Did you know, that just like how you can earn interest by opening a savings account in a bank, on your cash, the same way you can also earn interest on your Bitcoin digital currency? Let’s take a step back for a second, for those who aren’t aware of what BitCoin is.
In the simplest definition, Bitcoin is a digital currency that is held in virtual computers and is not owned or operated by any, one individual much like private and public banks are. The only authority that treats this virtual currency as a trading commodity is the Commodity Futures Trading Commission (CFTC).
It exchanges them on the value of a cryptocurrency, which is transferred or exchanged via computers sometimes with no or low fees. Suffice to say it does not work as the traditional banking system does. It is transacted through one computer wallet to another and is entirely digitally or computer-based. To know more about this form of currency and what it entails, you can click on this site and have a read for yourself.
Bitcoin (BTC) and The Act of Mining
Created back in January of 2009, and as a result of the housing market crash, BTC has been exceeding skeptics’ expectations throughout the world. What once was a coin that everyone could afford, is not a part of just a few as the price continues to increase.
Whereas one coin was worth a couple of hundred dollars back when it first came out, has now jumped in a huge leap and is worth, at the time of this article, $22,000.
This then began the emergence of other following digital currencies such as Etherium (ETH), Litecoin (LTC), Cardano (ADA), Stellar (XLM), and more. There are now over 20 different types in circulation throughout the world.
Although no one knows who created the original bitcoin idea, and even though one or two people have come forward to claim that it is their idea, no one cares. All they care about is owning the thing and making more of it in time through the act of ‘digital mining’: https://www.investopedia.com/tech/how-does-bitcoin-mining-work/and unlike the act of the conventional practice, here it is the idea that’ssimilar.
Mining as we know it is the task of extracting metals and minerals from the earth’s surface by individuals called miners.
Where this type of mining is to look for precious or raw materials like copper, tin, gold, silver, and even diamonds. Bitcoin mining is a costlier venture which involves a technological mindset, time, patience, and the right hardware set up.
There are many advantages of this, such as not having to give up any of your cash to purchase the currency, because you will be making it yourself.
Another benefit is that those who are miners receive a reward in the same digital funding once they compete for blocks of verified transactions. Equipment needed for this includes, amongst other things, an application-specific integrated circuit (ASIC) and a graphics processing unit (GPU).
The primary goal of those who set up a mining rig is to earn more coins. The more you earn the richer you will be. However, not everyone is this technologically inclined, nor do they have the patience for it, so what are their options to earn a living through this form of currency that does not involve setting up complex equipment to mine them?
Enter – Crypto Finance Companies.
Crypto Finance Companies
So, now you ask – how do I earn interest on my Bitcoins? This is where crypto finance companies come to play. These are institutions that supply an assortment of financial services to their customers, including the cryptocurrency kind of transactions.
An example of one such is the BlockFi, which was founded in 2017 and is a US company that works as a financial establishment that works with various kinds of deposits, borrowing, and lending of currencies. More on that can be on this ‘how to get into Bitcoin’ guide online.
These types of BIA’s or BlockFi interest accounts are just one such example of services that gives its users the option to earn up to 8.6% interest per annum on their cryptocurrency deposits much like banks, where you will be required to open an account under your details.
How It Works
The basic idea behind setting yourself up to earn interest begins with setting up an account, and then depositing a default amount of $100 or more, and automatically be given a certain number of free bitcoins once you register. Some places give anywhere between $15 to $250 in free bitcoins to those who open an account with them as an incentive.
Once you have opened an account, and you transfer money into it, it may take up to 5 working days to reflect in your new account, after which you can continue to purchase more digital currency to fund your account, after which you can earn interest of up to 6% on some platforms especially for storing the coins in a hardware wallet, such as Trezor for example.
Hardware wallets are advantageous due to several reasons, such as remote attacks on your account online or physical theft of your computer or hard drive. This is why the creators of both cold and hot hardware to store digital currency have now become one of the most popular ways to carry this kind of funds, and more info can be found here.
The majority of these setups also offer the option to trade your currencies with one another, for instance, you can exchange 4 ETHs for 1 BTC and more. However, as with cash exchanges, there is the aspect of an exchange rate and similarly, with this too.
Some users aren’t keen on the exchange rates when trading their coins for other types, which is why looking for a platform that only charges what’s necessary and does not have any additional fees would be the optimal direction if you want to stretch your funds to capacity, and not lose out on any high yield savings.