2021-03-12 18:05:48

How to Earn Interest on Cryptocurrency Right Now • Benzinga

Making profit from the appreciation of cryptocurrencies is great, but earning profit from the appreciation of your crypto assets while earning interest on your holdings is even better. 

Many platforms offer interest bearing accounts that pay you in the cryptocurrency you fund your account with, and these interest rates differ based on which type of cryptocurrency you choose. Learn how you can earn interest on cryptocurrency now.

Step 1: Open a crypto account.

To get started, you’ll need to make an account with a platform that allows you to earn interest on your crypto holdings. 

If you already have a coinbase account, you can join the waitlist to stake Ethereum for the Eth 2.0 upgrade coming later this year. Validators earn interest by staking Ethereum on its new proof of stake network in a similar way miners earn crypto for power proof of work blockchains. 

Coinbase takes a 25% cut of the rewards generated by your Ethereum, but allows you to stake any amount of Ethereum on the network (as opposed to the required 32 Eth tokens to stake independently).

BlockFi is a great option if you’re new to crypto and want to earn interest on your cryptocurrency. You can connect your BlockFi account with your bank account, so you can purchase crypto with cash. The platform currently offers up to 8.6% annual interest rate compounded monthly, depending on which cryptocurrency you use.

Another platform that allows you to earn interest on your cryptocurrency holdings is Celsius Network. This platform has some of the most competitive rates for stablecoin interest bearing accounts at 13.3% annual percentage rate (APR). This is roughly 5% higher than BlockFi’s stablecoin interest rates and 13% higher than Coinbase.

1 Minute Review

Maybe you think cryptocurrency is the future, or perhaps you were swept up in the initial waves of Bitcoin. BlockFi may be your next step if you’re ready to evolve as a crypto investor.

Whether you’re a native crypto user or curious enough to start investing, BlockFi seeks to bring institutional-grade financial products to crypto markets that often face restricted access. It strives to bring clients low-cost, simple applications designed to maximize the potential of crypto assets. Learn more in our BlockFi review.

Best For
  • Crypto native clients. You own Bitcoin now. You’re the friend who fills in the blanks when conversation turns to cryptocurrency, and you devour crypto literacy content like it’s your job (and maybe it is). BlockFi’s platform can help take your crypto assets to the next level.
  • Crypto fringe clients. If you’ve dabbled in buying alternative assets like crypto or know enough to be interested, BlockFi can help you take the next step.
  • Crypto curious clients. If you’re both intrigued by bitcoin and the type of person who obsessively learns everything you can about things you’re new to, BlockFi’s crypto asset platform might be the entry point you’re looking for.
Pros
  • Mostly fee-free platform
  • Market-best interest rates
  • Earn interest, trade and borrow from a centralized hub using the BlockFi app
Cons
  • Mostly restricted to those with a base knowledge of cryptocurrency
  • No dedicated relationship with an investment advisor, so best for those who have a solid handle on crypto trading

Best For

Crypto Investing

Best For

Crypto Investing

1 Minute Review

Coinbase is one of the Internet’s largest cryptocurrency trading platforms. From Bitcoin to Litecoin or Basic Attention Token to Chainlink, Coinbase makes it exceptionally simple to buy and sell major cryptocurrency pairs. 

You can even earn cryptocurrency rewards through Coinbase’s unique Coinbase Earn feature. More advanced traders will love the Coinbase Pro platform, which offers more order types and enhanced functionality.

Though Coinbase doesn’t offer the most affordable pricing or the lowest fees, its simple platform is easy enough for complete beginners to master in as little as a single trade.

