Earning Interest in Bitcoins: A Comprehensive Guide
The reasons behind the popularity of bitcoin are many. The benefits it has over fiat money include increased user autonomy, higher accessibility, and decentralized control. However, the most important of these is the higher rates of interest that you can earn by investing in bitcoins. As against most traditional savings accounts that offer you meager amounts as interest, bitcoin interest rates start from 3% and can go as high as 10%.
The high-interest rates have been serving as one of the major causes behind the exponential growth of the bitcoin industry, drawing many users towards itself. This has resulted in an efficient trading and lending market that makes effective use of blockchain technology to process loans and distribution of interests.
If you plan on investing in bitcoins to earn handsome interest, you can try out trading platforms like the crypto soft that analyze interest rates and find out the best transaction deals for you. However, since the entire procedure of purchasing, selling, lending, and borrowing of bitcoins take place in the digital space, the process of earning interests can seem confusing to potential investors. Therefore, to earn interest from bitcoin, follow these steps:
Step 1: Open an account
The best way of earning interest from bitcoins is to open a savings account on a cryptocurrency lending platform. These platforms make use of the money invested by you for lending bitcoin to investors, both retail and institutional, and make them collateralize such loans, lest they should falter. As a result, the rates of interest offered by such platforms can go as high as 8%. To open your account with such platforms, you need to sign up with them and create a savings account for yourself.
Alternatively, you can also try out Wrapped Bitcoin or WBTC, the bitcoin on the most popular blockchain, Ethereum. Using Wrapped bitcoin, you can earn your interests without even making an account. All you would have to do is form your Ethereum wallet and connect it to a decentralized platform.
Step 2: Check out the interest rates
While choosing the platform of your choice, you must consider the rates of interest offered by them. Most platforms offer interest rates from 3 to 8 percent, with some going up to 10 percent. Some even have a tiered interest rate system, which implies that the interest rate offered to you changes with the amount you invest. However, these are generally floating rates, which change with changes in the market demand and supply of bitcoins. So, although most interest rates can be expected to remain stable, there can be changes in case of a drastic change in the bitcoin market.
Step 3: Make your investment
Once you have finalized the platform of your choice and have made an account with it, the next step is making your investment. The system of investment varies across different platforms. For example, some platforms allow you to directly buy your bitcoins, making direct payments through bank transfers. To facilitate this, you will have to add your banking information, like your bank account number, to your account.
Some platforms, on the other hand, only let you deposit your bitcoins on their platform. Therefore, to invest in such platforms, you will first have to purchase your bitcoins on another bitcoin exchange and then invest them.
After you have made your investment, your interest earnings should start coming in right away. Of course, based on the amount you have invested, the platform you have chosen, and changes in the bitcoin market scenario, the rates of interest you earn would differ from time to time. However, since interest rates are much higher than traditional savings accounts, keeping your investment in these platforms for a long period would be a wise thing to do.