Trade on Bitfinex

Bitfinex is one of the most established digital asset platforms currently active in the crypto space. It offers a wide spectrum of state-of-the-art services dedicated to cryptocurrency investors and traders alike.

Established in 2012, Bitfinex has been able to accommodate the evolving interest of crypto enthusiasts. Over the years, the platform has cemented its position in the industry as one of the go-to platforms for all your cryptocurrency needs.

In this review, I will walk you through the different aspects of Bitfinex and examine whether it can be a trusted source for your cryptocurrency investments.

Bitfinex – An Overview

Bitfinex was first launched as a peer-to-peer margin lending service. At the time, not so surprisingly, the platform offered support only for Bitcoin. Over the years, it has since added hundreds of other cryptocurrencies and digital tokens to its list of supported markets.

Today, Bitfinex has upgraded itself to become a full-fledged tool for cryptocurrency traders and liquidity providers.

In a nutshell, Bitfinex offers six core products on its trading platform:

• Exchange trading
• Margin trading
• Margin funding
• Over-The-Counter (OTC) market
• Derivatives
• Paper trading

Apart from this, Bitfinex also has an entire section exclusively dedicated to cryptocurrency lenders. This will allow you to gain access to products such as:

• Staking
• Lending products
• Borrowing

Apart from the aforementioned, Bitfinex also has several other interesting features to make your trading and investing easier. For instance, the platform has developed Honey Framework, which you can use to create custom order types and automate your trading strategies.

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Cryptocurrencies have evolved to become one of the highest-growth asset classes that can be held in a financial portfolio. With that said, If you invest in or trade cryptocurrencies, it is crucial that you understand what your tax liabilities are.

However, compiling cryptocurrency transactions and figuring out the associated tax implications can be an overwhelming process – even for the most seasoned trader. This is where tools such as TokenTax come into play.

This crypto tax software can help you compile all your cryptocurrency transactions across multiple platforms, giving you an account of your total capital gains and losses.

In this review, I will examine TokenTax to gain a better understanding of how it works and how you can use it to file your cryptocurrency taxes in 2021 and beyond.

Prepare your taxes with TokenTax

TokenTax – An Overview

If you are new to the cryptocurrency markets, you might be still struggling with its many complexities. In its midst, one might end up overlooking the importance of crypto taxes. In simple terms, cryptocurrencies are taxed in the vast majority of jurisdictions if you are able to sell or exchange them at a profit.

This is potentially applicable even if you are spending your digital coins via online purchases. Meaning, you could owe capital gains taxes even if the digital coins you spent have gained in value compared to what you originally paid for them. Cryptocurrency tax software such as TokenTax aims to simplify this process for you.

It will scan the blockchain to identify crypto transfers between the different wallets you own – and provide you with reports of all transactions within a given tax year.TokenTax was first created by Alex Miles in 2017 – as an entry to the Product Hunt Google Global Hackathon. Not so surprisingly, the product ended up winning first place in the competition, and soon, he was joined by Zac MacClure.

Together, the pair was able to use the funding from the contest and build on the product to release it for the tax season of the same year. Given the broader unawareness regarding cryptocurrency taxes at the time, TokenTax was able to quickly garner attention from crypto traders and investors.

In the course of four years, the team behind TokenTax has managed to add several functionalities and tools that cater to the unique needs of cryptocurrency enthusiasts.

Currently, TokenTax offers four different products to assess your tax situation:

• Crypto Tax Reports
• Crypto Margin Trading Taxes
• Tax Loss Harvesting
• Tax Professional Suite

In fact, TokenTax is one of the few cryptocurrency tax software providers that can handle crypto margin trading and decentralized finance. It is also the only tax firm that offers in-built CPA services for accounting and auditing.

Moreover, TokenTax can be used to generate tax reports for residents across several regions. Whether you are located in the US, UK, Europe, South Africa, or Asia, – you will be able to get access to the full suite of TokenTax products.

How TokenTax Works

Before I take a closer look into the different features of TokenTax, I will explain how this software works. In a nutshell, TokenTax has partnered with several cryptocurrency exchanges in order to make sure that it can extract your cryptocurrency transactions. In fact, you can also find support for DeFi platforms such as yearn.finance, Uniswap, Sushiswap, Synthetic, and more.

You can get started with TokenTax in a few simple steps:

Step 1: Create Your Account on TokenTax

The first step is to set up your user account on TokenTax. Apart from providing your email address and password, the software will also require you to complete your tax profile.

For instance, you will have to fill in your country of residence, your estimated income, your filing status, the method you used for your previous tax filing, and so on. This is to give the tool a better idea of your tax profile.

Step 2: Upload your Cryptocurrency Transactions

TokenTax allows you to integrate your crypto wallets directly through an API. This way, transactions will be synchronized on both platforms. As I mentioned earlier, TokenTax works with a multitude of cryptocurrency exchanges – ensuring that the uploading process will be as smooth as possible.

Alternatively, you can also manually download a CSV file with your transactions and upload it to TokenTax.

Step 3: Choose Preferred Accounting Method

TokenTax offers support for a number of accounting methods such as FIFO, LIFO, minimization, and average cost.

At this stage of the setup process, you can choose which accounting system you want to opt for.

Step 4: Download Tax Forms

Once the platform has finished its calculation process, you will be able to download your tax forms right away. Crucially, TokenTax will automatically fill in your crypto tax forms on your behalf – making it easier for you to file them.

You can also import your completed forms directly to popular tax preparation services, such as TurboTax.

Features of TokenTax

In its simplest form, TokenTax is a software platform that can help you calculate tax on your cryptocurrencies. However, there is a wide variety of crypto investments and trade types and depending on the niche, it can be difficult to calculate net capital gains and losses – such as in margin trading.

This is where TokenTax truly shines. Unlike its counterparts, TokenTax can help you with any type of crypto tax statement. In this section, I will take a closer look at these unique products offered on this platform.

Crypto Margin Trading Taxes

If you are familiar with crypto margin trading, then you are already aware of its many intricacies. As you can imagine, the process of filing taxes on your margin trades can also be quite cumbersome. Generally, most tax rules for cryptocurrencies are identical to that of other assets – such as the likes of stock, forex, or CFD trading.

However, when you are dealing with margin trading, it can be a challenge to get the right data from exchanges in order to accurately report your transactions.In most cases, you will have to contact the exchange directly, requesting bespoke information – which will be provided in a different format.

For this reason, not every crypto tax software can calculate margin trading tax for you. If you have engaged in crypto margin and derivatives trading on platforms such as BitMEX or Derbit, TokenTax can automatically import your profits and losses from the respective exchanges.

On the other hand, platforms such as Bitfinex are even more complex. For such cases, TokenTax has a team of crypto CPAs and accounting experts that can offer you special guidance. They can help you account for earnings from lending interest and any liquidations involved with crypto margin trading.

Note that this service is reserved for only Pro and VIP level users. I will look at the Tokentax pricing structure later in this review.

Tax Loss Harvesting

It is common for cryptocurrency traders to sell off the assets they hold at a loss in order to reduce their capital gains liabilities. This method – called ‘tax-loss harvesting’, allows you to decrease the amount of taxes you owe. As such, even if you make a loss when selling your asset, you will be able to offset the capital gains from other investments, such as stocks.

• For instance, say you have made capital gains of $10,000 for this tax year.
• You also have holdings in Litecoin that is currency at a loss of $3,000.
• In such a typical scenario, you will have to pay the full amount of $10,000 in taxes.
• However, if you are able to sell your LTC holdings and harvest the losses – then your taxes will be reduced to $7,000.

TokenTax offers tax-loss harvesting tools that go through your crypto translation history to find out how many assets you hold and which positions are at a loss. This can give you a better idea of any tax-loss harvesting opportunities that you might have in your portfolio.

Not only that, but the TokenTax team itself is always ready to assist you in harvesting your losses to reduce your crypto taxes.

