.
Another interesting feature of Blockfi is the crypto loans for individuals as well as institutional investors. On Blockfi, you can take a loan by staking your crypto holdings as collateral or as security for repayment. Moreover, the Annual interest rate or APR is as low as 4.5%. In other words, you will be given a loan directly in your bank account in terms of USD, GUSD, and USDC in exchange for staking your crypto assets.
Coinbase vs BlockFi : Ease of use
Coinbase is appreciated for its easy-to-use interface and educational tutorials and videos teaching about various types of cryptocurrencies. Moreover, the platform is beginner-friendly in comparison with Coinbase Pro, which is exclusively for advanced traders. Also, most people find Coinbase an intuitive platform to use, and its mobile app receives high ratings for usability.
The issue comes with the customer service of Coinbase, which is very slow and tedious. Additionally, call support is almost considered useless even in cases of serious money issues.
Blockfi is also appreciated for being a beginner-friendly platform, as first-time users consider it easy to navigate through the services. In addition, however, Blockfi gives advice about understanding loan terms, buying a car, paying crypto taxes, and other educational resources regarding the crypto industry.
The major difference is the exceptional customer service provided by Blockfi. It offers live chat, phone customer support, and email support. Most of the emails are replied to within 24 hours, unlike Coinbase.
If you are an investor looking to diversify your cryptocurrency portfolio, Coinbase will be a good choice for you. However, suppose you are not looking towards diversifying. In that case, you must choose Blockfi because of the endless list of features like crypto-backed loans, Blockfi interest on crypto assets, buying and selling cryptocurrencies, and exceptional customer service.
Moreover, investors choose Coinbase as a futuristic option because of the educational resources provided by the platform, which empowers the traders. Hope this Coinbase vs BlockFi article has made clear Instructions for you to start your Crypto trading Journey.