If you’re looking for ways to make money off your cryptocurrency, it’s hard to beat the simplicity of depositing it into an account and earning interest. We tell you everything that you need to know to make the most out of this passive income method.
Are you looking for safe ways to build up your cryptocurrency and let your digital money work for you? There are several ways of collecting interest on your crypto, which means that for simply locking up a portion of your currency for a time, you can earn additional quantities.
We provide you with everything you need to know to understand how interest works and show you the best ways to earn on your crypto.
Intro To Earning Interest on Cryptocurrency
Many crypto earners are making money off their money by just depositing their currency into accounts intended to produce a percentage-yield interest. This phenomenon has rapidly spread throughout the digital currency market with more people engaging in these “crypto savings accounts”. Yet, what does this process involve? How does it work?
Ultimately, it functions like a standard fiat (traditional currency) account: you put your money in and based on whatever interest rate you agree on with the bank or agency, you acquire that percentage back as compound interest.
The rate of return for these savings accounts is higher than fiat accounts (sometimes significantly so) and you have less restrictions involving withdrawing your currency; you can even receive weekly payouts to your wallet account.
What Is Compound Interest?
Compound interest can be your best friend or worst enemy, depending on which side of it you are on. The best way to explain compound interest is through a comparison of it with standard interest.
With standard interest, at whatever cut-off period that is designated, you will gain interest based on whatever amount is in your account at that moment. So, if you have an account that provided 5% interest and you had 100 dollars in there, at the end of that period, you will receive $5 in interest (which is five percent of one hundred), bringing your total to $105. You would receive that total regardless of whatever fluctuations happened before that date, positively or negatively.
Now, with compound interest, the situation is different. Compound interest can grant the beneficiary interest on what is in the account each day and then builds the next day’s interest on the new amount. In other words, instead of waiting until the end of the designated period, the interest is computed immediately, meaning you actually gain interest on your interest!
This works in your favor and is significantly better when you’re on the receiving end in a savings account, but often credit card companies use compounded interest when collecting on their loans and since that interest builds on daily interest, this can cause significant fees.
Where To Earn Interest on Crypto?
Being on the receiving end of compound interest sounds pretty good, right? But where can you go to take advantage of this type of savings account?
A new startup called BlockFi is the answer you have been looking for. While this company handles a variety of different investment and wealth management options, they are quickly becoming renowned for their BlockFi Interest Account (the first of its kind!) which gives you a chance to save your money and enjoy the benefits of compound interest on your digital currency. Given a little time, you can significantly increase the amount of your crypto without having to do anything except wait.
Benefits To Using BlockFi
The first and most obvious benefit is that you will earn what is essentially free crypto, with the compound interest so you earn far more than if you are getting a standard interest rate.
The percentages of different cryptocurrencies vary, but percentage rates at this time can go up to 9.5%, depending on the type of NFT (non-fungible token or type of currencY) that you are depositing. Depositing a greater amount can provide you a greater rate as well.
Here are some other benefits:
- They offer high-quality, proven financial services
- S. based and regulated
- Interest is paid out monthly
- Offers easy crypto trading and you can earn interest on trades
- Provides loans using your crypto as collateral
- Instant trades and no commission fee
- No minimum deposits
- No monthly fees
How Payment Works on BlockFi
BlockFi uses a three-tier structure to determine how much interest you accrue, which varies from coin to coin. To illustrate, let’s look at how Bitcoin (BTC) works on BlockFi.
- Tier 1 – Holding an amount within the range of 0-0.10 bitcoin grants you 4.5% annual interest on that amount.
- Tier 2 – If you have a total within 0.10-0.35, the first 0.10 gets the 4.5% interest, while the remaining 0.25 receives 1.0% interest
- Tier 3 – Above 0.35 nets you the 4.5% on the first 0.10 you have, 1.0% from there to 0.35, and everything else gets 0.1%.
They payout to your account monthly and you get a free crypto withdrawal every month as well as a free stablecoin withdrawal. Otherwise, you can withdraw your currency at any time and as often as you’d like, but there are withdrawal amount requirements and fees, so make sure to consult their table of information on these scenarios.
Coins Available on BlockFi
Coins that BlockFi supports include the following:
- Bitcoin (BTC)
- Ethereum (ETH)
- Paxos (PAX)
- Paxos Gold (PAXG)
- USD Coin (USDC)
- Tether (USDT)
- Gemini (GUSD)
- Chainlink (LINK)
- Basic Attention Token (BAT)
Best Coins to Buy On BlockFi
Here are some of the cryptocurrencies that have some of the better interest rates on BlockFi, making them some of the best coins to buy on BlockFi. Remember that the interest system is a tiered system, meaning that you receive different interest rates for different amounts of your total deposit.
Ethereum works via the public blockchain network and is an open platform for building decentralized applications. Their digital coin is Ether. Here is how the tiered structure functions for this cryptocurrency on BlockFi:
Tier 1 – 0-1.5 ETH → 5%
Tier 2 – 1.5-50 ETH → 1.5%
Tier 3 – 50+ ETH → 0.25%
A decentralized oracle network, Chainlink provides input on different forms of external data operating outside of the Blockchain.
Tier 1 – 0-100 LINK → 3.5%
Tier 2 – 100-500 LINK → 0.5%
Tier 3 – 500+ LINK → 0.1%
Basic Attention Token
Using the Brave web browser, Basic Attention Token is a blockchain system that monitors time and attention media consumers spend on websites.
Tier 1 – 0-4000 BAT → 3.25%
Tier 2 – 4000 – 20,000 BAT → 0.2%
Tier 3 – 20,000+ BAT → 0.1%
BlockFi has pioneered an innovation for cryptocurrency, allowing users to essentially start a crypto savings account, similar to those of fiat bank accounts, except with less restrictions and greater average percentage yields.
With the ability to access your deposited funds at any time and the use of compound interest rates, BlockFi provides an unparalleled opportunity to collect interest on your crypto currencies while you plan your trade strategies, or if you just want to earn additional money for doing nothing but letting your money sit in an account. Whatever your reasoning, BlockFi’s compound interest account has a lot of benefits for anyone that is looking to build on their current crypto holdings by collecting on interest.