Tax Professional Suite

This TokenTax product is specifically designed for cryptocurrency accountants and accounting organizations. The platform will help your accounting firm build support for cryptocurrency traders using their exclusive features. You will be able to import your clients’ transaction histories, calculate their taxes and complete their tax forms – all in one place.

In effect, accountants will be able to manage your clients’ crypto taxes much more competently. TokenTax will also give you access to additional tools such as performance graphs, tax-loss harvesting, and finding missing extraction histories.

In other words, TokenTax can become your support system for offering cryptocurrency accounting services to your clients. It is also the first crypto tax software to offer tax harvesting and accounting services.

Note: Apart from these services, the TokenTax team also offers additional assistance for those that are facing IRS audits.

TokenTax Pricing

TokenTax has a unique pricing plan for cryptocurrency traders. To start with, it offers two types of services – one only for crypto tax calculations and the other to handle your entire tax filing needs.

Crypto Tax Software Plans

The plans listed below are best suited for those who seek help with filing crypto gains and losses.

Basic Account – at $65 per year

This account offers you support only for Coinbase, Coinbase Pro, and Binance.

The features include:

• Up to 500 yearly transactions
• Integration with TurboTax
• Support for IRS Form 8949/International Reports
• Unlimited Tax Form Revisions

Premium Account – at $199 per year

This account allows you to gain access to transactions across all supported exchanges of TokenTax.

The features include:

• Up to 5,000 yearly transactions
• Integration with DeFi platforms and margin trading.
• Tax-loss harvesting dashboard
• Includes all features of the Basic Account.

Pro Account – at $799 per year

The Pro account is best suited for advanced investors and margin traders.

The features include:

• Up to 20,000 yearly transactions
• Support for all margin exchanges
• Support for FBAR
• Includes all features of the Premium Account

VIP Account – at $2,599 per year

The VIP account gives you access to full functionalities on the platform, including advanced tax and accounting support.

The features include:

• Up to 30,000 yearly transactions
• Advanced tools for crypto reconciliation
• Integration will all DeFi protocols and cryptocurrency exchanges
• Private sessions with tax experts
• IRS audit assistance
• Includes all features of the Pro Account.

As you might have noticed, some of the exclusive products on TokenTax are reserved for those who sign up for Pro and VIP plans. If you are to benefit from the full functionality of the platform, you will need to pay a hefty fee. But, there is every chance that this will pay for itself – depending on how effective TokenTax is with your tax liabilities.

Full Filing Plans

TokenTax also has dedicated plans for those who want to use their services to file full tax returns, which is inclusive of crypto. You will also be able to work with a Crypto CPA to receive expert assistance.

Bronze Account – at $699 per year

• Best suited for those who only need the essentials of tax filing
• Up to 5,000 transactions
• Up to four tax forms
• Tax returns for one state
• Support for margin trading and tax loss harvesting

Silver Account – at $999 per year

• Best suited for those with multiple income sources
• Up to 5,000 transactions
• Up to 10 tax forms
• Tax returns for two states
• Support for margin trading and tax loss harvesting
• Support for one self-employed business

Gold Account – at $3,000 per year

• VIP tax filing services that offer support for the most advanced tax situations
• Up to 30,000 transactions
• Up to 10 tax forms
• Tax returns for two states
• Private sessions with experts
• IRS audit assistance
• Support for margin trading and tax loss harvesting
• Support for one self-employed business

TokenTax also gives you a 10% discount if you use its service for multiple years. However, one thing worth noting is that TokenTax does not offer any free trails. As such, there is no easy way to assess whether or not the platform is fit for your needs.

You might also have to pay extra if you are to file taxes in multiple states or regions, depending on your country of residence.

Paying for TokenTax in Cryptocurrency

As you can imagine, TokenTax also accepts payment for its services through digital currency. Currently, the platform allows you to make crypto payments in Bitcoin and Ethererum. However, the payment procedure is a bit indirect.

You will have to reach out to the support team, mentioning that you would prefer to pay for your plan using crypto. The TokenTax team will send you a price quote and the amount you have to send.

The address for the BTC and ETH wallet is available on the TokenTax website.

TokenTax Customer Support

TokenTax has a well-curated section on resources and guides – that provides you with all the information you need regarding the different facets of cryptocurrency taxes. You will be able to find extensive guides on the different rules and even find data that are relevant to your country’s tax system.

In addition, if you need customer support, the team is available through live chat or email.

TokenTax Review – My Verdict?

Reconciling all your cryptocurrency transactions across multiple sources can be a daunting task. Undoubtedly, TokenTax can make the entire process easier and convenient for all cryptocurrency traders. The software truly shines in terms of automation and user experience. It can give you a clear account of gains, losses, and more.

Most impressively, if you are in need of an expert’s opinion, TokenTax also has in-house CPA counsel that can offer you all the assistance you need. That said, such exemplary functionalities also come at an expensive price tag. If you opt for a cheaper pricing plan, the features you have access to are very limited.

As such, depending on your tax filing requirements, you might have to pay a high cost to avail of the full services of TokenTax.

Nevertheless, if you have traded cryptocurrencies multiple times across different exchanges, it might be a good decision to use TokenTax. The platform is arguably a market leader in this space and thus – can solve almost any cryptocurrency tax challenge you might be facing.

Sign up to TokenTax

Cryptocurrency has undeniably taken the financial world by storm. However, when it comes to real-world usage, digital currencies are yet to reach their full potential.

Considering the many benefits of blockchain technology, several developers are coming forth with organized efforts to tackle this issue. From tokens with unique utilities to crypto-loaded debit cards, we are witnessing the emergence of tangible applications.

BitDials is one such entity that was created to address this particular pain point. The platform allows you to use your Bitcoin or altcoins in order to pay for high-end luxury items. In return, you can expect to avoid the trouble of security and the trap of counterfeits.

In this review, I explore what BitDials is, what products it offers, and whether or not the luxury boutique is worth considering.

[Read more…]

Some of you might be well versed in Bitcoin. If not, you might have only recently come across this innovative digital currency. After all, the price of Bitcoin has exploded in recent months, reaching and destroying its previous all-time highs.

If you’re interested in gaining exposure to the world’s largest and most popular cryptocurrency, there are actually many, many ways in which you can do this. As I uncover in my guide, this includes everything from traditional ownership and CFDs, to futures and options.

If you’re keen to learn more about the many ways in which you can profit from Bitcoin – read on. My comprehensive guide not only covers the various Bitcoin marketplaces available in the online space but also the best brokers and platforms to do this with.

The Price of Bitcoin – How Does it Work

It doesn’t matter which financial instrument you opt for – whether that’s buying the digital currency and storing it in a private wallet or trading CFDs. Your ability to make a profit is determined by one thing and one thing only – the market price of Bitcoin.

This operates in exactly the same way as any other asset class – such as stocks and shares. That is to say, the value of Bitcoin is dictated by the demand and supply of the wider marketplace.

• If the general sentiment on Bitcoin is positive, then there will be more buyers than sellers. In turn, this will translate into the value of Bitcoin increases – much like it is at the time of writing.
• On the flip side, if the market sentiment is weak and sellers outweigh buyers, the opposite will happen.

As I uncover in more detail shortly, there are tradable Bitcoin markets now available that not only allow you to profit when the price of the digital currency goes up, but also down. This is known as short-selling and it means that you are speculating on the price of Bitcoin dropping.

Nevertheless, Bitcoin can be traded 24 hours per day and 7 days per week. Its price will change on a second-by-second basis and the digital currency can at times be overly volatile.

Keeping Things Simply by Buying Bitcoin

Before I even get to more complex financial instruments like CFDs, futures, and options – a lot of you will ultimately prefer to keep things simple. By this, I mean buying Bitcoin in the traditional sense with the hope that it increases in value. If it does, you will then be able to sell your Bitcoin for a higher price than you originally paid.