Best For
  • New cryptocurrency traders
  • Cryptocurrency traders interested in major pairs
  • Cryptocurrency traders interested in a simple platform
Pros
  • Simple platform is easy to operate
  • Comprehensive mobile app mirrors desktop functionality
  • Coinbase Earn feature rewards you with crypto for learning about available coins
Cons
  • Higher fees than competitors

1 Minute Review

Gemini is a cryptocurrency exchange and custodian that offers investors access to 26 coins and tokens. Founded in the US, Gemini is expanding globally, in particular into Europe and Asia. Offerings include both major cryptocurrency projects like Bitcoin and Ethereum, and smaller altcoins like Orchid and 0x.

Gemini is 1 of the only brokers with multiple platform options based on skill level. New investors will love the streamlined interface of Gemini’s mobile and web apps, while advanced investors might appreciate all the tools that come with ActiveTrader. 

In addition to a host of platform choices, Gemini users also have access to insured hot wallets to store tokens without worrying about digital asset theft. Learn more about what Gemini can do for you in our review.

Best For
  • New investors looking for a simple mobile and web app
  • Experienced investors who need a more advanced platform with more tools
  • Users looking for a 1-stop-shop to buy, sell and store all of their coins
Pros
  • Easy and quick signups — can get started in as little as a few minutes
  • Multitude of platforms to accommodate traders of all skill levels
  • Hot wallets include insurance to protect your from theft and hacking attempts
Cons
  • Charges both a commission and a convenience fee for users buying and selling through the desktop or mobile app

1 Minute Review

Voyager is a leading name in the sphere of cryptocurrency investing, giving you access to over 50 tokens and coins. Buy, sell and swap assets using Voyager Crypto’s simple mobile platform available as a free download for iOS and Android users. 

When you invest through Voyager, you’ll pay nothing in commissions, which is a major benefit when compared to other cryptocurrency brokers. Voyager is also one of the only brokers we’ve seen that allows users to earn interest on their crypto investments. 

Though the broker could do more to improve its customer service, it’s an excellent option for beginner investors and seasoned professionals alike.

Best For
  • Cryptocurrency investors looking for a wide selection of supported projects.
  • Investors who prefer mobile trading.
  • Anyone interested in earning interest on their crypto investments.
Pros
  • Simple, straightforward and intuitive mobile platform
  • Wealth of investment opportunities
  • Allows users to earn interest on select crypto investments
Cons
  • Only available for mobile users — no desktop platform
  • Limited routes to contact customer service team


get started

securely through Celcius Crypto’s website

1 Minute Review

Celsius Network is a platform that allows you to buy, borrow and pay in more than 30 cryptocurrencies. It’s less a trading platform and more of a means for passive investors to earn weekly returns on their investment. 

From a user perspective, it acts as something in-between a savings account and an investment portfolio. By definition, it’s an investment portfolio because you’re investing in cryptocurrencies. 

The risk that usually comes with trading crypto is much lower, however, thanks to Celsius’ unique business model. All deposits are insured up to $100 million and there are no withdrawal limitations, fees or lockup periods so you can cash out whenever you need to, as soon as you need to. 

Overall, Celsius Network offers a lower risk, less complicated way for both beginners and HODLers to buy and hold crypto while earning steady returns on their investments.

Best For
  • Passive investors
  • Crypto traders
  • Beginners
Pros
  • Rewards of up to 15% APY paid out weekly
  • Easy-to-use mobile platform
  • Available in over 100 countries
  • Instant, fee-free payments using CelPay
  • Great loyalty program
Cons
  • Minimal educational resources
  • Limited to cryptocurrencies

Best For

Crypto futures traders

Best For

Crypto futures traders

1 Minute Review

Kraken is a cryptocurrency that offers access to more than 50 supported coins and tokens, staking capabilities, futures trading and more. Kraken offers a variable maker-taker fee schedule, which often results in lower fees compared to flat-rate brokerages.

In addition to a wide range of crypto choices, Kraken offers customizable ordering platforms and mobile apps that you can use to fully refine your trading experience. There’s plenty to love about trading on Kraken. It appeals to both seasoned professionals and new investors looking to learn more about the market.

