BlockFi vs Coinbase: Which is Best for Beginners to Crypto?

by | Sep 23, 2022

If you’re new to the world of crypto and want to know which exchange is best to start your journey, here is a detailed comparison of BlockFi vs Coinbase to help you get started!

BlockFi and Coinbase are both crypto exchange services that allow buying and selling of cryptocurrencies. While Coinbase focuses mainly on cryptocurrency exchange and brokerage, BlockFi offers crypto banking features with interest-bearing accounts and loans.

When it comes to cryptocurrency variety, Coinbase is a more popular choice for investors. For those who prefer daily interest earnings, BlockFi is the obvious choice.

If you are considering a crypto investment to support your solopreneur and digital nomad lifestyle, this BlockFi vs Coinbase comparison will aid you with your decision-making.

Let’s find out which one is better!

BlockFi vs Coinbase: TL;DR

blockfi vs coinbase

The Pros of BlockFi vs Coinbase

The main benefits of using BlockFi are:

  • Fee-free trading for crypto or stablecoin.
  • Interesting earning from BlockFi interest account with no minimum balance.
  • Instant & recurring trades are available.
  • No minimum for setting up an account.
  • Allows earning crypto rewards.
  • Allows taking out loans with crypto assets as collateral.
  • Responsive customer service.
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The Pros of Coinbase vs Blockfi

The main benefits of using Coinbase are:

  • Rookie-friendly & one-click trading.
  • Low account setup minimum.
  • Allows earning crypto rewards by learning about crypto assets.
  • Supports 181 tradable cryptocurrencies, which is best for investors.
  • Deposits are insured against theft.
  • Analytics tools are available.
  • Coinbase Pro is available for advanced users.
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BlockFi vs Coinbase: Detailed Comparison

Let’s compare the two platforms based on the following features:

  • Crypto trading and exchange
  • Interest accounts
  • Crypto-backed loans
  • Wallet
  • Rewards & Cards
  • Security
  • Ease of use and support
  • Pricing & Fees

Crypto Exchange

If crypto trading is your intention, you must settle for a platform that offers crypto exchange services, and both BlockFi and Coinbase offer this feature.

BlockFi

BlockFi-vs-Coinbase-BlockFi-Crypto-Trading

BlockFi offers crypto trading through its cryptocurrency exchange services. To start trading, you need to send funds using ACH or wire transfer. BlockFi will convert the fiat currency into GUSD or Gemini Dollar and deposit it into the BlockFi interest account that you hold. You can then use the GUSD to buy cryptocurrencies.

However, BlockFi offers only 33 cryptocurrencies and 3 stablecoins. This doesn’t allow enough diversification of assets while trading.

Coinbase

coinbase-crypto-trading

Coinbase also offers crypto trading and allows cash deposits using PayPal, wire transfer, and ACH (Automated Clearing House Network). The greatest benefit is that traders can exchange fiat currencies for altcoins. There is no need to convert the cash deposits into any stablecoin such as Gemini Dollar for trading.

On top of that, Coinbase offers 181 tradable crypto assets, making it a perfect choice for investors who look for diversification.

Coinbase also offers Coinbase Pro for advanced traders. The platform comes with advanced charting and other features that advanced users prefer.

Blockfi vs Coinbase Winner: Coinbase is a clear winner for trading cryptocurrencies because of a wider range of tradable crypto assets and the ability to use fiat currencies for trading.

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Interest Accounts

You may want to earn interest on the money that sits ideal. Of course, you need to select a platform that will allow you to open an interest-bearing account.

BlockFi Interest Accounts

blockfi-vs-coinbase-blockfi-interest-accounts

When you create an account with BlockFi, you will be automatically entitled to a BlockFi interest account. All the money you deposit with BlockFi will be converted to GUSD before you can start trading.

The GUSD amount is then deposited into your interest-earning account where you will earn daily interest at 9.5% APY (annual percentage yield).

Additionally, non-US clients can transfer cryptocurrencies to their BlockFi interest accounts (BIAs) where they will earn daily crypto interest. The US clients who already had crypto holdings in their BIAs before February 15, 2022, will continue to earn interest on their crypto holdings, but now they can no longer move cryptocurrencies from their wallets to BIAs.

Coinbase

Unfortunately, Coinbase does not offer such interest-earning accounts to Coinbase users.

Blockfi vs Coinbase Winner: BlockFi is the clear winner because it allows users to earn interest on both GUSD and crypto holdings while Coinbase doesn’t have that feature at all.

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Crypto-Backed Loans

The ability to borrow cash with cryptocurrencies as collateral can help you reach your financial goals quickly. Both BlockFi and Coinbase offer this feature.