For example:

• You want to invest $2,000 into Bitcoin
• Right now, the price of Bitcoin is $18,105
• You hold onto your investment for two years
• When you get around to cashing out, Bitcoin is valued at $32,500
• This means that the price of the digital currency in the open marketplace has increased by 79%
• The value of your original $2,000 investment has also increased by 79%
• As such, when you sell your Bitcoin you get $3580 back.

The above example illustrates a classic ‘buy and hold’ strategy. Or, in the weird and wonderful world of cryptocurrencies – this is known as HODLing. In other words, you are buying Bitcoin and you plan to hold onto your investment for several months or years.

This is a simple investment strategy that ultimately means you can avoid the stress of short-term volatility. Sure, the value of Bitcoin will go through ups and downs. But, if you believe that in the long run the digital currency will continue to grow – then you simply need to buy Bitcoin and forget about it until it’s time to sell.

In terms of how you do this, the easiest, safest, and most cost-effective way is to buy Bitcoin online. You will be doing with this a third-party broker and depositing funds with an everyday payment method like a debit card or bank transfer.

In terms of platforms, Kraken is arguably one of the best options in the space. This is because you can easily deposit funds via bank transfer (SEPA, SWIFT, etc.) at virtually no cost.

And, trading commission amounts to just 0.26%. I also like Kraken because it has been active in the Bitcoin exchange scene for over 9 years and as such possesses a great reputation.

You can read my full Kraken review here.

If for some reason Kraken doesn’t quite meet your needs, other platforms to consider are:

• eToro: eToro is an online trading site that covers stocks, ETFs, CFDs, and cryptocurrencies. You will not pay any commission to buy Bitcoin from this broker – which is licensed by the FCA, CySEC, and ASIC. You can buy Bitcoin with a debit/credit card, e-wallet, or bank transfer and the minimum deposit is $200.You can read my full eToro review here.
• Coinbase: This US-based broker is home to over 35 million customers and now serves more than 100 countries worldwide. The platform is highly trusted and is often the go-to place for newbies. But, you will pay 3.99% to deposit funds with a debit card and Bitcoin trading commissions stand at 1.49%.You can read my full Coinbase review here.
• Binance: Binance is one of the largest cryptocurrency exchanges in the industry. The platform hosts hundreds of cryptocurrency pairs that you can trade at commissions of just 0.1%. Binance also allows you to buy Bitcoin with a debit card – although much like Coinbase, the fees are a bit on the high side.You can read my full Binance review here.

Irrespective of which Bitcoin trading site you use to invest, you need to think about storage. This is because Bitcoin needs to be stored in a digital cryptocurrency wallet. These can be downloaded free of charge onto your desktop device or mobile phone.

For even more security, you might consider a hardware wallet like Trezor or Ledger Nano. If you prioritize convenience and ease-of-access over security, you can also store your Bitcoin at your chosen broker.

For example, Coinbase is known to offer top-rated security with its web-wallets. This is because 98%-ish of its coins are held in cold storage and away from online servers. If opting for eToro, the broker does not give you the option of withdrawing your Bitcoin out. As such, you’ll store it with the platform until you decide to cash out.

On the other hand, Bitcoin can also become an income-producing asset for you if you opt to earn interest on your crypto holdings by using crypto lending platforms like BlockFi and YouHodler.

Trading Bitcoin CFDs

While the vast majority of you will likely want to stick with a simple, long-term buy and hold strategy – some will want to engage in more sophisticated traders. If this sounds like you, then Bitcoin CFDs are worth considering.

CFDs are contracts-for-differences and they allow you to trade assets without taking ownership. This is because the CFD simply tracks the current market price of the said asset. As I explain in a moment, this comes with several benefits.

Before I get to that, let me illustrate how a Bitcoin CFD instrument works:

• The global market price of Bitcoin is $17,408
• Your chosen CFD broker also quotes a price of $17,408
• A few minutes later the spot price of Bitcoin is $17,447
• Once again, your chosen CFD broker also quotes a price of $17,447

In other words, if the market value of Bitcoin increases by 1.2%, so will your CFD instrument. Similarly, if Bitcoin drops by 4%, so will the CFD.

So that begs the question – why trade Bitcoin CFDs as opposed to buying the digital currency outright? Let me explain.

Leverage

First and foremost, Bitcoin CFDs like the ones provided by eToro or NSBroker give you access to leverage. If you’re unfamiliar with leverage, this simply means that you can trade with more than you have available in your brokerage account.

You can view leverage as a factor or multiple – but the end result remains the same. For example, your chosen CFD platform might offer leverage of 1:2 or 2x – which means that you are trading with twice the amount you stake. In other words, a $500 stake at a leverage of 1:2 would mean that your CFD order is worth $1,000.

Here’s an example of how leverage can amplify your potential Bitcoin trading gains:

• You stake $1,000 on a Bitcoin CFD buy order
• You apply leverage of 1:2
• A few hours later, the price of Bitcoin has increased by 3%
• You are happy with your profits so you close the trade
• Ordinarily, 3% gains on a $1,000 stake translates to a profit of $30
• But, as you applied leverage of 1:2, your total profit stands at $60

It goes without saying that leverage can be beneficial if you want to trade with more than you have available in capital. It is also useful if you feel extra-confident on your Bitcoin trade and want to boost your stake.

But, leverage is also fraught with risk. If, for example, you apply leverage of 1:2 and your trade moves in the wrong direction by 50%, then your chosen broker will close the position. In doing so, you will lose your entire stake.

This is because you are trading with twice the amount you stake and thus – if the value of your order drops by more than half the position will be liquidated. In terms of how much leverage you can apply, regulated brokers accepting European and UK clients will cap you to 1:2. Other nationalities might get more.

I should note that US citizens are not allowed to trade CFDs. This is why a lot of Americans opt to use non-regulated cryptocurrency platforms to obtain leverage. You do, of course, need to be extremely careful when taking such an approach.

Short-Selling

On top of being able to apply leverage, Bitcoin CFDs also allow you to engage in short-selling. As the name suggests, you will be selling Bitcoin as opposed to buying it.

In Layman’s terms, this means that you are speculating on the value of Bitcoin going down. If your speculation is correct, then you will make a profit.

For example:

• Let’s suppose that Bitcoin is currently priced at $18,500
• You think this is overvalued so you place a sell order via a CFD broker
• You decide to stake a total of $1,000 on your prediction
• Later in the week, Bitcoin has dropped to $15,500
• This represents a decline of 16%
• You staked $1,000 on your short-selling position so you made a profit of $160

As you can see, Bitcoin CFDs allow you to profit in the event that you think the digital currency is likely to decline in value.

What to Know About Bitcoin CFDs

Before you take the plunge by trading Bitcoin CFDs, there are some important points that I need to mention.

Firstly, Bitcoin CFDs are only suitable for short-term trades. This is because you need to pay something called ‘overnight financing fees’ for each day that you keep a CFD position open. This is like an annual interest fee that is charged on a daily basis.

The fee will kick in at a certain time of the day – such as 10 pm. As such, for each day that your Bitcoin CFD trade stays open for 10 pm, you’ll pay a fee. This can make the trade unviable if you keep it open for too long.

Additionally, CFDs are complex financial instruments – so the industry is heavily regulated. For example, eToro – which offers CFDs on top of traditional Bitcoin brokerage services, is licensed by the FCA, ASIC, and CySEC. This offers heaps of regulatory protections – such as segregated client funds and regular audits.

You can read my full guide on CFD trading here.

Trade Bitcoin CFDs on eToro

Buying Bitcoin on Margin

Leverage and margin are two terms that are often used interchangeably. Although they refer to the same concept – being able to trade with more than you have in your account, they actually mean different things.

