BlockFi vs Coinbase: Which is Better?

Article Summary:

Crypto trading has become popular. The first things you need to do to trade crypto are to (1) familiarize yourself with the different crypto exchange platforms and (2) choose one or more to use for your trading. Cryptocurrency exchanges are a way to make money through trading and interest. Two prominent exchanges are BlockFi and Coinbase. These platforms offer similar features, but there are also some key differences between them.

Cryptocurrency is becoming more popular and mainstream every day. It’s decentralized and touted as more secure, immune to confiscation or freezing of assets (“censorship resistant”), and (sometimes) anonymous. Because no individual, organization, or government controls cryptocurrencies, to the extent that they are truly decentralized, they especially appeal to people who suspect the motives or competence of government officials, corporate executives, and other centralized authorities.

There are more than 1,600 cryptocurrencies available. Some are more popular than others. Understandably, that can seem daunting if you’re looking to invest in cryptocurrency. And you’ll have to choose between crypto exchanges, too — another seemingly complicated decision.

BlockFi and Coinbase are popular crypto exchanges for many investors. But which is right for you and your needs? Which one has the best features? Which one has the better prices and security? Read on to find out how BlockFi and Coinbase compare.

Pro tip: Pressed for time? Skip to the recap for a rapid summary of the key points of comparison between these two platforms.

Is BlockFi better than Coinbase?

At first glance, BlockFi and Coinbase look similar. Both crypto exchanges share comparable features. Yet, there are a few differences when it comes to their crypto products, investment choices, security options, and fees.

What is BlockFi?

Founded in 2017, BlockFi Crypto Account is a brokerage based in Jersey City, New Jersey. It’s popular for its interest accounts, which allow users to earn daily interest on their crypto holdings.

BlockFi offers 12 crypto coins. It’s a better option for crypto-backed loans due to its lower fees and interest rewards. BlockFi’s loans have interest rates as low as 4.5%.

What is Coinbase?

Founded in 2012, Coinbase Digital Currency Exchange is a brokerage based in San Francisco, California. The crypto exchange offers a huge number of cryptocurrency services. Included are ample trading features, low fees, and several educational resources for investors wanting to learn more about cryptocurrency. You can also learn more about cryptocurrency and how it works in our definitive guide to cryptocurrency for beginners. We’ve laid it all out for you.

Coinbase offers more than 90 different coins. It’s more suitable for traders wanting to dabble in a wide variety of cryptocurrencies. Coinbase’s bitcoin-backed loans have interest rates requiring an 8% APY (as of early May 2022).

What’s the difference between BlockFi and Coinbase?

Let’s get down to the technicalities.

Cryptocurrencies supported

For starters, Coinbase has a much larger crypto selection than BlockFi does. BlockFi only has 12 cryptocurrencies for you to choose from. In contrast, Coinbase offers its users a much wider selection. Users can pick from more than 90 cryptocurrencies with Coinbase.

Interest-bearing accounts and loan APRs

BlockFi can be the better option for you if you’re looking for interest rewards and lower fees. BlockFi also offers crypto-backed loans. Coinbase has a similar feature, but its rates are different. BlockFi’s interest rates reach as low as 4.5% APY. Coinbase’s interest rates reach as high as 8% APY.

Fiat currency support

BlockFi keeps crypto-to-crypto trading in mind. Unlike Coinbase, BlockFi will not show fiat currencies in your account. Traders must first convert their fiat currency into one of four USD-based stablecoins — USD Coin (USDC), Tether (USDT), Gemini Dollar (GUSD), or PAX Standard (PAX) — or a cryptocurrency. Fiat transfers into Blockfi are converted into GUSD automatically unless you specify another stablecoin or cryptocurrency to purchase.

Learning resources

Coinbase offers more resources than BlockFi. There are plenty of educational resources on Coinbase’s website for you to learn about cryptocurrency and how to best use it. Combine that with the more than 90 assets Coinbase offers (the more the merrier, right?), and you have a pretty impressive offering.

Overall, Coinbase acts as a teacher for its users, whereas BlockFi is there for you to place your trade or investment directly.

