Last Updated on October 3, 2022 by
The introduction of cryptocurrencies like Bitcoin and Ethereum opened doors for several investment opportunities. Today, more and more people are getting involved with cryptocurrencies by buying and holding, trading, or even creating new cryptocurrencies to improve existing projects.
During the 2007 bull market, several Initial Coin Offering took place as more people took an interest in cryptocurrencies. Similarly, investors are trying to earn interest on crypto through various means.
There are several avenues available for investors to learn how to earn interest on cryptocurrencies. Educational material has been provided to help new and experienced investors to learn more and take advantage of the numerous investment opportunities.
Recently, platforms like CoinRabbit, have sprouted and gained popularity over a short period due to their impressive track record and accountability to their users. At CoinRabbit, users can escape the highly volatile crypto market and let their investments earn interest.
There are essentially two main ways of making money with crypto at CoinRabbit. Either deposit your stablecoins on crypto savings accounts and earn high interest rates that are far ahead of the interest rates earned in fiat savings accounts.
Also, one can opt to take loans using cryptocurrencies. For instance, if you have 1 BTC today, you can deposit it as collateral for your loan at CoinRabbit, and in return, you will be awarded a loan of half the value of the Bitcoin. So, for instance, if BTC is worth $50,000, you will qualify for a loan amount of $25,000 paid in stablecoins of your choice.
How is this a good investment strategy? Well, users can take out loans and invest in higher return investments without selling their BTC. This way, you are provided with a hedge, allowing you to make more money with your loans as your collateral value appreciates.
What are crypto savings accounts?
Crypto savings accounts are relatively high-yield accounts that allow crypto holders to deposit cryptocurrencies to gain interest. This feature enables crypto users who cannot handle the market volatility to make money off cryptocurrencies by depositing crypto savings accounts.
Crypto savings accounts are fundamentally different from local bank savings accounts, where interests are incredibly low. Take, for instance, a standard savings account in a local bank that would give returns of not more than 1% per annum. On the other hand, CoinRabbit’s annual percentage yield for stablecoins stands at 8%.
At the time of this writing, CoinRabbit offers crypto interest rates for stablecoins; however, this isn’t the case with all crypto savings accounts. Crypto accounts allow users to deposit Bitcoin, Ethereum, and other Alts; however, these accounts are curated differently and appear to be more like staking.
These crypto interest accounts allow users to deposit speculative digital assets like Bitcoin and Ethereum that constantly change the value and also enable users to earn coins in the same currency; for instance, if you deposit 1 BTC, your 1 BTC will earn interest in the form of BTC. This means that investors are exposed to the same market risks and volatility experienced within the crypto markets.
Can you make money with a crypto savings account?
Yes, you can make money with a crypto savings account. However, it depends on the type of the account since investors can also lose money while investing in some of the crypto interest accounts that allow speculative assets.
For instance, when you invest Bitcoin in a crypto interest account to earn interest, you are exposed to market volatility. This means when the value of Bitcoin drops, so does the value of your investment and interest as well.
Therefore, if an investor decides to withdraw their investment when the unit price of one Bitcoin is lower than the value at the onset of the investment, then the investor will have made a loss.
Luckily, there is a solution to this, a particular type of crypto interest account that allows users to earn interests on stablecoins. Stablecoins provide the needed protection from market volatility, ensuring that your investments earn interest steadily through the years.
Centralized vs. Decentralized cryptocurrency interest options
There exist two types of cryptocurrencies, centralized and decentralized. For centralized cryptocurrencies, a significant level of control is held by the parent company or the creators. However, for decentralized cryptocurrencies, power is left to the community.
Cryptocurrency interests differ for most crypto assets. However, there are significant risks when dealing with centralized and decentralized cryptocurrencies; investors are often exposed to the same level of risks experienced by crypto traders in the market.
Cryptocurrencies like BNB are centralized tokens since they are primarily controlled by a for-profit company known as Binance. However, Bitcoin is a cryptocurrency that is considered to be decentralized. So, when comparing two crypto interest accounts that accommodate Bitcoin and BNB, there are significant differences.
For instance, staking BNB in a Binance interest account could potentially earn more interest than staking BNB anywhere else. Similarly, staking BNB on Binance would still be more profitable than staking Bitcoin on the same platform.
However, staking has its limitations; for instance, there is limited flexibility. If you opt to stake BNB or any other cryptocurrency, you have to keep it locked for a specific duration of time. This is quite limiting for investors looking to earn interest on their crypto without giving up their liquidity options.
For instance, with CoinRabbit, stablecoins such as USDC, USDTERC20, and USDTTRC20. These tokens have fixed prices; therefore, investments do not reduce in value. If an investor invests 10,000 USDT, for instance, at 8% Annual Percentage Yield, in one year, the investor’s total investment would be worth 10,800 USDT.
Earning interest on crypto has been made much simpler today with crypto loans and other investment platforms sprouting. CoinRabbit is offering loans for crypto investors with both centralized and decentralized cryptocurrencies.
In order to earn interest on cryptocurrencies using CoinRabbit, you need to deposit stablecoins to earn interest. Today, CoinRabbit offers interest of up to 8% on all stablecoins in its crypto interest account.
What are some of the pros and cons of investing in cryptocurrencies to earn interest?
Pros
- Higher interest rates of 8% APY compared to centralized platforms and are payable monthly
- Investing using stablecoins provides a hedge to market volatility
- No platform fees and KYC registration on CoinRabbit
- It offers maximum flexibility with your funds. You can withdraw your funds at any moment
- Maximum security of your funds
- The rewards and interests can be tracked on a daily basis
Cons
- Investing in speculative cryptocurrencies with price fluctuations may result in losses if the investor is not patient
- Some platforms offer low-interest rates that may not match CoinRabbits’ 8% APY
- Some platforms charge platform fees
At CoinRabbit, deposits are limited to specific stablecoins, such as USDT(Tron and Ethereum networks) and USDC.
Earn interest on crypto vs. hold
There have been several debates on how best one should invest in cryptocurrencies. Trading, staking, depositing to earn interest, and holding for the long term are all lucrative options. However, some are considered higher-risk investments than others. For example, it is easier to earn interest by investing to earn interest than day trading cryptocurrencies.
However, the holding has also proven to be profitable in the long term for many investors since it is easier to make up to 10X gains if an investor intends to hold cryptocurrencies for a long time. However, depositing cryptocurrencies to earn interest is a suitable option for both short-term investors.
Since the gains are assured, an investor would rather bank on the interest rates offered on stablecoins instead of risking speculative assets to increase value. Many investors would instead increase their deposits slowly but steadily using the crypto interest rates instead of exposing themselves to market risk that could potentially wipe out their entire cryptocurrency investment portfolio.
In a nutshell, investors can benefit from holding and earning interest on crypto. However, earning interest on crypto is preferable for both long and short-term investors. For instance, on CoinRabbit, investors begin to earn interest 5 minutes after the deposits are received and verified.
For long-term investors, careful considerations have to be made since many factors such as investors’ risk tolerance, desired interest rates, and duration of investments have to be considered. For risk-averse investors, earning interest on cryptocurrencies is a better option, while risk-tolerant inventors may choose both options as a way to diversify their portfolios.
Conclusion
Earning interest on cryptocurrencies in the new method of making money with cryptocurrencies with minimal risks. Trading cryptocurrencies is considered a high-risk investment, with nearly 95% of day traders losing money by the end of their career. However, APYs are assured and provide steady growth for investors of all calibers, making it a viable option.
Additionally, we made a video on how to make the most out of your crypto. Check it down below.
