1. Create a crypto account
The first step is to create an account with a platform where you can earn interest on your crypto holdings.
To stake your desired cryptocurrency, such as Bitcoin, you can join the waitlist if you already have an account. Valuators earn interest by staking Bitcoin on the new proof of stake network similar to how miners earn cryptocurrency when they power proof of work blockchains.
You can stake any amount of Bitcoins on the network, but the exchange takes a 25% fee from the rewards generated by your Bitcoins.
You can earn interest on your cryptocurrency by using BlockFi if you’re new to crypto and want to earn interest. The BlockFi account can be connected to a bank account so that you can purchase crypto with cash. Depending on the cryptocurrency you are using, the platform offers an interest rate of up to 8.6% annualized.
2. Comparison of interest rates
The platform’s website shows the interest rate you’ll earn on different cryptocurrencies. Even if you invest in the same cryptocurrency, the interest rate you earn may differ depending on whether the company takes a cut.
Savings account interest rates are usually floating. As a result, crypto loans’ interest rates are constantly changing based on supply and demand. The demand for cryptocurrency loans is often driven by leveraged investors and exchanges that offer leverage.
3. Make cryptocurrency part of your portfolio
You can fund your account easily on several platforms that allow you to earn interest. Some websites allow you to buy crypto with a bank account, such as BlockFi and Coinbase. If you don’t own any cryptocurrencies, it’s easy to earn interest in them.
In order to create an account on a platform that only accepts cryptocurrency deposits, you will need to open an account with a crypto exchange if you don’t already have one.
Coinbase, eToro, and Gemini are popular cryptocurrency exchanges. You can send your funds to an online Bitcoin wallet address on the platform where you want to earn interest once you have purchased crypto on one of these exchanges.
4. Learn how to earn interest
As soon as you add funds to your interest-bearing account, you will start earning interest. Just sit back and take it all in. Cryptocurrency investors who believe Bitcoin and other cryptos will continue to rise in price are particularly attracted to earning interest in cryptocurrency.
Bitcoin, Ethereum, Litecoin, and Uniswap are popular cryptocurrencies that earn interest for investors. As a result, you stay exposed to whichever crypto you’re investing in since you receive interest in the form of crypto in your interest bearing account.
Cryptocurrency Interest Earnings: The Pros and Cons
The interest rates on crypto are competitive, which is a clear advantage. Savings accounts yielding 7% interest are unheard of in the traditional finance sector, but by cutting out overhead costs through blockchain, companies can offer higher interest rates.
Below you will find a basic outline of the pros and cons of earning interest on cryptocurrency:
Benefits of Earning Interest on Cryptocurrencies
- Lock up times for crypto funds are low or none at all
- As your crypto asset appreciates, so does your interest
- Interest bearing accounts do not require a minimum balance
Cryptocurrency: The disadvantages of earning interest
- Interest rates don’t have to remain high for long when interest rates are floating
- Your capital and interest earnings will depreciate with the value of the cryptocurrency you hold
- Scams are more frequent in the industry due to a lack of regulatory oversight