• Leverage is a multiple that amplifies your stake. For example, leverage of 1:2 will multiply your stake by a factor of 2.
• Margin is the percentage of your desired stake that you need to cover with an available account balance. For example, if the platform requires a margin of 10%, then a $1,000 stake would only require an account balance of $100.

The reason that I have separated the two terms with their own section is that some platforms allow you to buy Bitcoin on margin outside of the CFD arena. At the forefront of this is the previously discussed Kraken.

In a nutshell, Kraken allows you to buy Bitcoin with a minimum margin requirement of just 20%. This means that you can buy $10,000 worth of Bitcoin with an account balance of just $2,000.

Read more: My in-depth review of Kraken

However, I must make it clear that the underlying fundamentals of margin trading at Kraken mirror that of CFDs.

For example:

• You will still need to pay ongoing fees for keeping your position open. At Kraken, for example, this stands at 0.01% for every four hours that your Bitcoin trade remains in play.
• You stand the chance of being liquidated and thus – you can lose your margin in its entirety.
• This form of trading is only suitable for short-term positions

Ultimately, margin trading at Kraken operates like-for-like with a CFD position. The only difference is that Kraken does not offer its margin trading services via a CFD instrument, meaning that it doesn’t need to follow the same regulatory conditions. This is why you are able to get margin at 1:5 on Bitcoin, while most CFD platforms are capped at 1:2.

Trade on Margin with Kraken

Bitcoin Derivatives

I am now going to move onto an even more complex form of Bitcoin trading – derivatives. Put simply, a derivative is a financial contract that is valued based on the movement of an underlying asset.

This allows you to place trades in a sophisticated and highly bespoke manner. There are many different Bitcoin derivatives available in the market – some more accessible than others.

This includes:

Bitcoin Futures

The first Bitcoin derivative that springs to mind is that of futures. The first regulated Bitcoin futures market was launched in late 2017. Two providers, in particular, took the bull by the horn – the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE).

These are two of the largest derivatives exchanges globally. While the CME is active in the Bitcoin futures scene, the CBOE halted its offering in 2019 due to lower trading volumes. Nevertheless, the CME is a marketplace for institutional investors, meaning that the Average Joe trader won’t be able to get a look in.

In addition to several other barriers, the minimum futures trade size is 5 contracts – with each contract worth 5 Bitcoin. As such, this amounts to 25 Bitcoin, which at the time of writing is worth over $450,000!

If you don’t have that sort of money lying around, the good news is that there are several cryptocurrency platforms offering Bitcoin futures markets that are accessible to retail clients. Before I get to that, it probably makes sense for me to explain how futures actually work.

How do Futures Work?

Irrespective of the underlying asset – whether that is stocks, commodities, or Bitcoin – futures work in exactly the same way. Put simply, they allow you to speculate on the ‘future’ value of an asset.

Each futures market will have an expiry date – which usually runs in cycles of three months. All futures markets also have a ‘strike price’. This is the price that you will be speculating on. That is to say if the strike price of a 3-month Bitcoin futures market is $16,500 – you need to predict whether you think the contract will expire at a price higher or lower than this figure.

In the vast majority of cases, you can actually offload your futures contract before they expire. The value of the contract will therefore move up and down depending on how likely the contract is to finish above or below the strike price on expiry.

If you are holding the futures contract when it expires, you have a legal obligation to buy or sell the asset. This is why futures are more conducive for institutional trading, as the futures contract often needs to be settled in the underlying asset.

Here’s an example of how a Bitcoin futures trade would work in practice:

• A Bitcoin futures contract has an expiry date of 3 months
• The price of Bitcoin is currently $17,200
• The strike price of the Bitcoin futures contract is $18,500

As per the above, this means that the wider markets think that Bitcoin will be worth more in 3 months’ time – hence the strike price being higher than the current market price.

• You agree with the wider market sentiment that Bitcoin is on the up
• As such, you buy 10 futures contracts – each of which are worth 0.1 Bitcoin
• For simplicity, we’ll say this amounts to a real-world value of $1,700 per contract
• As such, your total stake is $17,000 ($1,700 x 10 contracts)

A few days before the futures contracts expire, Bitcoin is priced at $19,400

• This is $900 higher than the strike price of $18,500
• You own 10 contracts, meaning that your profit amounts to $9,000
• In order to cash out these gains you offload the futures contracts on the secondary markets

As you can see from the above example, futures allow you to speculate on the price of Bitcoin in a more flexible manner. This is because you are tasked with assessing how accurately the wider market has got its strike price.

I should also note that futures contracts allow you to go long and short. As such, if you think the market has overvalued the strike price of the futures contract, this gives you the opportunity to profit from this.

Where to Access Bitcoin Futures?

Once again, I would argue that Kraken stands out in terms of a platform to access Bitcoin futures. First and foremost, the trading site offers several types of Bitcoin futures with various durations.

This includes:

• Perpetual Bitcoin Futures
• Monthly Bitcoin Futures
• Quarterly Bitcoin Futures
• Semiannual Bitcoin Futures

For those unaware, ‘perpetual’ Bitcoin futures have no expiry date. As such, they operate much like a CFD instrument, and thus – you can keep the position open for as long as you wish.

The minimum contract size when trading Bitcoin futures at Kraken is just $1. You can go long or short on the futures contract – and leverage is available, too. In fact, you can trade Bitcoin futures at Kraken with leverage of up to 1:50. This means that you only need to put a 2% margin down on your required trade size.

For example:

• You want to purchase $20,000 worth of Bitcoin futures
• Kraken requires just 2% upfront – meaning an available balance of at least $400
• This $400 is your margin
• As such, you stand to lose your full $400 margin if your 1:50 leveraged trade goes against you by 2% or more

I should warn you of the risks of trading with a margin as high as 1:50. Although your trade will for sure be liquidated if it goes against you by 2% – it will likely happen long before this. Kraken will usually send you a ‘margin call’ when your margin drops by 40%.

This means that you’ll receive a notification from the platform if your position goes in the wrong direction by just 1.2% (2% margin less 40%).

Bitcoin Options

Much like futures, Bitcoin options are getting more and more popular with traders that want access to this digital currency in a sophisticated manner. There are a lot of similarities between these two derivatives.

For example, both futures and options always have an expiry date – with the exception of perpetual contracts. Similarly, both mediums allow you to go long and short and in most cases – cashout before the expiry date arrives.

However, the overarching difference is that while you have a legal obligation to buy or sell the underlying asset when holding futures until expiry, options give you the ‘right’ but not ‘obligation’.

In addition to this, options can be accessed by paying a small ‘premium’, which is the most that you can lose if the trade goes against you. This premium is usually around 5% of the total contract value.

Taking these complexities into account, let me give you an example of how a Bitcoin options trade would work in practice.

Example of Bitcoin Options Trade

• Let’s say that Bitcoin is currently priced at $15,000
• You are interested in 3-month Bitcoin options contracts
• The contract has a strike price of $16,000
• The premium required to access the market is $800 per contract

You think that the price of Bitcoin will finish higher than $16,000 in 3 months’ time, so you buy ‘calls’. If you thought the opposite, then you would be buying ‘puts’.

• You decide to purchase 5 call options – so your total outlay is $4,000 (5 contracts x $800 premium)
• 2 months into your trade, Bitcoin is valued at $18,000 on the open marketplace
• This is $2,000 higher than the strike price of $16,000
• You are happy with your gains so you offload the Bitcoin options
• Each contract made you $2,000 profit, but you also need to subtract the premium of $800 ($1,200 net)
• All in all, your 5 call options made you a total profit of $60,000 (5 x $1,200 per contract)

Now, the most appealing thing about options contracts is that your potential losses are 100% capped. That is to say, you can never lose more than the premium.

For example, let’s imagine that in the above scenario, you held onto the options until expiry. If the options expired at less than the $16,000 strike price, you would have lost $800 on each contract.

This is because unlike futures, you don’t need to exercise your right to buy the underlying asset. In other words, by simply letting the contracts expire worthless, you can only lose the initial premium that you paid to access the market.

