If you are a bitcoin investor, you need to decide whether to hold your bitcoin for the long term or trade it for short-term profits. Trading bitcoins is an excellent way to earn short-term gains, but you risk losing your investment. Bitcoin trading is risky because its prices are highly volatile. On the other hand, many investors choose to simply hold their bitcoin and speculate on its value.
If you intend to hold your bitcoin long-term, you can earn interest to boost your bitcoin position. There are two ways to achieve this: simple and compound interest. While simple interest earns you interest from your primary investment, compound interest combines the same with previously earned interest and grows your account faster.
Here is how you can earn interest on bitcoin.
Open a Bitcoin Account
The first step is to open a bitcoin savings account with a crypto lending platform. These companies lend bitcoin to retail and institutional bitcoin investors and make them collateralize their loans with bitcoins as security in case they default. For instance, you can earn interest on bitcoin with AQRU, one of the most recognized crypto ending platforms.
When you open an account, you can fund it and start earning interest. Many of these platforms do not have minimum lock-up times, and you can withdraw your bitcoins whenever you want. They also provide the easiest way for novices to start earning interest on bitcoin.
Compare Interest Rates
The interest rates vary depending on the platform you use. You can expect to earn an interest of 3-8% on bitcoin on many platforms. However, others allow you to make an interest rate depending on how much you invest. With some platforms, there is no minimum amount to begin earning interest on bitcoin; therefore, you can put as much as you want into your account.
However, most interest rates vary with market conditions, especially supply and demand. So you should be ready for fluctuations from time to time. The most important thing is to track your interest to ensure you get the highest rate possible.
The next step is to add bitcoin to your portfolio. On some platforms, you can buy bitcoin directly via wire transfer, and all you need is to add your banking information, route the number to your account, buy bitcoin, and start earning interest. Other platforms only let you deposit bitcoin into your account, and that means you may have to register an account with an exchange platform if you don’t already own bitcoins.
Last but not least, start earning interest on the bitcoins you have deposited into your savings account. The interest rate may deviate depending on the number of bitcoins and your platform. But generally, interest rates on bitcoin range from 3% to 10%. It is advisable to retain your funds in the savings account to earn more interest in the long run.
Keep in mind that the volatility of bitcoin’s price presents a risk when using bitcoin to earn interest. If the price falls, your bitcoin account value may remain the same even after a year of investing.