BlockFi vs. Coinbase: Features

Both BlockFi and Coinbase offer similar crypto services. But these cryptocurrency exchanges have slightly different approaches.

Funding your account, buying crypto, and earning interest

Coinbase users may use the Automated Clearing House Network (ACH), debit or credit card, wire transfer, or PayPal to buy and manage crypto coins. Coinbase has an 8.6% APY on deposits, which is attractive to traders.

BlockFi has the BlockFi Interest Account (BIA) that attracts traders. Traders will store their cryptos in their BlockFi interest accounts. This can be used for crypto-backed loans. Traders will earn interest up to 9.75%, depending on the kind of cryptocurrency.

Other noteworthy features

BlockFi also has a Rewards Visa Credit Card. With BlockFi’s card, users earn interest each time they shop with cryptocurrency. Coinbase is considering the option, but nothing’s set in stone yet.

Coinbase offers its users the Coinbase Earn feature. It’s an educational tool that teaches its users about cryptocurrency and how to make the right trade and investment. This differentiates Coinbase from BlockFi in that BlockFi offers no such tool.

By the way, the “Earn” in Coinbase Earn is not a typo. Coinbase promos the tool with the tagline “earn crypto while learning about crypto.” The feature allows users to earn crypto rewards while learning about different cryptocurrencies.

BlockFi vs. Coinbase: Currencies

Not to belabor the point, but Coinbase is far superior when it comes to having a wide selection of cryptocurrencies. BlockFi users will only find 12 coins to choose from, whereas Coinbase offers its users more than 90.

On Coinbase, you’ll get to choose between several popular cryptocurrencies and many that are less well known. Think Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Cardano (ADA), Polkadot (DOT), or the infamous Dogecoin (DOGE).

Regardless of budget, Coinbase can be a good option for just about anyone. This is especially so because it offers not only large-scale crypto options but smaller cryptos. Other crypto assets include a few stablecoins pegged to the U.S. dollar.

Stablecoins on Coinbase and BlockFi

Stablecoins are a class of crypto designed to have a relatively stable price. They’re backed by a reserve asset. Stablecoins offer users instant processing, as well as the security and privacy of crypto payments and the low-volatility, stable valuations of many fiat currencies.

BlockFi includes its fair share of stablecoins. But, mostly, the service supports bigger stablecoins that more people are interested in. You’ll find Bitcoin and Ethereum there, but also LINK (LINK), Litecoin (LTC), Binance USD (BUSD), USD Coin (USDC), and Gemini Dollar (GUSD).

Let’s say you want to make a Polkadot investment. Since BlockFi’s selection is fairly limited, you’ll have to look elsewhere. Coinbase could be an option.

BlockFi vs. Coinbase: Security

Both platforms are under strict regulatory standards, implementing various user-verification methods. Users can set up two-factor authentication. In fact, both platforms encourage this. Two-factor authentication makes it much more difficult for a non-authorized person to log into your BlockFi or Coinbase account.

Gemini is BlockFi’s custodian. This means that most funds within your BlockFi account are placed in Gemini’s cold storage. One estimate indicates that Gemini keeps 95% of funds in cold storage. Cold storage is offline, so it puts your data out of reach by unauthorized individuals. If the platform manages to get hacked, unauthorized individuals won’t be able to breach the barrier set by cold storage (not without direct physical access to the cold storage media, at least). In addition, Gemini insures the remaining hot-wallet funds against loss due to hacking of Gemini’s systems.

Technical note: cold storage and hot wallets. Technically, cryptocurrency funds always reside on the blockchain for a given currency. All that resides in either your active (hot) wallet or in cold storage (hardware wallet, paper wallet) are the keys for accessing those funds. Any time the keys for accessing your funds or the funds of your exchange are online, there is some risk that bad actors with the right technical skills will figure out a way to steal those keys. Once they do this, they can use the keys to move funds out of the addresses those keys secure.

The security Coinbase uses is similar. 98% of the funds are kept in cold storage, whereas the other 2% are kept in hot storage. Hot storage is always connected to the Internet and the cryptocurrency network. It can run on the cloud, a mobile device, or a desktop.

