Cryptocurrencies are one of the most popular assets in the world because they are so versatile. Many people invest in cryptocurrencies because they believe they will increase in value so that they can be sold for profit later on. But cryptocurrencies can also help you to earn from the second you own them. Here’s how to unlock the value of your cryptocurrencies with interest. 

Passive income

One of the most reliable ways to increase your net worth is to diversify your income. This means earning money from more than one source, such as your salary. One of the first ways that people do this is by seeking out passive income. 

Passive income is one of the most important methods you can use to grow your money. Passive income is when you earn funds without physically working for it. Sounds good right? The good news is that it’s not just a secret for the super rich, anyone can do it once they know it’s possible. Common examples of passive income are rent from properties you may own, earnings from investments as well as interest payments.

Passive income is an important tool because it is an effortless way to add to your net wealth. Instead of thinking of passive income as a free way to increase your main income, think of it as a gentle trickle of funds into your account that gradually builds over time. This way, you won’t have unrealistic expectations about what passive income can do for you and still focus on ways to increase your other sources of income. As you do this over time, your income will diversify and start to add up more sustainably. 

How do you earn interest on crypto? 

Cryptocurrency was born from the belief that finance could be better, more accessible and more rewarding for everyone. Because the cryptocurrency industry is an exciting place where people are constantly trying to push the boundaries of what is possible, new ways to create passive income are popping up all the time.

Just like with anything else, there are different levels of accessibility. From experts dedicating their life to working at the cutting edge of finance to everyday people, there’s a way to generate passive income in cryptocurrency for everyone. 

Earning interest is the most common way to earn passive income and is a simple, but powerful tool for boosting your net worth. In an interest account, your savings will earn interest over a fixed period of time. 

The amount you earn might seem small at first, but a habit of regular investment will soon unlock the power of compounding. Compound interest is when the interest earned on your savings earns interest of its own and is reinvested. Compound interest is one of the most widely used techniques to exponentially grow net worth, all without working for it. 

It might sound complicated at first, but earning interest on crypto and working towards compounding interest really is as simple as investing a fixed amount every month and then leaving it to build momentum over time. The most simple, easy and beginner-friendly to start earning passive income from your cryptocurrency is from a crypto interest account.

What is a crypto interest account

One of the most trusted ways to earn interest on your savings is from a bank. Lucky customers might earn a few tens of euros on their deposits per year and unlucky customers might not even earn enough interest to beat the rate of inflation. 

This means they could actually lose money! It’s amazing that old fashioned banks have any customers left at all. But here’s the good news: cryptocurrency interest accounts are becoming a popular way to make sure your savings grow over time. 

Cryptocurrency interest accounts work just like a savings account in your bank, except better. It’s simple: all you need to do is deposit your cryptocurrency and the bank pays you interest for using their services, as well as to attract other customers. 

The company offering the interest account then makes loans of your cryptocurrency to other trusted investors. These investors are normally institutional or corporate. Because cryptocurrencies like Bitcoin have great historic returns and are one of the hottest investment assets in the world, cryptocurrency interest accounts are more rewarding than traditional interest accounts. 

A cryptocurrency account, like Nuri’s bitcoin interest account, can offer up to 3% interest per year on your savings. It works just like a normal savings account except with cryptocurrency and that’s why you can earn much more interest than with a high street bank. 

It’s a simple way for anyone to consistently earn passive income straight away, without any financial knowledge required. All you have to do is add your funds and let the interest roll in. 

What is crypto lending? 

Although you can use cryptocurrency however you like, the inventors of crypto had pretty ambitious plans: to improve and replace the international finance system. This means that they wanted to create a new way of doing finance that could offer bigger, better services, with more incentives for all participants and lending infrastructure is no exception. 

Crypto lending is a system of collateralized loans that use cryptocurrency. Collateralized loans are when the lender of the funds accepts an asset, in this case cryptocurrency such as bitcoin or ETH, as a security for the funds they loan out.

 The borrower temporarily exchanges their cryptocurrency for fiat currency, such as euros. If the borrower can’t pay back the loan, the lender gets to keep their crypto. 

