How To Earn Interest On Bitcoin & Crypto In 2020?

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  • Want to earn interest on Bitcoin-like cryptocurrencies?

You are right there in the epicenter of this discussion. But before telling you how to do that exactly, I want you to know that most cryptocurrencies like Bitcoin are self-sovereign money.

Meaning, they are to be held and taken care of by the owner only by design. That’s why handing it to someone else is counterintuitive to the very reason they were conceived for!!

Many crypto investors keep their Bitcoin and other cryptocurrencies in deep cold storage- the right way. While there are some careless ones also who keep them on crypto exchanges which are prone to crypto hacks !!

But in any case, just holding your cryptocurrencies doesn’t increase your wealth. (except the price appreciation part of the underlying asset).

For example:

If you hold 1 BTC which you bought for $2000, it may be $10,000 now, but your 1 BTC remains the same, it doesn’t become 1.15 or 1.25 BTC.

But what if it could become?

There are specially designed crypto lending, and borrowing services that are taking care of this complex process in a risk minimized way.

We will get to those services in a second, but before that, it is essential to understand that this method works for both individuals and businesses, alike.

Earn Bitcoin & Crypto Interest: Best Bitcoin Interest Saving Accounts

The easiest way to start earning interest on your BTC or cryptocurrencies is by opening a crypto/Bitcoin savings account with popular crypto lending services.

Many crypto lenders are mushrooming across the globe, but according to me, not all are worth your time. Some of the players that I feel that are worth pay attention are these:

Best Bitcoin Savings AccountInterest Rate Up to (APR)Allowed Deposits
YouHodler12 %USDT
BlockFi (US Only)6.2 %BTC & ETH
Celsius3.9 %BTC, ETH, + 14 more assets
Nexo8%EUR, DAI, PAX, USDC, USDT & TUSD

Opening a crypto lending/savings account with them will fetch you anywhere between 4-7% interest on your crypto holdings which is way too much than what you get from the banks. Especially in a world where many government bonds are having negative yields.

What Is Bitcoin (BTC) or Crypto Interest & How Does Bitcoin Interest Account Work?

Earning interest on your bitcoins and altcoins wasn’t possible a few years back, but now with increased liquidity and recognition from investors around the world, this has become possible.

It’s 2019 and crypto collateralized lending makes it possible for lenders (investors) to earn an extra buck on their idle sitting crypto capital.

Moreover, this is in no way a new concept.

The wealthy millionaires have been using this age-old method of making their money work for them by lending the extra capital they have in some form or other.

In the traditional world, investors/borrowers usually use real estate or stocks or bonds to issue or get loans and accordingly do more with their capital holdings.

Similarly, in the cryptosphere, anyone who has extra bitcoins or cryptocurrencies can lend it to the borrowers for earning a fixed rate of interest on their lendings.

How You Get Best Bitcoin (BTC) or Crypto Interest Rates?

There is no rocket science in this business model.

It is the same way banks operate. These crypto lending services take your deposits and lend it further to vetted borrowers at 10-16% interest rate and give you 4-7% interest from that share.

The balance amount generated from the difference in the interest rate of lending and savings accounts is the profit margin of these crypto lending platforms. This margin also accounts for the risk these players are taking by holding your cryptos and further lending it out.

Moreover, your funds are only lent to vetted individuals or institutions against over-collateralized assets of the institution or the individual just like crypto-backed loans for borrowers.

Earn Passive Income On Your Ideal Bitcoin/Crypto Assets

So this way you can expect to earn extra passive income on your idle sitting cryptoassets including BTC, ETH or other altcoins and stablecoins.

To get started with this you just need to verify yourself on any of the above-listed platforms and complete your Bitcoin/crypto deposits.

Once these funds are confirmed over the blockchain, they start accruing interest as per the agreed rate.

Depending upon the platform you choose for your savings account and the type of cryptos you deposit along with the market conditions decide the interest rate you will receive.

But there are services in the market that pay up to 7% interest on certain coins.

Also, in terms of payment, these services differ a bit. Some services like BlockFi will pay you interest in the BTC or ETH depending upon what you have deposited.

Celsius does the same, if you deposit BTC,  you get the interest in BTC and ETH for ETH deposit.

On the other hand there some like Nexo who like to pay in BTC for any kind of deposit you keep with them. And I guess, Nexo also does the same when you hold your stablecoins with it and they also pay dividends in BTC to Nexo token holders.

Here is the approximate estimation of holding 1 BTC with BlockFi in their crypto savings account:

Also, here are the projections for holding 1 BTC with Celsius at the current USD value of Bitcoin:

Clearly, BlockFi is winning over Celsius if we see from an interest accrued point of view.

Which is The Best Crypto/Bitcoin Savings Interest Accounts?

I think all these crypto lending players are doing a fantastic job in serving the market and allowing investors/crypto holders to do more with their cryptoassets.

But all are slightly different from each other.

When you compare in terms of interest rate offered and the flexibility of withdrawal of your deposits, Celsius wins over the others.

With Celsius, you get 7% APR for your stablecoin deposits, but when it comes to ETH and BTC, it is quite low. You will get around 3.9% APR for ETH and 3% APR for BTC deposits, calculated and distributed every Monday.

On the other hand, if you wish to deposit BTC or ETH, you should consider BlockFi (For US Only) because it offers a 6.2% APR on your deposits calculated and distributed monthly.

But when it comes to stablecoins like USDT, YouHodler provides a 12% APR interest rate which is the highest in the industry, provided you hold for a year.

When it comes to withdrawal, you can expect the funds to be processed the same day, but BlockFi reserves the right of up to 7 days to process withdrawals.

Lastly, in my opinion, if you are from the United States, you should consider BlockFi for your deposit accounts and Nexo or Celsius for the rest of the world…

Some Frequently Asked Questions:

  • Is Bitcoin Interest-Based?

No, Bitcoin isn’t an interest-based instrument but by arbitraging on its price movements and thus lending/borrowing it, you can generate interest on it. Just like banks do but this is quite risky.

  • Can Bitcoin Earn Interest?

No, Bitcoin cannot earn interest by itself. It has no intrinsic value but interest can be generated based on its price movements. Just like crypto margin exchanges do.

I hope you liked this detailed article on earning interest on your cryptocurrencies. If you liked it, please do comment below, and we will strive harder to bring more such informative content for you in the future !!

Sudhir Khatwani

Hey there! I am Sudhir Khatwani, an IT bank professional turned into a cryptocurrency and blockchain proponent from Pune, India. Cryptocurrencies and blockchain will change human life in inconceivable ways and I am here to empower people to understand this new ecosystem so that they can use it for their benefit. You will find me reading about cryptonomics and eating if I am not doing anything else.

4 thoughts on “How To Earn Interest On Bitcoin & Crypto In 2020?”

  1. of note YouHodler only pays interest on USDC up to $30K, BTC 1.5
    No limit for BlockFi, Nexo or Celsius

    I wonder if the daily Nexo vs weekly Celsius vs monthly YouHodler and BlockFi interest payments make a difference with ultimate compound interest paid?

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