As i started to discuss here, i am diving a bit deeper on the new (kind of) world of accruing yield with your criptocurrencies.
And nothing better than start this exploration with the king of the cryptos: Bitcoin
It is well knows that you can only generate more Bitcoin if you mine it (validating blockchain transactions), and the Bitcoin you have on your personal wallet just sits there, doing nothing, until you spend it.
But on the latests years, a lot of financial products were created that allow the "normal" people (those not interested on mining) to get some returns over the Bitcoin you have acumulated.
We could say that today we have financial products that are like savings accounts, where you will get paid for holding your funds and a specific account.
Risks
But before i dive deeper on the options that exists today, is never too much to remind you about the risks of having your cryptocurrencies on third-party custody.
As always: Not your keys, not your cripto.
Unlike the "normal world" economic system, is always good to remember that this is a totally unregulated market, and if something happens to your funds, there is no official entity that will enforce any kind of insurance or guarantee over the companies that provide these financial services.
If you are willing to take some risks to try to increase your cryptocurrency funds, i suggest that you never put all your eggs on the same basket, and only use these financial products with funds you won't bother too much if you lose it.
With that said, all the companies/sites recommendations that will follow on this article and on the future ones have been used by me, and so far, i didn't have any kind of problem with my funds, be it depositing or withdrawing.
But as always, do your own research before investing in anything. Cryptocurrency still is a wild world.
How Bitcoin yield works
As i said before, Bitcoin doesn't have a staking mechanic (recieving rewards for validating transactions based on your stake), so the only possible way to accrue interests is very similar to the "normal economy" model:
You lend your funds to someone, and receive an interest tax in return
There is a lot of ways that this can be achieved, but in all of them, the principle is the same, be it a yield paying website, a DeFi protocol, or exchange margin trading lending.
Why risk it?
I see two main reasons to take the risk of trying to increase your Bitcoin holdins
1 - HODL for life
Not much to say, but if you are going to not spend your bitcoin for a while, accruing interests is a good way to increase your profits when the price rises, or mitigate the losses, when the price fall
2 - Await for trading oportunities
Sometimes, the best trade move is to not trade at all.
But what happens to you funds? Nothing. They just sit there.
But with the idea of savings and lending, your funds will grow a bit more while you wait for a better trading opportunity.
Where and how to start receiving interest
Below is a list of all the services i found and already used/still use to increase my bitcoin holdings.
At the end of the article, i will put a resume, to make it easier to compare all the options.
freebitco.in
Description
The site freebitco.in is one of the oldest faucets still working today, and i use it daily to get some free satoshis.
But adding to the free BTC you can get from the faucet every 1 hour, there is a lot of extra features on the site.
The most important for the article sake is that you can receive daily interest on the BTC you have on the site, no matter if you deposited the funds or earned it only by using the faucet.
Values
Annualized return rate: 4.08%
Minimum Balance: 0.0003 BTC
Payments: daily
How to
Hold the minimum balance on your account.
Stakecube
Description
Stakecube Is a staking pool and exchange, where you can buy and sell cryptos while receiving rewards for staking them.
There is a lot of staking cryptocurrency options (44 so far) to choose from, and more are added every month based on community vote.
Also, users have the option to buy a "share" of a Master Node for coins that are stakable this way.
But the interesting part is that they pay interests to the Bitcoin you have deposited there (and also to LTC, DASH and DOGE), so you can recieve some yield while choosing which coin you will stake.
Adding to that, if you register a SCC (Stakecubecoin) masternode, you get a bonus on the paid interest rate.
Values
Annualized return rate: 7.572%
Minimum balance: 0.0005 BTC
Payments: daily
How to
Hold the minimum balance on your account
Binance
The biggest exchange on the crypto world allows you to put your Bitcoin on a savings state where you will receive daily interest.
There is two kind of savings product that Binance provide to its users: Flexible savings and Locked Savings.
Flexibe savings pay less interest, but you can withdraw the invested value at any time, and the cumulative interest is paid daily to your Binance account. Also, there is max value that can be put into savings (5000 BTC).
Locked Savings pay a better interest rate, but it you must wait a defined time period before receiving the payment. Also, this product isn't always avaiable, and are offered on specific times, at Binance discretion.
Values
Flexible Savings
Annualized return rate (expected): 0.65% (latest: 0.80%)
Minimum Balance: 0.01 BTC
Payments: daily
Locked Savings
(Based on the latest products that were offered)
Annualized return rate: 3%(14 days), 3.25%(28 days)
Minimum balance: 0.01 BTC (Fixed lot)
Payments: at the end of the period
How to
On the Binance page, use the menu Finance, then Savings.
From there, you click on Products and choose if you want Flexible Savings or Locked Savings
Kucoin
Kucoin is a korean exchange where you can lend your BTC to margin traders.
Different from the options above, there is no fixed rate, but a market where you can define the rate and for how long (7, 14 or 28 days) you will be lending your BTC.
The downside of this (besides the minimum of 7 days) is that your order might not be filled, or someone else might add an order with a lower rate.
On the other hand, sometimes, your might be paid a really high rate if the demand for margin trade grows.
Values
Annualized return rate: variable depending on the market demand
Minimum Balance: 0.0001 BTC
Payments: at the end of the period
How to
On the Kucoin site, go on the Earn menu and click Lend.
There you can set the amount you will lend, how many days you will be lending, and the daily interest rate you want.
Also, there is a feature called Auto-Lend, where you can set a reserved amount of BTC, and everything above that value on your account will be put on the Funding market automatically
Bitfinex
Here we have the same system and Kucoin. There is a Funding market, where you set the amount you want to lend, and for how long.
There is three main differences:
1 - The minimum period is 2 days
2 - Borrowers (not only lenders) can also place orders on the book, so they might try to get a better deal.
3 - There is a graph showing the historical accepted rates.
There is also an auto-renew where you can set so your funds will go to the book as soon as they are avaiable.
Values
Annualized return rate: variable depending on the market demand
Minimum balance: equivalent to 50 USD (+- 0.00515 BTC at the writing of this article)
Payments: At the end of the chosen period
How To
Go to the Funding option on Bitfinex screen and on the the Funding Form add your parameters for the funding offer.
Conclusion and Resume
There is a lot of other options out there where you can lend your BTC to recieve some interests while you don't spend it (BlockFi, Nexo.io, Saltlending, CoinLoan, etc), but so far, i can't say much about them because i haven't tested them yet, and i am mostly interested on platforms that allow me to trade cryptocurrencies while still recieving some yield while holding some of them.
In the future i might test some of them, and i will update this list if that happens.
Meanwhile, choose wisely.
And here is the resume of the platforms mentioned on this article:
Good day and good trading!