In a world full of uncertainties over job security and business outlook, it is prudent to consider diversifying your income streams. One sure way to go about this would be to venture into the emerging field of cryptocurrencies. But before diving in, some background information is critical.
What are cryptocurrencies?
Cryptocurrencies are digital assets or currencies. They are backed by a technology known as the blockchain. You can use cryptocurrency to buy goods or services. One can acquire cryptocurrencies through mining as an individual or as a pool of miners. On the other hand, you can purchase crypto from a trustworthy individual directly through peer-to-peer platforms or a third-party broker’s exchange. After acquiring the cryptos, you can HODL them and sell at a higher price later, so you become a crypto trader.
Bitcoin is the most popular cryptocurrency. It is also the most traded and has the highest market capitalization of over 800 billion USD. If well managed, you can have a high interest in the coin. Other popular currencies include Ethereum, Litecoin, and Binance coin.
Storing Cryptocurrencies in some wallets to earn interest
Crypto coins are held in digital wallets that you get from various exchanges. The good news is that you can earn crypto wallet interest by storing your coins with some platforms’ wallets. For example, you can earn interest on your Bitcoin savings or other crypto savings held on some exchanges. The interest rate can be between 3% and 18.55%, depending on the digital currency. Although cryptocurrencies are highly volatile digital assets, you can try a few, invest and earn interest in cryptocurrency.
Opening a crypto savings account to earn interest
You can open a crypto account such as a Bitcoin savings account with a crypto exchange. Once you fund your account, you start earning good interest than a traditional bank savings account. A trustworthy platform such as YouHodler gives you interest, paid weekly, which can yield up to 12.3 % per annum. The platform accepts Bitcoin, USD coin, and more than 15 other top coins.
For higher interest, you can consider a long-term investment. In addition, if you do not withdraw your interest payout earned on platforms like YouHodler, you get compound interest were previously earned interest is combined with the principal invested and makes you more. This is better than a simple interest model that only earns you interest from the principal. One thing to note is that crypto interest is driven by market conditions and is typically paid in the same coins that you saved. Thus earning you interest in cryptocurrency.
Pros and cons of earning interest on cryptocurrency
The most significant benefit of earning interest on cryptos is the high-interest rates you could reap. Compared to traditional savings accounts that bear less than 1% interest per year, most crypto savings accounts offer not less than five times the conventional savings accounts. Moreover, the interest is paid in cryptos, for example, BTC; thus, if the coin’s value rises, so will the interest you receive.
However, the main challenge is the price volatility of cryptocurrencies — the prices can drop drastically, making serious losses. But if you believe crypto prices will appreciate in the long term, you can invest in a crypto savings account and can be a worthy investment.
Now that you understand how to earn interest on cryptocurrency, you should consider investing in crypto savings accounts with one of the best and most reliable platforms like YouHodler and earn passive income. You can watch as your crypto holding grows. However, take necessary risk management measures because the crypto prices can drop unexpectedly.