Where can you Trade Bitcoin Options?

Make no mistake about it – there are very few platforms in the cryptocurrency scene that allow you to trade Bitcoin options. Sure, there are several CFD sites that claim to serve this purpose, but you are only trading the value of the contract.

As such, you can’t actually exercise your right to buy or sell the asset.

For American readers:

LedgerX is for sure the go-to platform to trade Bitcoin options in the traditional sense. In fact, this platform is regulated in the US – so you can rest assured that you are able to trade in a safe and secure environment.

Crucially, LedgerX is suitable for traders of all shapes and sizes – even retail clients. This is because you can access Bitcoin options from just 0.01 BTC per contract. You also only need to purchase a minimum of 1 contract and fees will cost you just $0.05 for each contract that you buy.

The only downside to LedgerX is that it only supports US citizens.

For the rest of the world:

If you’re located elsewhere, the next best option to consider is Deribit. The platform gives you access to heaps of Bitcoin options markets with various strike prices and durations. In terms of fees, Deribit charges 0.0003 BTC per contract.

Read more about Deribit in my review of this platform.

Some other great options are FTX (see my review) and IQ Option.

Automated Bitcoin Trading

So now that I have covered derivatives, I am now going to discuss the ins and outs of automated Bitcoin trading. As the name suggests, you will be trading Bitcoin in a fully-automated manner. That is to say, by using a Bitcoin bot – the underlying technology will place buy and sell orders on your behalf.

Although this might sound too good to be true, automated trading bots have been around for many years. In particular, the automated trading scene is very popular in the forex arena. The overarching objective is that you can leave the bot running on your device 24/7 and allow it to make consistent gains in a 100% passive manner.

Unfortunately, it’s not as simple as that. After all, if somebody has a Bitcoin trading bot that consistently outperforms the market, you need to ask yourself why they would release their secret sauce – even when a fee is involved. As a result, you need to do lots of research on your chosen Bitcoin bot provider before taking the financial plunge.

Now, you actually have a couple of options at your disposal when it comes to finding a bot – which I elaborate on below.

Software Bot via MT4

In the traditional trading scene, people typically turn to automated software that is compatible with MT4. This is the most popular third-party platform available in the conventional forex, stock, and CFD trading scene.

MT4 sits between you and your chosen broker. So, you need to download and install the bot into MT4 which in turn, will place buy and sell orders via the broker that you have linked the platform with.

In terms of finding bot software, there are hundreds of providers active in the space – most of which make super-bold claims that they can never meet. Once again, this is why research is crucial.

Specialist Automated Bitcoin Platforms

There are several online platforms that are now dedicated exclusively to automated Bitcoin trading services. The main premise is that you will need to pay a monthly subscription fee to the platform in question.

In turn, you can then build your own automated trading bot from the ground-up and simply buy a pre-programmed once from the site’s secondary marketplace. You then need to link the bot to your preferred cryptocurrency exchange – for example, Binance or Bitfinex.

In terms of the best providers active in this particular space, I would suggest considering the following:

Cryptohopper

Cryptohopper is a huge player in the automated Bitcoin trading scene. The main concept of the platform is that you get to implement your own trading strategies into the bot. That is to say, you will be required to create the trading conditions that the bot is tasked with implementing.

In its most basic form, this might be to place a buy order every time Bitcoin increases by more than 5% in a 12-hour period. Although this might sound somewhat complex, the Cryptohopper platform is designed for traders of all shapes and sizes. This is because the actual design process is based on a drop-and-drag format.

As such, you don’t need to have any experience in coding or programming. What I also like is that Cryptohopper offers backtesting. This simply means that your personal bot can be tested out in live market conditions. If you find that the bot isn’t quite performing as you had hoped, then you can go back to the drawing board and make the required tweaks.

If the thought of having to create your own bot conditions is daunting, Cryptohopper also has a marketplace. This is where people can sell the bots that they have created themselves. In turn, if you find a top-performing bot that you like the look of, it’s simply a case of buying it and allowing it to start trading for you.

In terms of the specifics, you can link your automated bot up to heaps of popular cryptocurrency exchanges. This includes the likes of Binance, Coinbase Pro, Bitfinex, Poloniex, Bittrex, and KuCoin.

There are four packages to choose from at Cryptohopper. This ranges from a basic and restrictive free plan, to a plan that permits up to 500 positions at any given time across 75 different cryptocurrencies.

Sign up to Cryptohopper

HaasOnline

HaasOnline is another option on the table if you are interested in automated Bitcoin bots. The platform requires you to download software onto your desktop device. You can then choose from a variety of bots – each of which will have its own strategy and risk profile.

Much like Cryptohopper, HaasOnline can be connected to heaps of leading exchanges. If you’re an advanced user with experience in coding, HaasOnline bots can be fully adapted to your own trading style.

In terms of pricing, HaasOnline offers three packages. The cheapest will cost you 0.031 BTC per year – and this includes 10 active bots alongside heaps of other features. The most costly plan will set you back 0.088 BTC per year, and this offers unlimited bots, indicators, and the developer license itself.

Sign up to HaasOnline

Bitcoin Lending

If you want to gain exposure to the Bitcoin arena but have no interest in trading or complex financial instruments – then you might want to consider lending.

This is a whole new industry of its own – as it allows users from all of the world to lend out their cryptocurrency holdings and in return – will receive interest. At the other end of the spectrum, you can also borrow funds by putting up cryptocurrency as collateral.

Both of these mechanisms actually give you the opportunity to make a profit, which I explain in more detail below.

Finance Loans With Your Bitcoin Holdings

Unlike stocks, bonds, or real estate – Bitcoin is not an income-generating asset. That is to say, you won’t receive dividends or coupon payments of any sort. Much like gold and silver – your ability to make money is achieved when the value of Bitcoin increases (or you trade it).

With that being said, it is now entirely possible to earn interest on your idle Bitcoin holdings via a crypto-lending platform. In its most basic form, you will be depositing your Bitcoin into the platform in question.

In turn, the platform will use the funds to facilitate loans from borrowers. Those receiving the funds will be required to put up some cryptocurrency of their own – which essentially turns the agreement into a secured loan.

Here’s a basic example of how it works:

• You have 0.5 BTC sitting in your private Bitcoin wallet
• You deposit the funds into a crypto-lending site
• The provider loans the money out to borrowers
• You receive an annual interest fee of 5%
• You withdraw the original deposit out at a later date

As you can see from the above, the amount of interest that you earn is quantified in cryptocurrency as opposed to fiat currency. If you believe in the future of Bitcoin – which you likely will if you already had some coins in your portfolio, this means that you get the best of both worlds.

In other words, while you are able to earn interest on your idle Bitcoin, you are not selling it. As such, if and when the value of Bitcoin rises, you will still benefit from this. For example, you might deposit 0.5 BTC into a crypto-lending site when Bitcoin is worth $17,000 – but cash out your investment when the digital currency is valued at $23,000.

As I uncover shortly, there are also platforms that allow you to lend your Bitcoin to traders that require increased capital. Once again, you’ll earn interest on the Bitcoin you lend out.

Borrow Bitcoin to Increase Exposure

This particular option is a think outside the box approach to increasing your exposure to Bitcoin. In a nutshell – and as noted above, there are crypto-lending platforms that allow you to borrow funds when you put Bitcoin up as collateral.

For example, some platforms will offer you a 90% LTV (Loan to Value) ratio when you deposit Bitcoin as a security. In turn, by depositing $5,000 worth of Bitcoin, you’d be able to get $4,500 in another cryptocurrency like USDT. Then, you’d be able to exchange that USDT into Bitcoin at a third-party exchange like Binance – with the transaction costing you just 0.1% in commission.

The overarching concept here is that you have turned $5,000 worth of Bitcoin into $9,000 of Bitcoin through a crypto loan. Of course, you will need to pay interest on this loan – meaning that this will eat into your potential gains.

