How You Can Now Earn Interest on Bitcoin and Cryptocurrency How You Can Now Earn Interest on Bitcoin and Cryptocurrency Photo: BitCompare

Are you interested in making a profit from the appreciation of digital currencies? And earn crypto assets on your holdings, too?

While these objectives might sound like various portions of a pipe dream, such is not the case. These are attainable financial goals if you find the right platform to work with.

That said, sorting the wheat from the chaff can prove challenging because many platforms offer interest-bearing accounts today.

How do these platforms work, and which one is right for you? Keep reading for our complete guide to earning interest on sites such as Gemini, BlockFi, and Crypto.com.

Cryptocurrency Platforms Worth Consideration

How do you get started making money in digital currencies? Begin by creating an account with a platform permitting you to earn interest on your crypto holdings. Options include sites such as:

  1. Coinbase
  2. Celsius Network
  3. BlockFi
  4. Crypto.com
  5. Gemini
  6. Nexo

As a crypto beginner, what do you need to know about each of these platforms? Let's take a brief look at what consumes love about each of these companies.

Coinbase

Coinbase represents a solid option for investors interested in capitalizing on the crypto momentum. Once you have a Coinbase account, you also gain access to the waitlist for one of the most anticipated events in digital currency, the upcoming Ethereum 2.0 upgrade.

How do users earn interest? By staking Ethereum on Coinbase's proof of stake network. It's similar to how miners earn crypto for power proof of work blockchains.

What will it cost you to go through Coinbase? It'll require a 25 percent cut of the rewards generated by the Ethereum you stake. But you may stake any amount of Ethereum on the network.

Celsius Network

What are other reliable options apart from Coinbase? Celsius Network represents another platform for earning interest in cryptocurrency HODLings.

The network boasts one of the most competitive rates for stablecoin interest-bearing accounts on the market.

You'll enjoy a +13 percent annual percentage rate (APR). That's about five percent higher than BlockFi’s stablecoin interest rates and 13 percent higher than those of Coinbase.

BlockFi

BlockFi is another fantastic option. For those new to digital currency wishing to earn yields on crypto, begin by connecting your BlockFi account with your bank account. This step will let you purchase crypto with cash.

The platform currently boasts a maximum 8.6 percent annual interest rate, compounded monthly, depending on which cryptocurrency you use.

Crypto.com

The Crypto.com platform is designed to give consumers secured custody and complete control of their digital assets. This wallet is ideal if you want to embrace decentralization to store your digital assets securely and safely.

A top-ranked cryptocurrency exchange, Crypto.com permits users to purchase, transfer, exchange, and store more than 90 digital currencies. It also offers a versatile debit card, allowing consumers to apply their crypto-assets towards daily purchases anywhere that Visa is accepted.

Gemini

Gemini's crypto products help consumers purchase, sell, and store Bitcoin and other cryptocurrencies. The platform allows consumers to buy Bitcoin and crypto instantly. But you'll also gain access to a wide array of tools that will help you understand the crypto market.

Through one straightforward, attractive interface, you can start dabbling in digital currencies and investing. Gemini provides fantastic account management options, too. Best of all, you can manage your account at a glance and view your balance 24/7.

Nexo

Another attractive option for crypto newbies is Nexo. This platform permits clients to retain 100 percent of their cryptocurrency. Instead of selling assets, users rely on Nexo's Instant Crypto Credit Lines to borrow against their crypto while retaining ownership.

This lending approach offers consumers access to the liquidity they need while HODLing their crypto's upside potential.

Compare Interest Rates

What else do you need to know when it comes to comparing interest rates ? You should compare different cryptocurrencies via each platform’s website so that you can see what interest rates look like.

Potential interest rates may vary, even if you invest with the same cryptocurrency because of differences in the fees each company charges. That said, interest rates for crypto savings accounts are often what we refer to as "floating interest rates."

What does this mean? It refers to continuous interest rate changes based on crypto loan supply and demand.

Digital currency loans are typically requested by leveraged investors and exchanges, offering leverage on their platform. What's a decent interest rate to earn on stablecoins? Between six and nine percent.