Can BlockFi be trusted?

 

BlockFi follows know your client (KYC) and account verification methods. It operates under strict regulatory standards and is required to meet or exceed industry guidelines. BlockFi uses Gemini as its primary custodian. Gemini keeps an overwhelming majority of crypto holdings in cold storage and insures hot wallets through Aron. Finally, BlockFi uses bug bounty programs to find security weaknesses.

However, in July 2021, the platform’s interest accounts drew scrutiny for potentially having violated securities law. In February 2022, BlockFi agreed to pay $100 million in penalties and pursue the registration of its crypto lending product.

According to SEC Chair Gary Gensler, the “settlement makes clear that crypto markets must comply with time-tested securities laws, such as the Securities Act of 1933 and the Investment Company Act of 1940. It further demonstrates the Commission’s willingness to work with crypto platforms to determine how they can come into compliance with those laws.”

BlockFi vs. Coinbase: Fees

BlockFi doesn’t charge a transaction fee. It does charge a 1% margin when the trade price is set, though. Moreover, BlockFi charges a withdrawal fee. Users are allowed one free withdrawal per month. If you end up using the free monthly withdrawal, BlockFi does charge a fee depending on the coin.

Unlike BlockFi, Coinbase charges transaction fees. Transaction fees will depend on the order value and payment method. Fees vary depending on whether you’re using the standard Coinbase platform or Coinbase Pro, too.

Although Coinbase doesn’t charge a withdrawal fee, it may charge trading fees. These fees vary depending on the crypto you’re trading and how busy the network is.

Is BlockFi right for you?

Since the platforms are similar, which you should choose depends entirely on how you plan to trade cryptocurrency and what kind of crypto rewards you look to reap.

Beginner-friendly and straightforward account funding

BlockFi is a newer platform than Coinbase. It automatically helps you earn interest, so it’s beginner-friendly. Coinbase has been around for longer and offers a load of features and coins. It’s generally recommended for more advanced traders.

Although you cannot hold fiat in your BlockFi account, BlockFi does support fiat currency transfers. So you’re able to fund your account with fiat currencies or crypto transfers. Any fiat you transfer into BlockFi will be converted to GUSD unless you specify another stablecoin or cryptocurrency to purchase. There’s no minimum to set up your account.

Commission-free trades and interest earnings

Worry not about transaction fees, unless you place limit orders. BlockFi utilizes commission-free trades. Any crypto you’ve purchased immediately earns interest the following exchange day. Recurring trades are available.

Drawbacks

One disadvantage to BlockFi is its limited selection of cryptocurrencies. Additionally, the platform’s interest accounts drew scrutiny for potentially having violated securities law in July 2021. And if you’re a New York resident, you won’t be able to take advantage of interest perks.

Is Coinbase better than BlockFi?

Coinbase is the most popular crypto exchange out there. With its user-friendly interface, it’s easy to see why there are over 73 million Coinbase users. But it must be mentioned: the fees are notoriously high. Not only that, it comes with its fair share of outages and random account closures.

Is Coinbase right for you?

Coinbase could be right for you if you’re looking for a wider set of trading options and more features. Of course, with more than 90 cryptocurrencies, it’s easy to see how Coinbase might fit the bill. Not only that, Coinbase offers low fees, interest perks, crypto loan products, card rewards, and several educational resources for traders wanting to learn more about cryptocurrency.

Coinbase gives traders two options: the standard Coinbase account and Coinbase Pro. A standard Coinbase account gives access to crypto trading, staking rewards, Coinbase Earn (an educational feature which, as noted earlier, lets you earn crypto rewards for learning about different cryptocurrencies), and digital storage. Coinbase Pro caters to more advanced traders.

Coinbase cons

But there are some cons to Coinbase. Namely, lower balances cost more. Also, there are no margin accounts or futures trading options available.

The biggest downside to Coinbase is its expensive fees. To buy and trade cryptocurrency, they’re as much as 3.99% per transaction with a 0.50% spread. This may be tolerable for investors who want to buy crypto and hold it for longer periods, but frequent traders could find the cost prohibitive.

