Bitcoin is a controversial subject. You could walk into any given room, mention the word Bitcoin and have die-hard fans or foes argue it out for hours. One persistent argument is that Bitcoin doesn’t produce any income and that it has no value. Well, that has now changed with the advent of Bitcoin interest accounts where holders can now earn an impressive yield on their Bitcoin.
What’s most amazing about this development is that you can not only earn interest on your Bitcoin, it’s often compounding interest and you can choose to earn that interest in Bitcoin or another currency like USD.
So, what are the interest rates like? Well, it depends on the platform you choose to go with but companies like BlockFi offer up to 6%. With interest rates like that, they’ve been growing wildly and big-name investors like Peter Thiel have jumped on board to invest in BlockFi so that can grow even faster.
This fast growth has caught the attention of competitors and now there’s a growing list you can choose from, including Celsius Network, Nexo, Crypto.com Youhodler and many more. It’s hard to keep track of them all, so Bitcompare provides a good way to compare them.
There’s a few things you could look out for when choosing a platform to earn a yield on Bitcoin, Ethereum and other cryptocurrencies.
First of all, does it compound? What is the security like? Does the platform have insurance? Who custodies (stores) the crypto on their behalf? What’s the team like? And what backing do they have? It’s a lot to take in, so we do recommend researching as much as you can before diving in.
The other thing to look out for is something called “native tokens”. This basically means that you earn interest in a currency that was created by the platform itself. An example of this is Celsius Network’s CEL token or Nexo’s NEXO token. Both of these currencies have grown rapidly and while they could be a great long-term investment, it’s just a good idea to be aware that this mechanic exists and if you don’t want to earn the interest in those currencies, you have to make sure you have the right settings switched on.
Companies like BlockFi, Youhodler and others don’t do such schemes and instead just offer interest on the cryptocurrency itself, or in BlockFi’s case, they allow you to earn interest in a USD stable coin like USDC or GUSD.
Some people love earning interest in the native tokens, while others really don’t like it. There’s a good chance you’ll be better off earning in those tokens in a bull market, but we’re yet to see what happens in a bear market.
With Bitcoin growing as much as it is and these interest rates as good as they are, you never know. You might just be able to retire on this type of yield. Do your research, compare them properly and if you’re comfortable with earning some yield on your crypto, it’s an amazing opportunity.