But you should know that some crypto interest rates are much higher. In some cases, they may skyrocket to more than 100 percent.

These climbing interest rates are indicative of highly leveraged positions and high crypto inflation rates. If you’re new to earning interest on crypto-assets, we recommend exercising a healthy dose of skepticism about any crypto interest rates above 25 percent.

Adding Crypto-Assets to Your Portfolio

Many interest-earning platforms make it easy to fund your account. Sites such as Coinbase and BlockFi permit you to buy crypto directly with your bank account. They make it a cinch to earn interest on cryptocurrencies.

You must make an account with a crypto exchange if you don’t already have one. Why? Because this provides you with access to accounts with a platform only accepting crypto deposits.

Popular choices for crypto exchanges include Coinbase, Gemini, and Crypto.com. Once you purchase crypto through one of these exchanges, you can send funds to your crypto wallet address via the platform you'd like to earn interest.

Earning Interest on Cryptocurrencies

After you’ve funded your interest-bearing account, what's next? You can officially begin earning interest. This aspect of digital currency investing proves especially attractive to crypto investors interested in Bitcoin and other crypto-assets.

What's more, the growth potential on a crypto interest account is exponential. Let's say you invest a Bitcoin worth +$57,000 (to date). The interest you earn at this price would be worth double, $114,000.

What's more, the seven percent interest you make on a $114,000 Bitcoin is also double that of the initial interest you received. What are some common cryptocurrencies that investors earn interest on? They include:

  1. Bitcoin
  2. Ethereum
  3. Litecoin
  4. Uniswap

Interest paid on these crypto accounts comes in the form of the cryptocurrency in your interest-bearing account. In other words, you maintain your exposure to the market, no matter the crypto you choose for investment.

Earning Interest on Stablecoins

What if you fall into the category of risk-averse investors? That's an excellent question in light of the relative volatility of cryptos over recent years.

Nevertheless, we'd place money on the fact you'll still find interest-bearing cryptocurrency investments attractive.

Know that some platforms offer stablecoin savings accounts. What are stablecoins?

These are digital currencies grounded in the value of another asset. Often, this is the U.S. dollar.

What are some popular stablecoins investors have relied on to earn interest? They include:

  1. DAI
  2. Tether
  3. USDC

Interest rates will vary based on supply and demand for crypto loans. They'll also depend on which stablecoin you select.

Remember that most larger coins have a relatively stable APR. For example, Bitcoin interest rates typically range between four and eight percent.

Compound Interest and Cryptocurrencies

To better understand the money-making potential offered by cryptos, you must know how compound interest works.

Most platforms facilitate earning interest on cryptocurrency savings accounts based on weekly returns. This setup proves fantastic for investors. After all,  compounding interest grows your account more rapidly than simple interest.

How does it work? Imagine you invest $1,000 at 10 percent interest compounded annually for two years. During the second year, you’ll enjoy yields on your initial deposit as well as that of your previous years' interest.

As you can see, time is on your side when it comes to compounding interest. The longer you keep money invested, the more you'll make (and faster).

This scenario isn’t the case with simple interest. Why not? Because you're expressly prohibited from earning interest on previously made interest.

The Advantages and Disadvantages of Earning Interest on Cryptocurrency

What's one of the most obvious benefits of earning interest on crypto? Gaining access to competitive interest rates.

After all, the traditional finance industry can't offer seven percent yields like crypto companies can. How are they able to do this? By cutting out overhead costs with a blockchain.

You'll also enjoy low or no minimum lock-up times for your crypto-assets. And your interest will grow with the appreciation of your funds. There's no minimum amount necessary to open an interest-bearing account.

But low regulatory oversight and minimal overhead are accompanied by significant vulnerability when it comes to scams. What's more, cryptocurrency proves notoriously capricious.

When your crypto depreciates, you must understand that so will your earned interest and capital. What's more, floating interest rates are no guarantee that rates will remain high for the long-term.

The Future of Currency

Diving into cryptocurrency investing is easier than ever before because of platforms such as Crypto.com, Gemini, Celsius Network, and more.

What else do you need to know about cryptos? Browse our website for the financial information you need to participate in the exciting world of digital currencies.