But, if you feel super-confident that Bitcoin increases at a greater rate than what you are paying in interest, so essentially allows you to increase your exposure to the market.

Crucial, this is different from trading on margin, as you actually own the underlying cryptocurrency. The key point is that you are paying fees via interest on the loan as opposed to CFD overnight financing fees.

Best Crypto Lending Platforms

It goes without saying that there are lots of crypto lending platforms out there that serve both of the above purposes. With that said, the platforms that I think you should consider are as follows:

BlockFi – The Biggest Crypto Borrowing and Lending Platform

Lendary – Loan Money to Traders Seeking Leverage

Lendary allows you to make money on your idle Bitcoin holdings. The main concept is that you will be lending Bitcoin to traders that wish to enter leveraged positions. As such, instead of borrowing the money from a brokerage firm, it is you that covers the trader in question.

In theory, this means that it is irrelevant whether or not the trader is profitable. This is because they are simply paying an interest fee to apply leverage to their trade.

Each loan that you agree to at Lendary can be anywhere from 2 days to 30 days. Take note, the only way to actually facilitate the process at Lendary is via popular cryptocurrency exchange Bitfinex.

You will need to deposit funds into the exchange and then the Lendary software will take care of the rest. In terms of expected financial returns, Lendary notes that its members have made year-to-date returns of 13.74% – as of late-November 2020.

Read my full review of Lendary or sign up today.

YouHodler – Earn Interest or Borrow Crypto

YouHodler covers both bases, insofar that it allows you to lend your Bitcoin out and earn interest, while at the same time it also facilitates loans.

Regarding the former, you can earn up to 4.8% per year when lending out your Bitcoin. The minimum to be able to take advantage of this is 0.1 BTC. At the time of writing, that amounts to about $1,800 – which might be on the high side for some of you.

But, if you are able to meet this minimum, 4.8% is a great amount of interest to be earning when ordinarily – your Bitcoin would just be sitting idle earning nothing.

If it’s loans you are interested in, you can borrow up to 90% of your Bitcoin holdings at YouHodler. When you put Bitcoin up as a security, you can choose to have your loan paid in USDT, Euros, or US dollars. You can then use the loan funds to grow your exposure to Bitcoin – or another asset class entirely.

You can read my full YouHodler review here.

The Bottom Line

In summary, this guide has outlined the many ways in which you can attempt to make a profit from Bitcoin. At one end of the scale, you can simply buy Bitcoin with the hope that it will be worth more in several years to come.

At the other end, there are heaps of more sophisticated instruments that allow you to profit from Bitcoin, too. This includes everything from Bitcoin CFDs and loan financing to futures and options.

The most important thing to remember is that Bitcoin is a volatile asset class – so you should have at the very least have an understanding of the key risks before taking the plunge

You may have your objections about the realism of some cryptocurrencies’ price trajectory. On the contrary, once you get into studying the protocols that underpin networks like Bitcoin and Ethereum, you start realizing that open blockchain economies and decentralized financial (DeFi) solutions will be the eventual end of banks and the financial market. 

Recently the American reserve bankrolled out more cash from thin air than it had done in 2 centuries. Institutional investors and companies are coming to terms with the sickening effect of these simulations and the promise of decentralized economies as an alternative. 

Tesla’s $1.5 Billion BTC investment is just one of many huge cash moves into cryptocurrencies. As of the time of writing, the Canadian SEC has approved two Bitcoin-ETFs. 

In the middle of this progress, the space of self-custody through various DeFi protocols is booming, even with all the risks involved.

Cryptocurrencies will likely remain volatile and a risky market for regular and new investors. Even more, the DeFi space may take more time before it becomes a safe zone for regular, and new investors.

Fortunately, in the last 4 years, there are several controlled and regulated investment companies offering safer and more realistic crypto investment solutions with decent ROI for cryptocurrency investors. 

Over the remaining part of this review, we will be comparing 3 leading names offering safe cryptocurrency investment opportunities. That being said, this piece is going to take this trajectory. 

YouHodler is a crypto-backed loan service provider with the option of fiat loans. YouHodler was founded in 2018 by Ilya Volkov, a FinTech specialist with 20 years of experience. The YouHodler platform has been operating since 2018, registered in Cyprus and Switzerland and licensed under European Union Financial Commission License.

Read more: My in-depth review of YouHodler

In this article, I’ll be comparing the following three crypto lending platforms:

• YouHodler
• BlockFi
• Nexo

As a centralized cryptocurrency investment platform with several profit-making opportunities, the best way to describe YouHodler is that it offers long-term cryptocurrency holders the opportunity to exploit the market and make profits while still retaining their positions.

YouHodler is a Switzerland brand with two main offices: one in Switzerland and the other in Cyprus.

YouHodler offers crypto interest saving accounts with decent rates, and cryptocurrency loans across over 26 cryptocurrencies, and several tools for investors looking to try out some multi-loan yield farming strategy or users looking to try out some algorithmic trades.

Although fairly new, YouHodler offers one of the best LTV ratios for crypto loans, a decent APY across its offerings.

YouHodler operates pretty much the same as a traditional bank. Investors who have been storing cryptocurrencies such as Bitcoin for a long time (waiting for prices to rise) can deposit their cryptocurrencies in YouHodler’s wallet for a steady income. Then the platform lends out cryptocurrencies to people wishing to trade cryptocurrencies in exchange for interest.

The platform offers loans in fiat (USD, EUR, CHF, GBP), and stablecoins ((USDT, USDC, BesidesTUSD, PAX, PAXG), with guarantees in BTC, ETH, XRP, and other major cryptocurrencies. YouHodlers offers stablecoin interest rates of up to 12% per year.

YouHodler offers customizable plans for legal loans backed by cryptocurrency and Bitcoin loans, as well as a revolutionary cryptocurrency savings account and platform conversion tool.

YouHodler is available in most countries of the world except for the following countries: USA, Bangladesh, China, Iraq, Pakistan, Crimea, Cuba, Iran, North Korea, Sudan, Syria, and Palestinian Territories.

YouHodler has a variety of great features but today, we’re going to examine just the loan portion of the platform and compare it to a few other platforms on the market.

YouHodler loans

To get a YouHolder loan, you first need to select the collateral in the form they want to tender. Once this step is completed, users can immediately obtain the agreed loan amount in fiat currency, Bitcoin, or any stable currency of their choice.

However, the loan eligibility on the platform is related to having sufficient collateral and a verified account.

The platform has several loan packages (with customizable loans available upon request):

• 30 days – 90% LTV
• 60 days – 70% of LTV
• 180 days – 50% LTV

If the user cannot repay the loan received within the stipulated time; they have three different payment methods.

1. Termination of the loan without repayment: with this option, users can terminate their loan without fully paying off the loan. In this case, YouHolder will withdraw all outstanding loans from the collateral and immediately credit the remaining amount to the creditor.
2. Increase the loan term: users can choose to extend their loan term because it is close to the due date.
3. Price Down Limit (PDL): If the price of cryptocurrency falls sharply beyond the “price floor”, YouHodler reserves the right to sell the collateral and settle the loan.

On the other hand, if the price of the mortgage asset rises above the take-profit threshold, the platform will sell the collateral and then credit the profit to the user’s wallet.

