With the emergence of new cryptocurrencies, exchanges and tecnologíes, more people now tend to adopt crypto savings alongside their fiat and other savings methods because they understand the concept of having multiple streams of income. .
Just like one would own traditional savings accounts
like in banks
and other financial institutions, one can also own a crypto savings account.
Let's get to know what crypto savings is
Crypto savings simply means keeping. or depositing cryptocurrencies into a savings account which yields interest
after a period of time.
Just like the traditional savings accounts, which are usually denominated in fiat currency like dollars or euros and earn interest based on the central bank rate, crypto savings accounts are denominated in cryptocurrency
and the interest rates earned are determined by the protocols of the specific blockchain which they are built on, which of course are gotten from the interest paid by the borrowers of the cryptos saved.
Just like there are several traditional institutions involved in savings, there are also several crypto platforms where one can carry out crypto savings like:
- Celsius
- BlockFi
- Coinbase Esrn
- Binance Earn
- Kucoin Earn
- Bittrex Earn
- Huobi Earn etc.
Each of these crypto savings platforms operate differently with regards to terms and conditions and interest rates. So before you chose any to save with it's best to conduct a research first to understand their mode of operations.
The importance of having a crypto savings account as an alternative stream of income is so much that one wouldn't think twice to delve into it. Some people have attained financial stability, opened up other businesses, acquired landed properties plus taking care of some financial needs through the returns from their crypto savings.
Without much ado, let's look at some of the benefits of having a crypto savings account;
- Interest is earned on the crypto saved
Undoubtedly one of the reasons one goes into crypto savings is for the purpose of earning interest at the end of the stipulated time in the contract. The good thing about this is that once you deposit your crypto into the account, you start earning interest without having to sell it or even risk losing it to market volatility.
The HBD savings with interest of 20% APR is a good example of this. Whether there is an increase or decrease in the price of Hive, it doesn't affect the HBD interest rate, it still pays out 20% APR. This is a fact.
My HBD savings: Screenshot from my wallet
Having a HBD savings is another best decision I made this year apart from joining Hive. My first saving was $30 and I've been growing it little by little.
My staked Leo and Hive are also other means of crypto savings for me and they are growing too.
- Account Flexibility
Crypto savings allows one to earn interact without locking up the funds at all, whether six months or one year unlike in the traditional bank's savings account which may expect you to do so.
Also in crypto savings you are at freedom to withdraw your funds at any time meaning that you own and have full control over your funds.
- Divereification Of Crypto Portfolio
Crypto savings allows for crypto portfolio diversification which offers one the opportunity to earn higher returns in a variety of different cryptocurrencies. One can operate different savings accounts for Bitcoin, Etherum, RUNE and earn interest on each of them.
I'm sure most of you can relate with this.
- High Interest Rate
This is one of the greatest selling strategy of crypto savings - offering high interest rate to it's numerous customers. The essence of getting into crypto savings is to earn returns, (even higher than anticipated) on investment and crypto savings platform try to satisfy their customers in this aspect.
This high interest rate is usually determined by market condition - the supply and demand chain of the particular cryptocurrency to be earned Interest on.
Higher demand for a cryptocurrency attracts higher interest rate and vice versa.
It is important to note that each platform offer different interest rates so it's important to make inquiries and compare rates before signing up.
- Easy Access To Funds
The ability to easily access one's fund 24/7 is one of the things that makes crypto savings stand out. Once there's internet connection, accessing funds can be done on the go, at any time with no restrictions.
Inasmuch as going into crypto savings has numerous benefits it offers, it also comes with risks. Let's see some of them
Risk of smart contract hacks or other security breaches. Cryptocurrency platforms are always the target of hackers who are out to carry out their heinous act. As a result of this, customers are likely to loose their funds when this happens.
The crypto market is highly volatile
unstable and unpredictable, and there's a possibility of one losing funds as a result of this.
A saving savings of $1,000 today can crash to $200 tomorrow, same way a ₦1,000 deposit of today can increase to $1,500 tomorrow. The crypto market always experiences an upward and downward trend. So it's best to be knowledgeable about the happenings in the crypto world.
- Another risk with crypto savings is that crypto platforms are not FDIC-insured unlike banksand other financial institutions which are FDIC insured and customer's savings and investment are protected by the government. Owing to this fact, there is a great possibly of one losing his or her funds in the event of bankruptcy
Just like in Nigeria and some other countries where cryptocurrency
transactions were banned, anyone doing so is to his own risk.
Wrapping Up
Having multiple streams of income really help in combating the ever increasing expenses and crypto savings is a good option to consider. Although it is still evolving and with little or no regulation coupled with the risk factors, it is still a great source to earn passive income.
But do not forget to be wary of the risks involved and conduct thorough research into the various crypto savings platforms before signing up.
Thank you for reading.
Still @luchyl, the #threadsaddict 😂