BlockFi Loans

blockfi-loans

With BlockFi you can use Bitcoin, Ethereum, and Litecoin as collateral to borrow dollars with interest rates as low as 4.5%. However, the interest rates can reach as high as 9.75% depending on your LTV or Loan-to-Value ratio.

The maximum loan you can secure is 50% of your crypto deposit. In case the LTV is 50% the interest rate will be 9.75%. For LTV of 35% and 20%, the interest rate will be 7.9% and 4.5%, respectively.

Coinbase Loans

blockfi-vs-coinbase-coinbase-loans

Coinbase also offers crypto-backed loans, but the interest rate is flat at 8.7%, making it much more expensive than BlockFi. Also, you can use only Bitcoin as collateral. LTV is capped at 40% as opposed to BlockFi’s 50% cap.

Blockfi vs Coinbase Winner: BlockFi is a clear winner because of its higher LTV cap and low interest rates. It also allows using three cryptocurrencies as collateral.

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Wallet

You will need a crypto wallet to hold your cryptocurrencies. A wallet will allow you to send, receive, trade, and hold cryptocurrencies. Both BlockFi and Coinbase crypto exchanges offer wallet services.

BlockFi Wallet

blockfi-wallet

The BlockFi wallet is a custodial wallet controlled by Gemini Exchange. The problem with a custodial wallet is that if BlockFi freezes your account, you will lose access to your cryptocurrency holdings.

BlockFi wallet puts 95% of holdings into cold storage and the remaining 5% in hot storage. Hot storage is insured through Aron.

BlockFi users will not earn interest on cryptocurrencies they store in the wallet. They also cannot store NFTs.

Coinbase Wallet

blockfi-vs-coinbase-coinbase-wallet

Coinbase wallet is a self-custody wallet, allowing Coinbase users to remain in complete control. With Coinbase crypto wallet, you can sell and buy crypto, send and receive cryptocurrencies, and even store NFTs.

Coinbase wallet puts 98% of holdings into cold storage and the remaining 2% in hot storage. The hot storage is protected against fraud and theft with an insurance policy. Also, the fiat cash held in the e-money wallet is insured with FDIC (Federal Deposit Insurance Corporation) for up to $250,000 per user.

Furthermore, you can earn interest on crypto assets you hold in the wallet. You don’t need to be a Coinbase user to use the wallet, but you connect it to your Coinbase account.

Blockfi vs Coinbase Winner: Coinbase is a clear winner in the wallet segment because it allows holding both cryptos and NFTs. Plus, users can also earn interest on cryptocurrencies they hold in their wallets.

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Rewards & Cards

Both BlockFi and Coinbase offer rewards and cards.

BlockFi Card and Rewards

blockfi-visa-credit-card

With BlockFi, you will hold Gemini Dollars that will earn 9.5% APY. You will also get a BlockFi Visa credit card that has no annual fees and with every purchase, you will earn 1.5% rewards in Bitcoin and other cryptocurrencies.

Coinbase Card and Rewards

blockfi-vs-coinbase-coinbase-visa-credit-card

You can earn crypto rewards by taking short courses and watching videos. You will also get the Coinbase card, which is a Visa debit card that offers 4% rewards for every purchase and has no annual fee.

With Coinbase, you also get USD Coin (USDC). You can earn 0.15% APY for holding it.

Blockfi vs Coinbase Winner: Coinbase is the winner here because you can earn free crypto just by watching videos and taking courses. This is not possible with BlockFi.

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Security

When dealing with cryptocurrencies, security must be top-notch to prevent financial losses.

BlockFi Security

blockfi-security

BlockFi offers two-factor authentication to prevent unauthorized account access. Plus, they have allowlisting (BlockFi’s terminology for whitelisting) which allows withdrawals only to whitelisted addresses. Also, the BlockFi wallet comes with AES-256 encryption.

However, BlockFi suffered a SIM card swap incident in 2020 in which hackers stole some customer information. No funds were stolen.

Coinbase Security

blockfi-vs-coinbase-coinbase-security

Coinbase also offers 2FA and whitelisting and their wallet is secured using 256-bit AES encryption. Interestingly, Coinbase has never been hacked.

Blockfi vs Coinbase Winner: Coinbase is a clear winner because of its clean track record and no security breaches.

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Ease of Use & Support

Nobody likes a complex platform, especially when dealing with money. You will also want a platform that offers better customer support.

BlockFi

blockfi-customer-support-options

BlockFi is beginner-friendly with both its website and mobile apps being easy to navigate. The platform doesn’t offer enough resources to learn about cryptos, but offers resources on loan terms, paying crypto taxes, etc.