These loans normally happen on exchanges where lenders and borrowers can agree the amounts and the specific rates of interest directly, without any intermediaries or middlemen. Once the loan amount is repaid in full, the lender gets their cryptocurrency back. Crypto lending can also work where fiat currency is the collateral and the borrower receives crypto assets as a loan. 

Crypto lending is making waves around the world because it is removing the barriers to entry for people who have long been underserved by the traditional finance industry, cutting costs and creating huge value in a sector that has been struggling for over a decade. 

Why would you use crypto lending? 

Getting a loan from a bank isn’t as easy as it used to be. The amount you can borrow has strict regulations and depends on your credit score. If you don’t have a strong financial history, are self employed or don’t have access to conventional financial services, your chances of securing a decent loan are slim. 

Crypto lending is an attractive alternative for people left out by traditional banks because your credit score is not important and repayment for a crypto loan can be more flexible. 

Crypto loans are also much faster. There are a lot of platforms that can offer crypto lending services, such as Compound, Aave, BlockFi, Celsius and Maker. Each platform’s offers vary slightly, from the tokens accepted, to the interest rates available. The whole process, from applying to receiving the funds, can take just a few minutes. 

Cryptocurrency loans are also useful ways to get access to credit by using your cryptocurrency as collateral. Now that cryptocurrency is known around the world, it’s not unusual for some investors and businesses to find themselves dealing more with cryptocurrency than with traditional fiat currencies. 

Despite this, traditional banks won’t usually give cryptocurrency a second glance. This means, although many people do have access to assets they could use as collateral to receive funding, they are being denied the loans they need. 

Here’s where crypto lending is making a difference for millions of people around the world. Cryptocurrency lending helps people to gain access to credit by unlocking the value of their assets, without the demeaning process of having to jump through hoops to get a small loan with high interest repayment rates from a traditional bank. 

In fact, cryptocurrency lending is empowering in yet another way. Investors don’t have to give up their crypto when using it as collateral and can save themselves a taxable event in the process. This is because when you collateralize a loan with your cryptocurrency, you still own it. 

This way, when you are trying to calculate how much of your loan you will be able to use, you can leave out any cost implications from your bitcoin, such as capital gains tax, because it’s still yours. This is a win/win situation because investors still get all the long term benefits that they invested for, while getting their hands on cash when they need it, without losing ownership of their assets. 

What’s next? 

Crypto lending is just one aspect of the booming decentralized finance industry, also known as DeFi. 

DeFi has really taken off in the past few years, going from a niche topic that was dwarfed by crypto trading to an industry of its own that is now worth billions. Crypto lending will expand its services as new possibilities open up, giving cryptocurrency investors yet more options for tax-free liquidity and replacing more structures that we still rely on traditional finance for. 

Because cryptocurrency and blockchain technology are still young, we’re only just seeing the beginning of what is possible. One of the most hotly anticipated products are tokenized exchange traded funds (ETFs). ETFs are a basket of securities that track an underlying asset like stocks or bonds. They’re one of the most popular investment products in the financial world and can give investors great returns. Tokenized ETFs are funds made of cryptocurrencies that track the price of one or several assets. 

Tokenized ETFs have an advantage over traditional ETFs because they can be traded 24/7 all over the world, can be settled instantly and can be traded on multiple exchanges. ETFs

Cryptocurrencies are one of the most empowering investments around. Few other assets give you the opportunity to invest in something that could have a big role in growing your wealth long term, while also helping you to earn interest along the way. 

Crypto lending gives investors the opportunity to get instant liquidity on their assets without a nasty visit from the tax man, while cryptocurrency interest accounts are an easy way for anyone to increase the value of their savings. 

Crypto and DeFi are trimming the fat from financial services and making them cheaper and easier to use, which means more rewards all round. There’s no need to settle for the measly interest your high street bank keeps offering year on year when new ways of earning interest on your money are popping up in the crypto world all the time. 

Don’t let your money gather dust in a traditional bank account, get it out there and earn as your assets increase in value.