BlockFi vs Bitcoin Hex

James HeadshotAuthor: James Page
Last Updated: November 2020

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These days, people all over the world are looking for alternative financial services to replace inefficient, time-consuming, and expensive financial institutions, central banks, fiat currencies, outdated monetary systems, and centralized electronic payment networks.

The solution can be found in DeFi projects built using blockchain technology and digital currencies. These trustless environments and secure assets allow users to make decisions about their own money.

The popularity of global cryptocurrency exchanges like Binance and Coinbase shows that people are ready for these changes.

However, buying and exchanging assets is not the only thing you can do with cryptocurrency. More and more platforms are working on ways to bring traditional banking services to the crypto industry. Today, we’ll focus on two attractive projects, BlockFi and Bitcoin HEX, that focus on different ways to earn crypto interest.

The History Behind the Platforms

BlockFi

BlockFi is a pioneering crypto lending platform and a popular crypto interest exchange. This crypto project was launched in 2017 and headquartered in New York City. As the platform grew its customer base, it expanded its offices in the US (New Jersey), but also in the European market (Poland), and South America (Argentina).

So, how does BlockFi manage to edge out its competitors?

First of all, BlockFi was created by a stellar team of fintech experts whose main area of expertise is online lending. We have the co-founders Zac Prince (the current CEO) and Flori Marquez (SVP of Operations). There’s also teammate Rene Van Kesteren whose role as the Chief Risk Officer has been crucial for BlockFi’s effective governance and development.

Their joint mission has been to bring financial services to those who have restricted access to traditional banking services and to create similar ones that would be applicable to the crypto market. Starting with basic credit services, BlockFi has added crypto borrowing and lending options, a crypto interest account, and a trading platform.

This is why BlockFi has the institutional backing and support from industry giants like Winklevoss Capital – their crypto exchange Gemini is BlockFi’s primary custodian – Valar Ventures, Morgan Creek, Coinbase Ventures, ConsenSys Ventures, Galaxy Digital, Fidelity, Akuna Capital, SoFi, and many others.

Bitcoin Hex

HEX is a cryptocurrency and high-interest blockchain certificate of deposit (CD) launched in December 2019 by an early Bitcoin adopter called Richard Heart. The project has attracted a lot of attention and a somewhat notorious reputation prior to and after its launch and has been accused of being a scam.

Namely, the only thing that the HEX team seems to care about is to pump up the price of its native ERC-20 token HEX instead of focusing on the use cases of both the asset and the technology behind the project. In fact, the only thing we know about HEX is that it’s built on the Ethereum blockchain and includes a couple of smart contracts.

At the moment, there are 15 cryptocurrency exchanges that support the HEX token including Uniswap V1 and V2, Hotbit, BitMart, Bilaxy, YoBit, LBank, Bitbox, Bitcratic, BitexLive, Crypxie, Exrates, Coinsbit, Bidesk, p2b2b, and Bitcoin.com. Judging by the 24-hour trading volumes on both Uniswap and Hotbit, both over $360,000, we can conclude that HEX is quite popular among traders despite the stigma.

Bitcoin HEX vs BlockFi: The Comparison

Supported Cryptocurrencies

On BlockFi, you can choose to trade, deposit, or lend some of the most popular cryptocurrencies and stablecoins on the market.

The list includes the top three most promising cryptos with the highest market capitalization: Bitcoin (BTC), Ether or Ethereum (ETH), and Litecoin (LTC), and several stablecoins: Paxos, PAX Gold, USD Coin, and Gemini Dollar. Tether (USDT) is not an option for US-based clients. Unfortunately, BlockFi lacks support for other prominent altcoins like Ripple (XRP), Monero (XMR), or Bitcoin Cash (BCH).

BlockFi only supports crypto to crypto trades for now. The company has promised to add a fiat gateway soon but encourages users to try investing in stablecoins as well.

By being pegged to a fiat currency – for example, Gemini Dollar is pegged at a 1:1 ratio with USD – these digital tokens decrease volatility risks and allow investors to exchange their cryptos for a currency that’s still more private and secure than traditional ones.

Claim HEX with Bitcoin (BTC) or Ethereum (ETH)

On the other hand, Bitcoin HEX only supports its native token HEX and there are a couple of ways to purchase this digital asset.

The simplest option is to buy HEX via credit card or wire transfer directly from a number of cryptocurrency exchanges.

Next, you can use the AdoptionAmplifer to transfer ETH and earn HEX. The percentage of your ETH transfer that day would determine the amount of HEX you’ll get. For example, if 1 billion HEX is available that day and you’re the only one to transfer ETH, you’ll earn the total amount.