Best For
  • Cryptocurrency investors looking for a wide selection of supported assets
  • Crypto futures traders
  • Beginner investors looking for maximum account security
Pros
  • Wide selection of supported tradable assets
  • Straightforward platform is easy for new users to master
  • 24/7 customer service available via live chat
Cons
  • Maker-taker fee schedule may confuse some users
  • No option for phone or email customer service

Step 2: Look at interest rates.

You can see the interest rate you’ll earn on different cryptocurrencies directly on the platform’s website. Depending on if the company takes a cut of the interest, the interest rate you earn may vary, even if you invest with the same cryptocurrency.

The interest rates for these savings accounts are typically floating interest rates. This means that the interest rate changes continuously based on supply and demand for crypto loans. Cryptocurrency loans are often demanded by leveraged investors and exchanges that offer leverage on their platform.

A good interest rate to earn on stablecoins is typically between 6% to 9%. Some interest rates in crypto are much higher –– sometimes over 100%. 

However, these high interest rates should be an indication of high crypto inflation rates and highly leveraged positions. If you’re new to earning interest on cryptocurrency, you should be skeptical about any crypto interest rates above 25%.

Step 3: Add cryptocurrencies to your portfolio. 

Many platforms that let you earn interest make it easy to fund your account. Some websites, like BlockFi and Coinbase, let you buy crypto directly with your bank account. This makes it easy to earn interest on cryptocurrencies if you don’t already own some.

If you make an account with a platform that only accepts deposits in cryptocurrency, you’ll need to make an account with a crypto exchange if you don’t already have one. Popular choices for cryptocurrency exchanges are Coinbase, eToro and Gemini. Once you purchase crypto through one of these exchanges, you can send your funds to your crypto wallet address on the platform you seek to earn interest on.

Step 4: Earn interest.

Once you’ve added funds to your interest bearing account, you’ll start earning interest. Just sit back, relax and watch your crypto holdings grow. Earning interest in cryptocurrency is particularly attractive to cryptocurrency investors who believe the price of Bitcoin and other cryptos in the long term. 

This is because of the exponential growth potential on a crypto interest account. For example, if you were to invest a bitcoin worth $30,000 at the beginning of the year,  the interest you earned at that price would be worth double at a $60,000 bitcoin. Not only this, but the 7% interest you earn on a $60,000 bitcoin is double that of the interest earned on your initial investment.

Popular cryptocurrencies that investors can earn interest on are Bitcoin, Ethereum, Litecoin and Uniswap. The interest paid on these accounts are in the form of the cryptocurrency in your interest bearing account, so you keep your exposure to the market in whichever crypto you’re investing in.

Risk averse investors may find certain interest bearing cryptocurrency investments intriguing. Some platforms offer stablecoin savings accounts –– stablecoins are cryptocurrencies pegged to another asset, commonly the U.S. dollar. 

Some popular stablecoins that investors use to earn interest are DAI, Tether and USDC. Depending on which stablecoin you choose, the interest rates will vary based on supply and demand for crypto loans.

Most interest earned through crypto is a floating interest rate based on supply and demand. Although the rate fluctuates, most larger coins have a relatively stable APR. For example, Bitcoin interest rates typically range between 4% to 8%. 

How Does Compound Interest Work?

Interest on most cryptocurrency savings accounts accrues on a weekly basis or shorter. This is great for investors, as compounding interest grows your account much faster than simple interest. 

For example, if you invest $1,000 earning 10% interest compounded annually for 2 years, then the second year you’ll earn interest on your initial deposit plus the interest from the previous years.

Given the way compounding interest works, time is in your favor. The longer you keep your money invested, the faster it will grow. This isn’t the case with simple interest, as you won’t earn interest on previously earned interest. 

Pros and Cons of Earning Interest on Cryptocurrency 

A clear benefit to earning interest on crypto is its competitive interest rates. A savings account yielding 7% interest is unheard of in the traditional finance industry, but through cutting out overhead costs with a blockchain, companies are able to offer higher interest rates. 

