Cryptocurrency has become one of the most exciting asset classes you could possibly invest in. What began in 2009 with bitcoin has become a multitrillion-dollar cryptocurrency market, with investors from all around the globe.
The reason investors are flocking to crypto? The gain potential is huge. New currencies are launched, often for pennies on the dollar. And they can experience 1000x returns in a matter of months.
But that’s not the only reason investors are pouring money into crypto. It’s actually very easy to earn interest in crypto. While your assets are appreciating in value over time, you can also build your wealth by utilizing a crypto interest account.
So how can you put your crypto holdings to work, and what interest rates can you expect? Keep reading to find out now.
First, Buy Some Crypto
Before earning compound interest on your crypto investments, you first need to learn more about crypto, research what to buy, and load up your crypto wallet. You can earn interest on nearly any reliable cryptocurrency that you can buy.
So make sure to choose assets that you are comfortable investing in, and believe will appreciate over time, like bitcoin, Ethereum, Solana, Polygon, and so forth.
You can use a crypto exchange to make purchases online, or you can use a crypto ATM to deposit cash and buy crypto.
How to Earn Interest on Crypto
With your chosen crypto in hand, it’s time to put it to work. Here are just a couple of options for earning interest in the crypto market.
The most popular way to earn crypto on top of your crypto is to stake your holdings. This is essentially the same as depositing funds into an interest-bearing account.
All you need to do is deposit your crypto, set it aside in a staking pool, and enjoy your interest.
Staking is the process of participating in network security. Funds are needed in huge pools in order to run validator nodes and verify blockchain transactions. And as a thank-you for your participation, you earn some of those network transaction fees in interest.
Staking interest rates can vary from 2% to around 15%, depending on which asset you are holding.
Another way to earn interest is by supplying crypto to a lending pool. Borrowers can then take out collateralized loans using the funds in the lending pool.
They pay interest on the money they borrow, which in turn allows you to earn interest. Since their loans are collateralized, there is no risk to lenders. Lending interest rates are similar to staking rates.
The third way to earn interest is by providing liquidity. Liquidity is needed in decentralized exchanges, categorizing this process as a “Defi” investing strategy, short for decentralized finance.
Decentralized exchanges rely on liquidity pools for trading cryptocurrencies, rather than matching buy and sell orders. Exchange rates can be much higher but may require you to hold more obscure cryptocurrencies.
Start Compounding Today
There are many other ways you can earn interest in crypto, but these are the best places to start for beginners. The world of crypto is huge, and there is so much opportunity to make more money by maximizing yield.
The sooner you get started, the sooner your gains will start compounding and speeding up the wealth-building process.
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