You’ve likely heard of a new trend in the crypto space where users can earn money from storing their crypto assets in certain wallets on specialized platforms. These are called Crypto Earn programs, and while they vary from platform to platform, they generally harbor the same process: you put funds into a crypto earn account, and you earn interest. Generating passive income of this nature might help you to reach your financial goals more quickly.
What is a crypto interest account?
In light of many traders losing money through uneducated or ill-advised attempts to trade crypto, the notion of hodling (holding funds for an extended period of time) has become an equally successful strategy. Working off of this concept, fintech platforms have recently started offering crypto traders access to Earn programs that reward users for depositing their crypto holdings into a specific wallet with regularly paid interest. These types of financial products can often be found on a crypto exchange.
These accounts, commonly known as crypto interest accounts, work in a similar way to regular bank accounts or savings accounts in that users can earn interest proportionate to the amount of money they hold in their account.
Not only can crypto traders potentially earn money through the increasing value of a digital asset, but now they can also earn interest while they sleep. The crypto company providing this service should have adequate licenses in place and the correct authorizations from regulatory bodies.
What is the difference between crypto staking & crypto earn?
While we’ve covered what Crypto Earn is, let’s explore staking for a moment. Staking is the process of locking your funds in a blockchain network in order to assist in the network’s operations. This is only relevant to Proof of Stake networks such as Cardano (ADA), Polkadot (DOT), Polygon (MATIC), recently Ethereum (ETH), and several more.
Through staking, users can earn rewards when they are selected to confirm transactions. It's worth noting that these typically come with a long lock up period, depending on the platform.
The bigger the stake you made, the more chance you have of being chosen to validate a new block and earning rewards. Similar to the Proof of Work mining process, validators get rewarded with the network’s cryptocurrency when they add a new block to the blockchain.
The main difference between the two is that through Crypto Earn you can earn interest on your crypto (particularly on otherwise stagnant assets that are not from PoS networks) while staking involves users in the operating of the network. While staking rewards are typically higher, there are a number of other factors that make them less flexible.
What to look out for in crypto earn programs
The beauty of these programs is that you don’t need to invest more than you already have. You can use your pre-existing portfolio and simply transfer the funds to a platform that allows you to earn interest on your crypto.
When choosing a reliable Earn program, there are a few things to consider:
Some platforms will charge you fees to deposit and withdraw funds, be sure to research this prior to engaging in the program.
- Lock up period / Flexible Term
Lock-up period is a predetermined amounts of time that the funds need to remain in the account in order for you to earn interest on your digital assets. Typically, the longer that the funds remain in the account the more interest you will make. Some platforms might also offer higher interest rates for longer time periods. Ideally, a flexible plan is best, giving you access to your funds at all times.
- Varying Interest Rates
Some platforms will offer varying interest rates that remain relative to the market, meaning that when a coin's price fluctuates so too does the interest rate. When the crypto markets go through a slump, the interest rates will decrease proportionately. Be sure to check the interest rate relevant to the crypto you wish to use, as these typically vary from currency to currency.
- Minimum Amounts, Limits and Supported Coins
Be sure to check what the minimum and maximum amounts are that you can transfer into your Earn wallet. Staking typically requires a high minimum amount in order to participate so be sure to check this beforehand. You'll also want to check what coins the platform supports, for instance, if the platform only provides interest on stablecoins and you only have Bitcoin this might not be the platform for you.
- Choose The Right Platform
Ensure that you place your digital assets in a reputable company, ideally regulated with the correct licenses. You’ll also want to read the fine print in order to get a full understanding of all the rules when engaging in the activity.
To reiterate the point above, if you decide to engage in any of the activities mentioned in this article, ensure that you do so through a reputable platform that holds the correct licences to provide such a service. If you are unsure, please consult a professional or financial advisor who can give you specialised advise.
This article is for general information purposes only and is not intended to constitute legal or other professional advice or a recommendation of any kind whatsoever and should not be relied upon or treated as a substitute for specific advice relevant to particular circumstances. We make no warranties, representations or undertakings about any of the content of this article (including, without limitation, as to the quality, accuracy, completeness or fitness for any particular purpose of such content), or any content of any other material referred to or accessed by hyperlinks through this article. We make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up-to-date.