Why you should open a Crypto Interest Account

Why you should open a Crypto Interest Account

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Crypto interest accounts are a relatively new way to earn interest on your crypto holdings. They work by allowing you to deposit, sometimes locking in your crypto assets for a set period of time, and in return, earning a return on your investment. This makes them a great way to make your crypto assets work harder for you than simply holding.

What is a traditional interest account?

A savings account is a type of interest-bearing account at a bank or other financial institution. Savings accounts are often described as a place to “park” money that is not currently needed.

Savings accounts are a great way to save for short-term goals, such as saving for a rainy day fund or a vacation. Many banks offer high-yield savings accounts that pay above-market interest rates, in some cases as high as 2.00% APY. But, with crypto, we can do much more (keep reading).

What is crypto (for those that are new)?

Cryptocurrencies are digital or virtual assets that use cryptography to secure their transactions and control the creation of new units. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control.

Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Since then, hundreds of other cryptocurrencies have been created. Cryptocurrencies are often traded on decentralized exchanges and can also be used to purchase goods and services.

Crypto wallet

What is a crypto interest account?

Blending these two concepts is very much like a savings account at a traditional bank but uses crypto, like Bitcoin or a stablecoin, like USDC or USDT, that pays you interest on your balance.

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These services are relatively new and are becoming more popular. There are some popular names in this space that you are familiar with, such as Crypto.com and Nexo. But there are also a group of smaller, less-known platforms that beat these top services on a couple of factors.

What are the benefits of a crypto interest account?

There are many benefits of a crypto interest account. Some of the most notable benefits include:

1. You can earn interest on your crypto assets.

2. You can easily access your funds.

3. You can keep your assets safe and secure in a custodial wallet/service.

4. You can keep your assets in a single location.

5. You can access 24/7 customer support.

6. You can access a wide range of features and benefits, such as swaps or other crypto services

How do I open a crypto interest account?

Crypto-based interest accounts are a special type that allows you to earn interest on your cryptocurrency investments. Your coins will be relatively safe in this account, and you can earn interest on them while they are stored.

If you are interested in opening one, there are a few things you need to know. First, you need to find a reputable platform or service that offers this type of account. There are a number of crypto interest account providers, so you should be able to find one that appeals to you.

Once you have decided to open a crypto interest account and picked out a platform that supports the crypto you have or is planning to buy, you need to take the next step and sign up. This process is relatively quick and done entirely online. You will need to provide some basic information, such as your name and contact information, and you will need to set up a username and password. You will also need to give valid ID information, typically a selfie and photos of your driver’s license to confirm your identity.

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Once you have opened your account, you need to fund it. You can do this by transferring money from your bank account or depositing cryptocurrencies into your account. Once your account is funded, you can start earning interest on your cryptocurrencies, depending on the platform’s typical earning and payout schedule (some pay daily, weekly or monthly).

Investor holding bitcoin

What should I consider when looking at different services?

There are a few key items you should look out for when looking into these services.

  1. Current interest rates on the supported crypto coins you will deposit (see our comparison table of who has the best crypto interest rates)
  2. Bonus or extra services the platform offers (i.e., built-in swaps or a credit card you may benefit from)
  3. Security and an established history (as these platforms do not offer the same type of protection you get with a traditional bank account).

We index, track and review over 50 of these services on our site to make the research easier on you.

Typical interest rates in the crypto space

So, what type of returns can you expect if you open a crypto-based interest account and fund it with assets? Well, each coin typically pays a different return, but stablecoins often pay the highest, sometimes even over 10% annually. Bitcoin and Ethereum are other top coins, but they do not have as high returns, but amazingly they double or even more the payments that traditional savings accounts do.

But what about defi?

Defi, or decentralized finance, is a smart-contract-based monetary system. Since code in defi is typically open source, it can be easily audited and inspected. It also does not require humans and can be fully automated. However, defi is not without its faults, as it can be difficult for new users to use, and an error in code can lead to significant losses.

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See also: How to invest in DeFi

M2: Earn interest on Your Crypto