Here’s a breakdown of the basic pros and cons of earning interest on cryptocurrency:

Pros of Earning Interest on Crypto

  • Low or no minimum lock up time on crypto funds
  • Interest grows with appreciation of your crypto asset
  • No minimum amount required to open an interest bearing account

Cons of Earning Interest on Crypto

  • Floating interest rates don’t guarantee rates stay high for the long-term
  • If the cryptocurrency you hold depreciates, so does your earned interest and capital
  • There is low regulatory oversight in the industry, making scams more common

Best Crypto Investment Platforms with Interest Offers

The best crypto investment platform that lets you earn interest depends on your needs as an investor. If you aren’t looking to hold crypto for the long term, then you’ll want to use a platform with no minimum lock up requirements on their savings accounts. 

You should also take into account which cryptocurrency you’ll be earning interest on, so you can compare the rates between different platforms.

Best For
  • Crypto native clients. You own Bitcoin now. You’re the friend who fills in the blanks when conversation turns to cryptocurrency, and you devour crypto literacy content like it’s your job (and maybe it is). BlockFi’s platform can help take your crypto assets to the next level.
  • Crypto fringe clients. If you’ve dabbled in buying alternative assets like crypto or know enough to be interested, BlockFi can help you take the next step.
  • Crypto curious clients. If you’re both intrigued by bitcoin and the type of person who obsessively learns everything you can about things you’re new to, BlockFi’s crypto asset platform might be the entry point you’re looking for.
Best For
  • New investors looking for a simple mobile and web app
  • Experienced investors who need a more advanced platform with more tools
  • Users looking for a 1-stop-shop to buy, sell and store all of their coins
Pros
  • Mostly fee-free platform
  • Market-best interest rates
  • Earn interest, trade and borrow from a centralized hub using the BlockFi app
Pros
  • Easy and quick signups — can get started in as little as a few minutes
  • Multitude of platforms to accommodate traders of all skill levels
  • Hot wallets include insurance to protect your from theft and hacking attempts
Cons
  • Mostly restricted to those with a base knowledge of cryptocurrency
  • No dedicated relationship with an investment advisor, so best for those who have a solid handle on crypto trading
Cons
  • Charges both a commission and a convenience fee for users buying and selling through the desktop or mobile app

Earn Interest on Crypto or Hold?

Earning interest on your cryptocurrency is a great way to grow your investment. Many platforms let you take out your balance at any time, so it’s relatively easy to get out of your cryptocurrency holdings if need be. 

Some companies have minimum times to keep your crypto in your savings account. This exposes you to more risk of price volatility in the crypto market. Although you’d be earning interest, the value of your investment would be worth less if the cryptocurrency were to fall in value.

Frequently Asked Questions

Q. Can I get free bitcoin with a crypto interest account?

1

Q. Can I get free bitcoin with a crypto interest account?

asked

Ryan McNamara

1

You can get free bitcoin by signing up for BlockFi. Depending on how much you deposit to your account, you can get up to $250 of free bitcoin to start earning interest with.

answered

Benzinga

Q. Should I put my savings into Bitcoin?

1

Q. Should I put my savings into Bitcoin?

asked

Ryan McNamara

1

The United States just approved another stimulus package, adding another $1.9 trillion into the economy. But printing so much money in such a short span of time leads to inflation. 

Afraid of high inflation, investors are looking for alternative stores of value to the dollar. If you believe Bitcoin is an established store of value, it may not be a bad idea to diversify some of your holdings into crypto.

answered

Benzinga

Gemini builds crypto products to help you buy, sell, and store your bitcoin and cryptocurrency. You can buy bitcoin and crypto instantly and access all the tools you need to understand the crypto market and start investing, all through one clear, attractive interface. Gemini Crypto Platform offers excellent account management options. You can manage your account at a glance, view your account balance 24-hour changes and percent changes. Get started with Gemini now.

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