Users who owned Bitcoin on December 2, 2019, were able to claim HEX for free as the platform chose to take a snapshot of Bitcoin’s blockchain on that particular day and award those Bitcoin owners with free HEX as an incentive.

Earn Crypto Interest with BlockFi

The great thing about crypto assets is that once you purchase them, you can find a secure digital wallet or platform where you can store them and let them generate passive income while you go around your own business. This is possible thanks to crypto interest platforms that let you earn interest payments on your crypto holdings over time.

BlockFi lets you deposit any of the supported cryptos and stablecoins into your interest account. You start earning interest immediately after depositing and get paid on the first day of each month. Some platforms distribute interest payments weekly or even daily but BlockFi has other benefits to make up for that.

First, BlockFi lets you earn compound interest, i.e. interest on your interest, making sure your balance grows at a rapid rate even though the interest is paid out monthly. Second, you can change the currency of your interest payments. If you store BTC, you can earn interest in ETH and vice versa.

As far as interest rates are concerned, BlockFi offers some of the highest rates in the industry. Thanks to the institutional support that BlockFi received throughout the COVID-19 crisis, the platform was able to remain a stable source of liquidity and has even raised some of its interest rates as seen below:

 

BTC (Tier 1) 0 – 2.5 6% APY
BTC (Tier 2) > 2.5 3.2%
ETH > 0 4.5%
LTC > 0 5.0%
USDC > 0 8.6%
GUSD > 0 8.6%
PAX > 0 8.6%
PAXG > 0 4%
USDT > 0 7%

Fees and Limits

You can decide how much you want to deposit into your Interest Account. BlockFi doesn’t have any minimum or maximum deposit limits because it focuses on retail or small-scale investors as well.

However, the platform has maximum withdrawal limits and incurs the following fees:

  • 0.0025 BTC for Bitcoin withdrawals with a maximum limit of 100 BTC per week.
  • 0.0015 ETH for Ethereum withdrawals with a limit of 5,000 ETH per week.
  • 0.0025 LTC for Litecoin withdrawals with a limit of 10,000 LTC per week.
  • $0.25 USD for stablecoin withdrawals with a limit of 1,000,000 stablecoins per week.
  • 0.0025 PAXG for Paxos Gold withdrawals with a limit of 500 PAXG per week.

Until recently, BlockFi didn’t only incur a withdrawal fee but a withdrawal termination penalty as well. The platform used to charge its users if they requested a withdrawal from their account balance prior to the last day of the month. Moreover, it sometimes took up to seven days for them to process a withdrawal request.

BlockFi took notice of customers’ complaints and removed the termination penalty, adding one free cryptocurrency withdrawal and one free stablecoin withdrawal per month, and informing customers that withdrawal processing time will shorten with time.

Crypto Loans

Financial services such as lending money to earn interest or borrowing loans have always been popular with investors around the world and have helped them stay afloat, diversity their portfolios, and yield high returns.

Unfortunately, this wasn’t an option for crypto investors until very recently. BlockFi is one of the first platforms to include crypto lending services as part of its core features that are now used by thousands of customers.

If you own cryptocurrency but plan on holding onto them for a while, you can deposit your holdings into BlockFi’s safe cold storage wallets and allow the platform to find suitable borrowers who need cryptocurrency to increase their capital. This way, you can rest assured your funds are safely stored and earn interest payments on them in the meantime.

The second option, for those who need fiat loans, is to use your crypto holdings as collateral and borrow USD from BlockFi. The collateral is calculated via a loan to value (LTV) ratio and you can pay in BTC, ETH, LTC, or PAXG. Why sell your crypto and pay capital gains tax, when you can use them as collateral instead?

Earn Interest with HEX

Staking HEX is quite similar to what a traditional fixed deposit looks like, i.e. users lock their funds over a set period of time and when the term’s over, they receive the invested principal plus the accumulated interest.

Bitcoin HEX is, therefore, the first high-interest blockchain certificate of deposit (CD) that allows customers to stake HEX tokens and earn interest payments. On their website, HEX audaciously claims that users could get as much as 369% average return if only 1% of HEX is staked. This, however, largely depends on the token’s value when the term matures.

The philosophy of Bitcoin HEX’s founder Heart is that instead of earning interest by lending Bitcoin and other cryptos on lending platforms (e.g. BlockFi), you can become a HEX staker instead. This way, you don’t have to rely on third-parties to get your cryptos back – according to Heart, you probably won’t – because to earn interest on HEX you simply need to lock them into a smart contract. “It’s a trustless interest”, concludes Heart for CoinTelegraph.