Service features

YouHodler offers the following features:

1. The highest LTV on the market – up to 90%. This means that you can take out a loan in the amount of 90% of the collateral.
2. High interest on the deposit – up to 12% per year.
3. YouHodler provides variable and extendable loan terms. Your Bitcoin loan can be between 30 days and 180 days, which provides convenience for those who wish to borrow cryptocurrency in the short term. Lenders can withdraw the funds they want at any time.
4. YouHodler’s deposit limit is $100.
5. Turbocharge – the ability to take a chain of credits. Fiat credit is used to buy additional cryptocurrency without commission to be used as collateral for further loans. Thus, the collateral is “cloned” and in the event of an increase in the cryptocurrency rate, the profit will be even greater.
6. Support for a large number of payment solutions – bank cards and transfers, stablecoins.
7. There are no additional or hidden usage fees for this platform.
8. A multi-platform wallet, also for mobile devices, with an advanced security system and a combination of hot and cold storage.
9. YouHodler has a savings account that allows users to save cryptocurrency at a good interest rate. Users get compound interest every week. BTC lending rate is 4.8%; PAX, USDC, USDT is 12%; ETH is 4.5%.
10. YouHodler has a fund demonstration function. This allows users to experiment with cryptocurrencies and find suitable cryptocurrencies. The user can then decide whether borrowing in this currency will make them profitable.
11. Users can take a loan of up to $ 30,000.
12. Competent technical support 24/7.

Open a YouHodler account

Now let’s take a look at YouHodler’s main competitors.

1. BlockFi

Founded in 2017, BlockFi is registered in the United States as a service provider for cryptocurrency investment opportunities ranging from interest-earning crypto savings accounts, cryptocurrency-backed USD loans, and cryptocurrency exchanges.

The main task of BlockFi is to help increase liquidity in the cryptocurrency market, while also helping debtors better afford daily expenses. Currently, many traders rely on BlockFi’s services for margin trading.

Since its first establishment in 2017, BlockFi’s popularity has risen rapidly, making the company one of the most valuable players in the U.S. cryptocurrency lending market.

While writing this review, there are eight assets listed on BlockFi, with varying annual percentage yield (APY) and the highest ROI coming from USDT.

As a United States-based financial service company, Blockfi operates under the regulatory confines of the SEC in the United States, and it does not include the insurance of users’ funds.

Also, registration generally requires a standard KYC/AML requirement which will require you to fill in some personal information, go through an ID verification process, and video verification with your ID in hand and, without your ID.

Its interest account allows users to earn up to 8.6% annual interest rate on BTC, ETH, LTC, USDC, GUSD, and PAX. Users will be able to purchase stablecoins with the fiat currency of their choice and deposit them into the interest account to start earning interest.

BlockFi provides home, auto loans, and offers the option to pay off credit card debt with these crypto-backed loans. The funds come from the deposits of other users who open savings accounts on the platform. A calculator available on the site shows the interest rate users can expect to earn based on their deposit.

In terms of loan services, BlockFi is very similar to other platforms that are active in the market. Therefore, the platform provides 50% of the loan value (LTV) with a starting interest rate of 4.5%. The debtor’s interest rate may vary based on the amount borrowed and other factors such as the minimum loan amount or origination fees. The exact amount that must be repaid does not fluctuate over time, and users realize this from the moment they sign the virtual loan contract. The minimum loan amount that anyone can accept is $10,000.

BlockFi’s typical loan term is 12 months, and users can take advantage of multiple options to repay the loan early or refinance the debt at the end of the repayment period.

Service features

BlockFi offers the following features:

1. BlockFi provides compound interest deposit accounts. This means that your monthly interest will continue to be compounded to your original deposit, which will result in more income.
2. BlockFi allows users to lend a variety of cryptocurrencies and earn interest, including BTC, ETH, GUSD, USDC, and LTC.
3. The loan term on this platform is one year.
4. The lender can withdraw at any time. The first withdrawal is free, but subsequent withdrawals will be charged a fee of 0.0025 Bitcoin.
5. There are no deposit restrictions on this platform, and users can deposit any amount of deposits according to their needs.
6. The interest rate for loans below 5 BTC is 6%, and the interest rate for loans above 5 BTC is 3.2%. The borrower’s interest rate is 4.5%. This interest rate encourages borrowers to borrow from the platform, which in turn benefits lenders.

The interest rate of other cryptocurrencies of ETH is 5.25%; LTC is 5.0%; USDC, PAX, GUSD are 8.6%; USDT is 7%.

BlockFi is very secure and is called Gemini’s third-party cryptocurrency storage.

Open a BlockFi account

2. Nexo

Founded in 2017, Nexo is a subsidiary of Credissimo, a Switzerland Fintech Company which had its IPO in 2014. Nexo is currently licensed and regulated as a financial institution in the EU.

Nexo offers a token-based cryptocurrency investment platform, which offers crypto-backed loans and a credit card to support that. Nexo also offers crypto and fiat interest-bearing savings accounts and an exchange.

All of its services hinge around its in-house token. Nexo is backed by other high-volume cryptocurrencies like Bitcoin and Ethereum. Since the token is backed, holders get a dividend from the company’s profit for holding the token, which is more like legacy stock’s dividends.

As of the time of writing, Nexo manages over $5 billion in assets for its over one million users across 200 jurisdictions.

Nexo is one of the most experienced crypto lending platforms today. The platform is backed by a fintech group, allowing holders to obtain legal currency loans while retaining their cryptocurrency assets. BitGo is a partner of Nexo, which means highly secure funds.

Nexo also provides credit cards, which allow debtors to easily access their credit lines from anywhere in the world. Nexo cards can be used to make ATM withdrawals or purchase products and services directly at online and offline retailers.

For investors, Nexo is also a good solution. The cryptocurrency lending platform allows users to earn 8% interest on 100% asset-backed deposits in Euros, U.S. dollars, and British pounds. Therefore, it provides investors with the opportunity to obtain high-yield passive income from savings.

Unlike most traditional banks and many alternative lending platforms, funding is instantaneous. In addition, Nexo also provides daily compound interest on all deposits, as well as custody insurance up to $ 100 million per deposit.

Interest rates can also be used for stable currencies such as USDT, TUSD, USDC, PAX, and SAI.

Service features

Nexo offers the following features:

1. Users can earn daily interest from their cryptocurrency assets and fiat currencies (such as U.S. dollars, British pounds, and Euros).
2. The loan period of the platform is one year, which can be renewed if the lender wishes.
3. Nexo does not charge any platform fees.
4. The lender can withdraw or deposit funds at any time.
5. Some of the major digital currencies supported by Nexo include but are not limited to Bitcoin, Ethereum, Nexo Token, BNB, XRP, Litecoin, Tron, Stellar, Bitcoin Cash, EOS, Cardano, Dash, IOTA, Ethereum Classic, Zcash, Tezos, Monero, VeChain, KIN, NEO and Tezos.
6. The ARV of the platform is 8%, but this is only if you use Nexo tokens. The ARV without these tokens is 24.9%.
7. The minimum loan you can get on Nexo is $500 and the maximum is $2 million.
8. In addition to BitGo, which provides top-level security services, Nexo also has an insurance value of US$100 million provided by Lloyd’s. In other words, your funds are very safe.
9. Good customer service.

Comparing all 3 solutions

Different users rate services on different basis and parameters, which is why we are offering these reviews across these parameters to allow you make up your mind on what works for you or what’s a deal-breaker.

Partnerships and reputation

BlockFi

BlockFi has on its customer-lists, institutional investors like Valar Ventures, Galaxy Digital, Fidelity, Akuna Capital, SoFi, and Coinbase Ventures.

Also, the company’s primary custodian is Gemini Trust, a leading cryptocurrency exchange and wallet custodian, registered and regulated by the New York state department of financial services.

YouHodler

Youhodler is the youngest of all three, which is evident in the number of partnerships it has and its manpower. However, the company is registered with the financial commission and blockchain association, which is also compliant with all the regulatory benchmarks for operations in the EU.

A big plus along its partnership lines is its internal wallet provider, Ledger vault which is a leading name for wallet security.

Nexo

Of all three platforms, Nexo has the biggest user base, according to the numbers on their website, which is largely due to their 550 million coin offering, at the heat of the 2017 to 2018 ICO frenzy.

Also, Nexo has some of the leading brand names in the blockchain industry as strategic partners, some of which are names like BitGo, Ledger, TrueUSD, HuobiGlobal, Securitize, Paxos, and several others.

