There are a lot of ways to make money out of crypto. You can become a crypto trader and invest in newer crypto projects, and the safest option is a crypto savings account.
A Crypto savings account is an ideal solution for anyone who is looking for a secure way to hold their cryptocurrencies for the long term and earn interest on the go.
Unlike trading, there is no need to keep buying and selling your coins. Instead, you have to store your crypto in a crypto savings account for a certain period of time and get rewards in return.
But is a crypto savings account worth it? Well, let me talk about it in brief below:
Is a Crypto Savings Account Worth It? Pros and Cons of it
Storing your crypto in a savings account has a lot of benefits. It is the simplest way to earn extra profit from your crypto. Plus, crypto savings accounts make it super easy to deposit and withdraw your funds.
However, to help you understand better, here are some of the key advantages of owning a crypto savings account:
Crypto savings accounts are highly profitable. They do offer additional benefits compared to the traditional savings account.
Through a crypto savings account, you can earn about 4 to 8 percent interest on your deposit. Also, the interest rate depends on what coin you are depositing and the duration. Overall, you can earn up to 12% interest on your crypto holdings.
However, if you compare the same with traditional banks, you can only earn about 0.45 percent to 0.55 percent APR. Hence, keeping your money in a crypto savings account is a better way to earn and grow your money than keeping it in a bank.
You can start earning interest from day one. There are many crypto savings accounts that pay interest on a daily basis. For instance, the Celsius network offers you interests every Monday to keep your funds on their platform. Apart from Celsius Network, YouHodler is another safe and flexible platform which provide interest on crypto holdings with them.
But if you compare the same with a bank, you usually get paid interest after completing one year. And if you choose to withdraw your money midway, you may not get paid any interest at all.
One of the confusions that many have is that to make money out of crypto, you have to be a pro trader. Although, that’s somewhat true. But when it comes to a crypto saving account, there is no need to have any knowledge about trading.
As all you have to do is buy crypto from an exchange and transfer it to the crypto savings account. That’s it now you are all set to earn interest on your crypto holdings.
On top of that, as your crypto asset price increases, the value of your holdings will also increase. This way, you are making money in two ways—one by selling your crypto at a higher price, and another way is to earn interest.
Although, earning interest out of your crypto savings account seems like a great deal. There are some risks that you have to keep in mind. Such as:
One of the biggest issues with crypto savings accounts is that they are not insured by FDIC. As a result, if anything happens like the platform shuts down, your account gets hacked, or anything, you will lose all your money.
There are many crypto savings accounts that ask you to hold your assets on their platform for a certain time limit. This restricts you from withdrawing your money. As a result, if you ever feel a need to withdraw your money, you might not be able to do so.
Luckily, there are some platforms that don’t really have a holding time limit, and you are free to withdraw your funds at any time.
One such platform is the Gemini Earn. It allows you to withdraw your funds instantly and offers you flexibility compared to other high yield crypto saving accounts. Plus, there are no minimums and transfer or withdrawal fees.
Another setback of a crypto savings account is that the interest you earn might not be compound.
This means that your initial deposit will grow over time. But the interest earned on it won’t be compounded.
Instead, to enjoy the gains, you will need to trade or spend your interests.
Some crypto savings accounts require you to lock in your balance for a certain period of time. Although, one might not have a problem with it, as they have a long term holding plan.
But if the price of your crypto drops, then you might not be able to sell it instantly. Instead, you have to keep holding your coin till your holding term ends.
This is a highly risky thing when you invest in coins like meme coins which don’t really have a future. However, this can be bypassed by storing stablecoins in a crypto savings account.
Stablecoin’s price is pegged to a reserved asset like the U.S dollar or gold. As a result, their price doesn’t fluctuate as much as a coin’s price like Bitcoin would fluctuate.
The crypto market is extremely volatile. As it is decentralized in nature and no one controls the crypto market. So even if some platforms offer a good interest rate against your crypto holdings, there might be a problem if your interest is paid in a crypto coin whose value is decreasing.
However, there are platforms that let you earn interest in the same coin you have deposited. So in case you have deposited a stablecoin like USDT, its value won’t fluctuate much, and you will have a profitable investing experience.
So that was all about crypto savings accounts and their pros and cons. I hope this has helped you understand why and why you should not use a crypto savings account.
Overall, a crypto savings account comes with a lot of risks. But by choosing a well-known platform and depositing a stablecoin, you can easily enjoy high profits. But make sure to do your own research at first.