Fees and Limits

HEX’s main catch is that users get penalized if they decide to terminate their stakes before the end of the smart contract term. Although you won’t be at a loss if you unstake close to your deadline, your principal can suffer if you terminate the contract before ½ of the committed days have passed.

Yes, you read that right. You’ll be penalized and your return will be less than your initial investment. We’re guessing Heart isn’t a big fan of indecisive investors.

Are BlockFi and Bitcoin HEX Legit or Scam?

BlockFi is supported by a range of leading institutional investors who wouldn’t be financing a project they don’t believe in. Moreover, BlockFi outsources customer funds to Gemini, its primary custodian, that keeps them safe in cold storage. Gemini is regulated by the NYDFS and was the first exchange to complete the SOC 2 Type 1 examination in 2019.

The platform complies with AML policies and performs KYC check on every customer asking them to provide a government-issued ID to verify their identity.

While there’s no doubt about BlockFi’s legitimacy, the same can’t be said of Bitcoin HEX. In their FAQ section, when asked “Do I have to fill out any AML/KYC?” the HEX team proudly answers: “No”.

A lot of people are accusing Heart of plotting some Ponzi-like scheme. A Ponzi scheme is when a new project promises high returns with little or no risk. In reality, the project only makes early investors wealthy by acquiring money from new investors – something like a pyramid scheme.

Experts suspect HEX’s hype around pumping up the price of its token and comparing HEX investing with early Bitcoin and Ethereum investing. “HEX’s price went up 11,500% in 129 days!” is written in capital letters all over their website,

In the interview with CoinTelegraph, Heart himself agreed that Bitcoin HEX uses “tactics a scam might use”. In his view, however, such reactions are normal coming from fervent supporters of other crypto projects. “In crypto, there’s a tribalism that every coin you buy is a world-changing amazing thing. Every coin anyone else buys is a scam by default”, states Heart.

Ease-of-Use and Customer Support

Both BlockFi and Bitcoin HEX can be used via their web-based platform or downloaded as a mobile app by investors who like to use their services on the go.

BlockFi has been praised for being beginner-friendly so that even newbies can find their way around the platform and understand how its interest account and crypto loan schemes work. You can file a support ticket, use their FAQ section, or contact them via telegram.

At the moment, HEX only offers a FAQ page and chat group for the HEX community.

Pros and Cons

BlockFi Pros

  • A greater choice of cryptocurrency and stablecoins.
  • No minimum deposits on interest accounts and no deposit fees.
  • Attractive interest rates and options for compound interest.
  • Funds are protected by Gemini.
  • BlockFi is regulated, licensed, and supported by renowned investors.
  • Has a responsive support team and a beginner-friendly interface.

Bitcoin Hex Pros

  • High HEX trading volumes on crypto exchanges.
  • You can earn interest if you lock your coins into a smart contract.
  • You don’t have to lend money to third-parties.

BlockFi Cons

  • Charges withdrawal fees.
  • Distributes the interest payments monthly instead of weekly.

Bitcoin Hex Cons

  • You can earn interest by staking HEX tokens only.
  • Promises unreasonably high returns.
  • Lack of support for its legitimacy and called a scam in disguise by many crypto experts.
  • Most of the project developers already left the team.

Final Thoughts

At the end of this comparison guide, it’s more than clear we have a winner here. Between BlockFi and Bitcoin HEX, BlockFi takes the prize for being first of all a trustworthy crypto platform with a reputable and distinguished institutional clientele, and secondly, for its groundbreaking fintech services.

BlockFi offers some of the highest interest rates in the crypto industry and smart options for crypto loans and lending. You can put your mind at ease and watch as your profits increase in real-time.

While it remains to be seen how investors will benefit from Bitcoin HEX, or fall victims to the greedy HEX scammers, at the moment, the project seems like a high-risk one. The founder Heart seems really passionate about his project but will he be able to keep his generous promises?

If the Bitcoin price has successfully increased since 2009, who can guarantee that HEX price will follow in its steps.

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About The Author

James Page

James Headshot

James is the main editor. With a passion for finance and anything blockchain, cryptocurrency is right up his alley. He's responsible for most of the content on the site, trying his best to keep everything up to date and as informative as possible.

Disclaimer: Digital currencies and cryptocurrencies are volatile and can involve a lot of risk. Their prices and performance is very unpredictable and past performance is no guarantee of future performance. Consult a financial advisor or obtain your own advice independent of this site before relying and acting on the information provided.