Coinbase vs. Blockfi: comparisons recap

This table recaps the key points of comparison between these two platforms. Each point has been discussed in greater detail above. All numerical values here and above are as of early May 2022 and may change.

ComparisonCoinbaseBlockfi
MaturityFounded in 2012Founded in 2017
CryptocurrenciesOver 90Only 12
StablecoinsWide selectionOnly the most popular
Loan ratesAPR as high as 8%APR as low as 4.5%
Learning resourcesMoreFewer
Learning tool with crypto rewardsCoinbase EarnNone
Fiat supportFiat funds show in the account and can be used to purchase cryptoIt doesn’t show fiat in account; initial fiat transfers automatically converted to GUSD unless you specify another stablecoin or cryptocurrency
Interest on deposits8.6% APY, but not automatic (not as easy for beginners)Up to 9.75% APY with automatic BIA enrollment (not available in NY)
Rewards credit cardNo, but may addRewards Visa Credit Card
Regulatory complianceComplies with strict regulatory standardsComplies with strict regulatory standards, but has faced scrutiny and paid penalties
Login securitySupports and encourages two-factor authenticationSupports and encourages two-factor authentication
Security against hacking98% of funds kept in cold storage, protected from platform hacksCustodian keeps most user funds (perhaps 95%) in cold storage and insures the remainder
Transaction feesTrade and purchase fees up to 3.99% with 0.50% spread, varying by cryptocurrency, whether one is a standard or Pro user, and other factorsNo transactions fees on regular trades, but limit orders incur 1% fee
Withdrawal feeNoOne free withdrawal per month, fees after that varying depending on currency
ControversyAccount closures without clear justification and some outagesOne prominent run-in with regulators, with penalties paid
Big pictureMore feature-rich and powerful for experienced usersFewer features but more beginner-friendly, with lower fees in most cases

Different people use crypto differently

Some people use cryptocurrency to complete transactions. For example, they may buy or sell goods using crypto. Other people use cryptocurrency as a sort of investment, hoping to gain big and make a profit. And some, believing that certain cryptocurrencies will lose less value over time than fiat (government) currencies, acquire or “stack” crypto then hold onto it over the long term. Though these last acknowledge the greater price stability of fiat currencies over the short term, their beliefs about what constitutes sound money make them doubt this will remain true over the long term.

Key takeaways

  • Strategize before starting to buy and sell cryptocurrency.
  • Both BlockFi and Coinbase have their own strengths as crypto exchanges. Choosing one is merely a matter of deciding which best suits your needs.
  • Looking for something simple and straightforward? Wanting to invest in larger cryptos or stablecoins and earn interest? BlockFi it is.
  • You’re a more advanced investor looking for many trading options? Do you enjoy the analytical side of things? Or do you simply want to learn more about crypto as a whole? Coinbase is the one for you, provided you can tolerate some higher fees.
View Article Sources
  1. 3 states have cracked down on crypto lender BlockFi as the company’s interest accounts draw scrutiny — Business Insider
  2. Bitcoin Falls by $1,400 After Crash of Major Crypto Exchange Coinbase — Cointelegraph
  3. BlockFi Agrees to Pay $100 Million in Penalties and Pursue Registration of its Crypto Lending Product — Securities and Exchange Commission
  4. Coinbase and Its Troubling History of Customer Account Closures — Bitcoin.com
  5. Digital Assets Insurance — Gemini
  6. Explainer: ‘Privacy coin’ Monero offers near total anonymity — Thomson Reuters
  7. Most Cryptocurrencies Are More Centralized Than You Think — Bitcoin.com
  8. Relevant background articles from personal finance and investing sites — Various
  9. Will I see US Dollars in my BlockFi Account? BlockFi
  10. Binance Cryptocurrency Exchange Review — SuperMoney
  11. BlockFi Crypto Account Review — SuperMoney
  12. Coinbase Digital Currency Exchange Review — SuperMoney
  13. Cryptocurrency: The Definitive Beginner’s Guide… — SuperMoney