Customer service

BlockFi

From the actual user remarks, we found on Trustpilot, most users have good customer service reports. However, some shared complaints of not being able to speak over the phone with actual customer support and some delay in response over email.

YouHodler

One thing YouHodler makes up for in its age is its customer support and a strong team-to-community relationship. A good example is the periodic live YouTube review of the company’s CEO and team, with their users, in realtime on YouTube.

So far, we found few testimonies, on Trustpilot, which is obvious,(considering its age) but they were relatively good testimonies.

Nexo

Nexo has decent customer service overall. However, there are several accounts of a slow response time from their customer service team, which is something to expect from a brand with over a million users.

Crypto-backed loans— interest and collateral rates

BlockFi

On BlockFi, Interest rates on loans vary, depending on the collateral assets. These assets include BTC, ETH, LTC, PAXG, USDT, USDC, PAX, and GUSD.

The collateral rates required or loan to value (LTV) ratio also affects the interest rates. For instance, for BTC, an interest rate of 4.5% requires a 20% LTV ratio and an interest of 9.5% a 50% LTV.

The LTV ratio of a loan is a measure of the amount of collateral required for a particular amount. An LTV of 20%, therefore, means that you can only get 20% of your collateral size as a loan and an LTV of 80% means you can get up to 80% of your collateral size as a loan.

YouHodler

Of the three platforms in this review, YouHodler has the most generous LTV ratio of 90% for over twelve assets. In other words, $111 worth of collateral you can get up to $100 worth of loan. With BlockFi that can only get your $55 for the best LTV ratio at 50%.

Also, of all three platforms, YouHodler has the most number of collateral options, with twenty-three assets for collateral. Also, repayment is a one-time payment with the option of unlimited loan terms.

Another unique feature is the Turbocharge borrowing option of repeated borrowing, which mirrors the strategy of compounding borrowing strategy used by yield farmers, on DeFi lending protocols. This strategy involves, taking a loan against collateral and locking up the collateral to get another loan, and repeating the process across several assets that have high growth potentials.

Nexo

Nexo accepts BTC, ETH, XRP, BCH, BNB, LTC, NEXO, EOS, XLM, and PAXG as collateral with collateral LTV ranging between 15%-75%. A 75% LTV is somewhat better than BlockFi’s 50% LTV but not as generous as YouHodler’s 90% LTV.

Interest-bearing accounts

BlockFi

As of the time of writing, BlockFi offers interest for ten digital assets, with APYs ranging from 3% for BTC savings (that is greater than 2.5 BTC) to 9.3% for USDT savings.

These rates are considered high, relative to most DeFi staking and liquidity pool protocols or even traditional savings accounts. However, it’s not the highest you will find in this review.

YouHodler

YouHodler offers up to 12% APR + compounding interest on some assets and allows for interest-earning across over twenty-two cryptocurrencies. Also, the Multi HODL option allows users to loan against their interest saving accounts and multiply their market exposure, however, this comes with more risk.

YouHodler’s interest-bearing account also starts compounding, after the first week.

Nexo

Nexo’s interest rates are simple and not as high as BlockFi and Youhodler, with yields averaging around 5% APY for volatile cryptocurrencies and 10%  APY for Stablecoins.

Another interest leverage Nexo has is its higher interest rate for users with a minimum of 10% of their savings held in Nexo token.

Also, like with stock dividends, holders of Nexo get to share 30% of the company’s profit for holding the Nexo.

Exchanging assets

BlockFi

BlockFi offers a simple trading outlet for simple buying and selling at their quoted price, which comes with some increase in cost as compared to other high volume exchanges with an order book that defines the price.

One pros with their exchange service is the zero fees they offer for these trades.

YouHodler

One visible pro with YouHodler is its varieties across all of its products. It is one feature the platform makes up for its small size and young age in the market.

The Multi HODL gives the option to set your trades to execute automatedly, similar to algorithmic trading. We must also warn that this, like with every cryptocurrency speculation, comes with risks.

YouHodler also has universal conversation between all asset pairs on the platform with exchange rates as low as 0.5%.

Nexo

Nexo’s exchange offers its users the option of over seventy-five crypto to fiat pairs, allowing up to $50,000 per swap. Also, the Nexo in-house token is a listed pair on its exchange. This function is built for simple swaps

User experience

BlockFi

BlockFi has a decent UX design with regard to the website’s usage. However, there have been complaints from some users regarding the difficulty in withdrawals, especially in bearish markets, sometimes taking up to one business week.

There have also been similar complaints regarding high withdrawal fees. Fortunately, there has been a recent development of a zero-fee for the first monthly withdrawals.

YouHodler

So far, YouHodler has a good UX design and a responsive site. Also, the user testimonials have been quite positive, with only a few complaints coming from the Multi HODL rates. That is why we advise the Multi HODL option for experienced traders.

Nexo

Nexo responsive UX design is well optimized for easy use and first-time usage. Also, their user remarks on Trustpilot confirm their user experience.

Security

BlockFi

BlockFi uses Gemini —a registered and regulated NYC crypto exchange and wallet provider— as its fund custody solution. In other words, Gemini receives the funds and holds them in cold storage, and also pays out users of BlockFi on withdrawal requests.

With user account security, there is a 2-factor authentication security layer and address whitelisting for withdrawals.

It’s important to note that there was a slight security breach that led to the compromise of BlockFi’s user personal data. While no funds were lost, such breach, however, could degenerate into personal phishing attacks on their users, with the possibility of hackers tricking users into sending out their funds to a compromised wallet address.

YouHodler

For fund security, YouHodler uses Ledger Vault,( a pioneering and leading wallet provider), as its wallet providers. As such, YouHodler benefits from the Ledger’s pooled crime insurance program, which insures up to $150 million in user funds.

Also, YouHodler uses a multisig account to manage its Ledger Vault holdings.

Another great security feature for the end-user on YouHodler is its 3FA withdrawal measure, which allows users with over $10,000 in account holdings to disable all withdrawal options while every other feature is active. With this extra security measure, users will need to undergo an identity verification process to make withdrawals.

As for storage, YouHodler never keeps 100% of its funds in hot wallets (online wallets). They use an advanced mixture of hot and cold storage to ensure the majority of funds are kept safe from hackers at all times.

Nexo

For its cold wallet storage, Nexo uses BitGo, a trusted provider of highly secure multi-sig wallet storage. Also, Nexo is one of the few crypto companies out there investing significant amounts into ensuring its operations, with over $100 million spent in insurance premiums.

The Final Verdict

When comparing just the loan features of these platforms, YouHodler has the best conditions around. The 90% loan to value ratio is the highest by far on the market and their minimum loan amount is a great entry point for crypto loan seekers of various budgets. The fact that they let clients receive loans in five different currencies is also far more than any other platform and YouHodler is the only platform that lets its clients get a loan in Bitcoin.

So if you don’t want to sell your crypto, consider using it as collateral for an instant crypto loan on YouHodler. That way, you don’t have to sell your precious crypto but keep HODLing instead.

However, all three platforms have some features that stand out depending on your priority as a user.

BlockFi is great for institutional-grade investment, with several hybrid solutions that support this.

Nexo on the other hand has a reputation for its numbers. Also, users looking to make some dividends for holding their native tokens still get to earn 30% of the company’s dividend.

YouHodler being the newest of all three, has more improved investment features, for users looking to scale their earning potentials and very active support. They also feature the highest LTV (90%) and highest savings accounts rates (12%) without the need to stake any native token to unlock these high rates.

In addition, YouHodler has the Multi HODL tool, a crypto multiplication tool that is 100% unique. They are the only platform that has this innovative margin trading feature. It really helps them stand out from the pack. Therefore, YouHodler seems like the most well-rounded, transparent, and client-focused platform of the three and it’s a recommended option.

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