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How To Earn Interest On Your Cryptocurrency Holdings
Investing in cryptocurrency is a wild ride no doubt, and its speculative nature and ability to move several basis points in a day has attracted day traders and those who want to make money off of volatility. However, cryptocurrency still needs those who are looking to HODL it long term and want to provide liquidity for the markets.
As we continue to see banks slash interest rates and in some countries moving into negative territory, savers may want to look to other markets for value on their reserves. There have been several blockchain projects looking to stake a claim in the De-Fi (Decentralised Finance) space and are now offering deposit holders interest payments for providing holdings as a bank would do with a savings or money market account.
So where can you put your cryptocurrency to earn interest? Well, there are several promising projects offering depositors a monthly, weekly or daily return on their investment.
Crypto.com has been one of the fastest innovators in the space and offers a range of products from crypto-backed cards for daily transactions to providing savings accounts that pay interest on the deposit. Crypto.com supports several cryptocurrencies and stable coins, and you can earn a variable interest rate depending on your asset. You will have to lock your funds up for three months to get the maximum return and interest is paid out weekly but does not compound.
A project profiled by Forbes, Nexo was founded in 2017 by the founder of TechCrunch, Michael Arrington. The Dapp has proved wildly popular with over 200,000 customers and supports payments in 45 Fiat currencies, making them one of the biggest crypto lending platforms in the space.
Nexo allows lenders to have their earnings deposited each day into their wallets with no waiting. The Nexo Wallets are also provided by BitGo, and the cryptocurrencies are insured for up to $100,000,000.00 by Lloyd's -- a London-based bank -- in case of a hack or bankruptcy.
3. Celcius Network
Celsius Network has become one of the more popular De-FI Dapps in the space since its launch in 2018 by Alex Mashinsky -- one of the inventors and patent holders of VOIP (voice over IP) technology. He holds numerous awards for entrepreneurship. The App was launched with much fanfare with Forbes naming the Celsius Network in their Top 10 companies to watch for in 2018.
Celsius Network can only be used via their mobile App, which is annoying for me since I prefer using a desktop. Still, it does offer something I do love, and that is no withdrawal fees, no deposit fees, no transaction fees, no early termination fees, no origination fees. They also offer no minimum deposit, meaning the barrier to entry is very low.
Users who are lenders and borrowers are insured for up to $100,000,000.00 by Lloyd's -- a London-based bank -- in case of a hack or bankruptcy. This amount is for the total company, not per person.
Your payouts are added to your balance weekly in compound interest, and rates change according to the prices of the coin you're investing in and locked up with them.
Created by Zac Prince and Flori Marquez BlockFi has raised over $20 million from firms, including Coinbase Ventures to run their De-FI startup. BlockFi offers no minimum deposit. BlockFi also opens its doors to all users, no matter the size of their wallet. Your crypto assets are held with Gemini. This 3rd party depository trust is a licensed custodian with insurance and has so far had a perfect track record void of hacks or customer fund losses.
dLease is a bit more complicated than the other platforms mentioned above, but it is the only service that provides non-custodial holding of your funds. dLease works on both the STEEM and HIVE blockchains and provides an open market for lenders and borrowers to exchange in a secure and transparent medium.
dLease allows you to delegate your funds via a peer to peer exchange and get paid for the duration of the lease. You can view all available leases on the platform and look for ones that suit your wallet. You're also able to cancel a lease at any time.
It will, however, take five days for funds to be allocated to your wallet once a lease is over or cancelled.
Freebitco.in is one of the oldest cryptocurrency faucets still running today. While its primary function is that of a gambling site, it's always looking for public funds to provide liquidity for the service. Users can deposit BTC with freebitco.in and receive a 4.08% daily interest on their deposit.
Gaining an interest in cryptocurrency
It' s important to remember that these are all private companies and each project carries its own risk depending on how well capitalised they are, so they may not have the insurance on deposits banks can offer. You're depositing at your own risk. Also, many of these projects I've mentioned only offer custodial holding of funds which means they hold the private keys to the cryptocurrency you send them, and you're exposed to that 3rd party risk.
For these reasons as well as market swings and volatile price action on various coins means you should not rely on these tools for a steady income but more of a hedge and diversifying some of your cryptocurrency holdings.
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If you enjoyed this post and have a little extra time to dive deeper down the rabbit hole, why not check out the following posts on cryptocurrency and blockchain.
- Why Blockchain and Cryptocurrency Is The Future Of Money
- 24 Ways To Earn Cryptocurrency
- How To Pay Tax On Cryptocurrency In South Africa
- How To Buy Bitcoin In South Africa
- Why Does Your Bitcoin Wallet Address Keep Changing?
Disclaimer: This article should not be taken as, and is not intended to provide any investment advice and is for educational purposes only. As of the time posting the writers may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency as all investments contain risk.