Interest on cryptocurrencies and stablecoins: Much higher than a bank

By ZC Crypto | token | 11 Sep 2020

The interest the bank pays on euro balances is pretty devastating. Those who hold cryptocurrencies, on the other hand, can receive interest that one can only dream of at the bank. The monopoly on the money market, to which the banks are used, is officially broken.

Yes my You can do the same with the interest rates. If you invest money in a bank with a savings account today, you get a miserable 0.5 percent if things go well. At most banks you can even be happy if you get 0.1 percent. So if you invest 10,000 euros, you will get interest of in the best case 50 euros per year.

If you want to make your euros work for you today, you have to buy stocks or bonds. For most, it's too risky and too complicated. Who knows the companies well enough to invest in them? And who knows when there will be another corona-like crisis that will destroy 10-20 percent of the capital in one week? In any case, buying shares is only worthwhile if you invest larger sums, because otherwise the broker fees will eat away too much. And if you then put everything on paper to save fees, you increase your risk.

This system is blatantly unjust. Investing is only worthwhile if you have large sums of money and if you know what to do. Those who invest six- or seven-figure amounts continue to make good money on their capital - while those who are not so much on the edge can see where they stay. It goes without saying that this will further increase inequality.

Fortunately, you can escape this system with Bitcoin and other cryptocurrencies. As soon as you step out of the comfort zone “bank account”, you can suddenly receive interest rates that your bank advisor doesn't even dare to whisper about.

You are of course giving up deposit protection and, in the worst case scenario, you could lose everything. You should be aware of that.

In the following, I'll introduce you to a few methods by which you can earn interest on money in the crypto market.

4%: Bitwala pays interest on Bitcoins

The Berlin-based Bitcoin startup Bitwala recently introduced interest rates on Bitcoins. Bitwala is the world's first and only merger of a bank account and a Bitcoin wallet. If you have bitcoins in it, you can invest them and receive interest rates of currently around 4 percent per year. The interest is paid out once a week in Bitcoins, the investment can be canceled at any time.

So if you invest 10,000 euros in Bitcoin at Bitwala, you will not receive 20-50 euros, as in the bank, but 400 a year. That's attractive, isn't it? In contrast to the Euro balance at Bitwala, of course, the deposit protection does not apply here. You can also deposit euros directly at Bitwala and buy bitcoins there, but the fees are relatively high. 

How does Bitwala do it? The answer lies in the Celsius network.

3 to 10%: Directly at the Celsius network

In principle, you can also register directly with the Celsius network . Because Bitwala uses this to invest the customer bitcoins. Celsius is a British startup that offers a wallet for many crypto currencies - and the coins that are in it earn interest at the customer's request. It is possible to charge the Celsius wallet with some of the most important cryptocurrencies, such as Bitcoin, Ethereum, Ripple, Stellar, Bitcoin Cash and Dash, as well as with all common stablecoins, from Tether to USDC and Paxos to Dai.

Then you get nice interest rates for the coins. For Bitcoin it is 4 percent today, for Ether 3.82, for Dash even more than 6. However, stablecoins are becoming really lucrative. If you have Tether, Paxos or USDC in your wallet, you get a whopping 8.69 percent interest per year. Optionally, you can have the income paid out in Celsius tokens (CEL), which increases the interest rate by a further 2-3 percent. The conditions are even better than the interest rates: There is no minimum amount and you can cancel at any time.

How does Celsius do it? In a blog post , the startup explains that there is no such thing as a “magic secret”. Because banks could also pay such high interest rates, but “they just don't want it”. Why should they if customers entrust them with their money at minimal interest rates while they keep most of the profits to themselves? When banks lend money, they usually charge an interest rate of 14-25 percent. The absolute majority of this goes to the shareholders, while the savers don't even get 10 percent of it. Celsius, on the other hand, pays 80 percent of the interest to savers, while they lend money to “hedge funds, stock exchanges and institutional traders” at the usual bank rates, in the form of “asset-backed loans” with an average interest rate of 9 percent.

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Thank you for reading.

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