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What is a crypto interest account?

What is a crypto interest account?

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Interest accounts, in crypto, are very similar to savings accounts of yore at a traditional bank. They are accounts, that hold funds, that specifically earn interest. This means you earn crypto just by holding crypto.

Banks have traditionally used deposited funds to lend out to other bank members. They charge interest for this capital and share some of it back with those bank members. Changes to banking laws over many years have allowed for banks to lend out money it doesn’t actually have on hand, known as fractional reserves. This is risky behavior and can lead to a bank run.

Depending on the service or platform that you have your account with, the interest rate can vary, and also can be “locked up” for a certain amount of time. Some services avoid this, but others use it as a way to help increase your interest rate by discouraging you from moving your funds around.

Luckily, crypto lending is highly collateralized, meaning it’s backed nearly 100%. It’s also easy to validate backings with block explorers or proof of community. Traditional banking does not expose this information, except to auditors in private.

Check out our crypto interest rates for BTC, ETH and more.

High-interest savings account in traditional banking very rarely exceed 2%. Less than that is more common, and many savings today account earn no interest. This is why we believe interest is the killer app!

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