Article Two for Coin

Article Two for Coin

Today we will be covering two of the biggest names in the crypto lending space, where crypto holders can lend, borrow, spend, buy, and more. We will be doing a high-level side by side comparison of Nexo and BlockFi.

If you would like a more in-depth review on these platforms, we also have a specific Nexo review and a BlockFi review.

Disclaimer: I use BlockFi and Nexo and hold the NEXO token as part of my personal crypto investment strategy. I would like to highlight the risks with both platforms in the form of centralization/custodianship, hacks, mass default/liquidation events, and unknown changes in the regulatory landscape.

BlockFi vs Nexo

BlockFi and Nexo are both great platforms that are built by reliable companies. The teams behind both companies have extensive experience in FinTech and traditional financial industries. The leadership teams of both platforms have experience working in leadership roles for massively successful FinTech companies before starting these crypto lending platforms.

Until BlockFi sorts itself out with the SEC, I would recommend US-based users consider Nexo. However, be aware that US users on Nexo can only earn interest payments “in-kind”, meaning that they can only earn interest payments in the same asset that was deposited or purchased; they are not eligible for the extra 2% APY boost by earning in NEXO token as it the NEXO token is registered as a security.

Until BlockFi sorts itself out with the SEC, I would recommend US-based users consider Nexo. However, be aware that US users on Nexo can only earn interest payments.

Platform Features

As for the core features, the two platforms are similar in services offered. Users can lend, borrow, swap, and spend on both platforms. When deciding which one to use, you should consider your location to ensure that the feature you are interested in is supported and make sure the platform supports your favourite assets.

Another critical factor to consider is what feature is most important to you. For example, if a high earning APY is your primary goal, then Nexo will likely be your choice, but if you are looking to borrow 10k+ against your crypto holdings, then BlockFi may be for you. When it comes to borrowing, check closely and read the fine print for both platforms to ensure that the digital assets you hold are supported as collateral, and the asset you want to borrow is available.

Lending/Earn

The ability to earn passive income safely and securely without having to learn the complexities behind crypto self-custody and DeFi is one of the reasons people love these platforms, and they have exploded in popularity. Additionally, both of these platforms pay user’s an attractive APY simply for hodling. Here is how these two platforms stack up.

Both platforms have the option for users to earn in-kind, meaning if you hold Bitcoin, you can earn Bitcoin; if you hold Ethereum, you can earn Ethereum etc. In addition, Nexo provides a nice little boost for non-US customers where you can earn an extra 2% on your stash if you are happy to earn your interest in NEXO tokens.

Borrowing

Being able to borrow against your crypto collateral has become a key part of many crypto holders’ wealth planning strategies. But, unfortunately, most of us cannot simply “yolo” all-in on Bitcoin and hodl forever as we have pesky expenses such as bills that need to be paid, and I don’t know about you, but my local pub doesn’t accept Bitcoin for pints…Yet.

Other Features

With the primary lending and borrowing products out of the way, let’s look at some additional icing on the cake features offered by these two.

Crypto Card

The Nexo Crypto card is one of the most popular crypto cards on the market. Users can get up to 2% cashback on their purchases anywhere that Mastercard is accepted. I really like this card for travelling as purchases can be made in local currencies, so it is like having a local bank card every time you enter a new country. Using a traditional banking debit or credit card overseas is often a costly endeavour and should be avoided unless you have an exceptional bank card.

Here is a summary of the BlockFi card benefits:

• Unlimited 1.5% cashback, 3.5% for the first 3 months
• No fees
• No foreign transaction penalties
• Real-time transaction monitoring
• Accepted anywhere that accepts Visa
• Cardholders can select the crypto they want cashback earned in

Crypto Purchase Methods

Purchasing crypto directly from a debit/credit card or bank transfer is only possible on Nexo. BlockFi users will need to deposit USD first via wire/ACH, which is then converted to stablecoins, and from there, users can access the swap feature to pick up crypto.

Nexo offers a great perk, allowing customers to earn 0.5% cashback on purchases depending on loyalty level. Depending on how much you are purchasing, this can make purchasing crypto essentially free or even profitable if the 0.5% cashback is more than the fees associated with purchasing.

Fees

Neither platform charges fees for depositing crypto onto the platform or for simply holding while earning APY, making these both great for long term, fee-free earning. The only fees encountered will be from crypto purchases and withdrawals. On Nexo, there are fees for purchasing, withdrawing, and exchanging.

At Nexo, users can expect fees between 1.49%-3.49% depending on user location when purchasing crypto via card, plus a spread for when the fiat is swapped for crypto. Here is a list of countries that cannot purchase crypto on Nexo via card. There are no fees for bank transfers, though your bank may charge for this service.

Support

Nexo offers fantastic support via their comprehensive FAQ and knowledge base section, featuring great video tutorials and articles. I also appreciate Nexo’s live chat support, which I have used and received a response and resolution for my query within minutes, so kudos to the Nexo support team.

Security

It doesn’t matter how good either platform’s features are if the security is shoddy and there is a high risk of losing your funds and all the interest earned! Fortunately, both Nexo and BlockFi follow industry best practices and place a strong emphasis on security.

Nexo has partnered with multiple custodial security solution companies such as BitGo, Ledger Vault, and Bakkt, among others, to spread risk and ensure customer funds are well protected. In addition, Nexo carries $375 million in insurance through third parties to protect users. Through Nexo and Third-Party custodial solutions, here is a breakdown of Nexo’s security features:

• Air-gapped cold storage with bank-grade Class III vaults
• SOC 2 type 2-certified custodianship program
• $375,000,000 in insurance via third-parties
• Customer information is stored with limited personnel access
• Security management system and monitoring that is ISO/IEC 27001 certified

That is how the company keeps funds secured on the back end. On the front end, here are the security features on Nexo that users can enable to ensure their accounts remain as safe as possible:

• 2FA Authentication: SMS verifications, email verifications, authenticator app support
• Biometric Identification
• Whitelisting
• Withdrawal Confirmations & Log-in Alerts

At the time of writing, there have been no known successful hacks resulting in loss of user funds on either platform, which is always a good sign.

Closing Thoughts and Verdict

Both these platforms are seriously good at what they do, which is why they are two of the largest crypto lending platforms in existence and have both absolutely exploded in valuation, growth, popularity, and profitability.

But of course, each platform has its pros and cons and who they are better suited for. For the average person, I think it is quite clear that Nexo is the obvious winner because they offer significantly higher returns on crypto holdings. In addition, they have far more flexible options for borrowing funds regarding what can be put up for collateral and what funds can be borrowed. Nexo borrowing offers more flexibility due to the readily available and liquid crypto credit line. Nexo also has far superior asset support, more options for buying crypto, swapping assets, and withdrawal methods.