The customer support is excellent with email support often clocking a 24-hour response rate. Live chat and phone support are also available.

Coinbase

blockfi-vs-coinbase-coinbase-customer-support-options

It is very user-friendly and great for first-time users because of an extensive collection of tips, tutorials, and knowledgebase articles. Both the website and mobile apps are stable and easily navigable.

Customer support is terrible, though! Phone support is almost unusable and email support is also notoriously slow.

Blockfi vs Coinbase Winner: BlockFi is a clear winner because of its excellent customer support.

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Pricing & Transaction Fees

Cryptocurrency exchanges will charge transaction fees for crypto trading. Trading fees usually vary from one platform to another. Thus, your aim must be to select the one with lower fees.

BlockFi Pricing & Fees

BlockFi positions itself as a fee-free cryptocurrency exchange platform. Trading costs do not attract any convenience fees. Plus, you don’t need to pay any fee for sending money using a wire transfer or ACH. You can even connect your bank account to your BlockFi account.

However, at the time of the trade, there will be a price, which is around ± 1% relative to the spot price index of an asset. In layman’s terms, you will pay 1% more than the current market price during trading. Even at 1%, the trading fees of BlockFi are cheaper than Coinbase in many cases but higher than Coinbase Pro.

For withdrawal, BlockFi offers one free withdrawal for stablecoin, and one free crypto coin withdrawal in a month. Anything beyond that attracts withdrawal fees with the following rates:

blockfi-fees-schedule

Coinbase Pricing & Fees

Transaction fees include a 0.5% spread in addition to a separate transaction fee that depends on various factors like the payment method, location, etc. The convenience fee is the greater amount between a “variable payment-related fee” or a “flat fee.”

For instance, if you purchase $180 worth of Bitcoin and you pay using your debit card, you will pay a 2% variable fee, which is $3.60. However, if you buy using deposited funds, you will pay the flat convenience fee of $2.99.

Here is a quick breakup of the flat convenience fee structure:

  • Amount ≤ $10: $0.99
  • Amount > $10 or Amount ≤ $25: $1.49
  • Amount > $25 or Amount ≤ $50: $1.99
  • Amount > $50 or Amount ≤ $200: $2.99

However, if you are a Coinbase Pro user, there will be a spread of 0.5% and maker fees of 0% to 0.5% and taker fees of 0.04% to 0.5%, which effectively makes Coinbase Pro cheaper than BlockFi.

Also, Coinbase doesn’t charge withdrawal fees, but they will charge a network fee which will depend on the asset and how busy the network is during the withdrawal.

Blockfi vs Coinbase Winner: Unless you are an advanced trader capable of handling Coinbase Pro, BlockFi is a much cheaper option and hence, a clear winner for beginners.

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BlockFi vs Coinbase: FAQs

Is BlockFi or Coinbase Better?

Both Coinbase and BlockFi offer exchange services with BlockFi focusing more on crypto banking services and Coinbase focusing more on trading and exchange. If you want to earn interest and secure cheaper crypto-backed loans, BlockFi is better. If you want a greater diversity of tradable cryptocurrencies, Coinbase is better. Which one works better for you will depend on your intent and financial goals.

Does BlockFi work with Coinbase?

Yes, you can transfer coins from BlockFi to the Coinbase wallet app and vice-versa. You need to enter the unique wallet address in the destination box and initiate the transfer. However, people usually transfer coins to BlockFi accounts to take advantage of interest-earning accounts.

Are BlockFi and Coinbase the same?

BlockFi and Coinbase are both crypto exchanges, but they are not the same. Yes, you can trade cryptocurrencies using both, but BlockFi is better for holding cryptos and earning interest from them, while Coinbase is better for diversifying crypto investments.

Both platforms offer educational resources, but they are for different purposes. For example, BlockFi’s resources will teach you about loan terms and paying crypto taxes. Coinbase’s educational resources are geared towards learning about cryptocurrencies, crypto trading, etc.

BlockFi vs Coinbase: Summary

Both BlockFi and Coinbase are excellent companies with great security features that will allow you to trade crypto. When it comes to selecting between the two, the choice will depend on your intent.

For instance, if you want to diversify your crypto investments, Coinbase is much better because it offers a wider range of tradable assets. Also, if you want to be able to spend your cryptocurrency holdings using a Visa debit card, Coinbase is right for you.

Similarly, if you want interest earning on your cryptocurrency holdings, and want a Bitcoin rewards credit card where you can earn Bitcoins as rewards, BlockFi is the best option.

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