But it's hard to argue with the benefits of earning interest. That's why cryptocurrency lending platforms have made it possible to open saving accounts. While interest rates on traditional bank accounts are often below 0.5%, a crypto savings account can offer an annual percentage yield (APY) of up to 12%.
So how can you maximize your passive income without taking unnecessary risks with your Bitcoin? Read on, and we'll talk you through the perks and pitfalls of Bitcoin interest.
Finding the Right Bitcoin Savings Account
Your first step is to find a cryptocurrency lending service and open an account. Most crypto lending services lend out the currency you invest in their savings accounts to external investors. This enables the currency you've invested to gain interest over time.
But lending rates across the industry are getting lower, which limits the amount of interest you can earn. You should consider a service that will invest your deposits rather than lending them out. These services often use minimized risk trading to earn higher yields.
Make sure you compare interest rates across the services you're considering. Some services will even give you the opportunity to earn compound interest on your Bitcoin, letting you increase your yields even further.
But as with anything to do with crypto, rates can fluctuate, so it's important to keep an eye on how much you're earning over time.
Earn Interest on Bitcoin
Once you've found the right account, you'll need to load it up with Bitcoin. Some platforms might let you buy Bitcoin directly, while others might only let you make a deposit. Either way, once you've deposited your Bitcoin into your savings account, you should start accruing interest right away.
Earning interest on Bitcoin is a long-term project. If you want to see significant returns on your investment, you will need to keep your Bitcoin in the account for some time.
If you're going to be holding tight through market fluctuations, it's crucial to be able to trust the platform you're using. There will always be risks involved in cryptocurrency. But as long as you make informed choices, you can take on a level of risk that suits you.
Managing Your Risks
When researching accounts, knowing the answers to these questions will help you to invest with confidence:
- Does the platform have a good track record?
- Is the platform accredited in any way?
- Does the platform take steps (such as two-factor authentication) to verify your identity and deter hackers?
- Has the platform accounted for the risk of borrowers defaulting on their loans?
Decentralization has always been a central tenet of cryptocurrency. When you deposit your Bitcoin with a savings account, you have to trust a centralized institution to take good care of your investment.
Take your time, do your research, and find a service that will work for you.
Taking an Interest
Bitcoin interest is an amazing way to earn passive income from your cryptocurrency assets. Just open an account, deposit your Bitcoin, and you're ready to earn interest on Bitcoin – it's as simple as that.
Our favorite service is Haru Invest, which uses minimized risk trading to bring you a better return on your initial investment. Because Haru Invest doesn't loan your deposits to investors, you're not at risk of a borrower defaulting. That means you can deposit your Bitcoin with confidence, and enjoy some of the highest yield rates on the market.