Bitcoin has been criticized by certain people in the past for being an asset that does not yield any dividends, but this argument no longer holds any water.
Many crypto investors store their digital assets on exchanges like Kraken and Binance for long-term safekeeping. Doing so means they are assuming counterparty risk, however, so in my opinion, if you’re going to opt for keeping your crypto with a third-party custodian, you might as well put it to work.
These are my favorite crypto lending platforms where you can earn interest on your crypto and also obtain loans by providing crypto as collateral.
- YouHodler – biggest number of cryptos supported, lowest fees
- Nexo – best all-rounder in terms of provided services
Alternatively, you can store your crypto in cold storage, but you won’t be able to grow your wealth in that way unless your crypto asset prices appreciate over time.
In this post, I’ll show you how you can earn 5% and upwards on your Bitcoin by using the interest accounts on the platforms featured here.
Most of the platforms I will describe help you earn interest on your crypto by implementing some form of lending. I have written extensively about my P2P lending experience and my favorite P2P lending platforms, but today we’ll add the crypto factor into the mix – hence we will be talking about crypto-backed loans. In my opinion, as an investor, the addition of crypto as collateral marks a huge improvement over the traditional P2P lending platforms, which can lack transparency and that mostly work with no collateral.
Crypto lending is becoming a huge industry, and we can take a look at Google trends to verify this. Have a look at the chart showing a strong worldwide uptick in interest in crypto lending options over the past three years.
Let’s take a look at the best platforms available. One of the important things to note before we start is that these platforms exclude fewer people than traditional P2P lending platforms. While the traditional platforms operate within very strict geographical limitations, with crypto lending platforms basically anyone who holds crypto can participate.
YouHodler offers an extensive set of crypto-fiat financial services. In its essence, the platform intends to help investors take advantage of cryptocurrencies, without having to actively trade them.
YouHodler has managed to make crypto-HODLing an active strategy. For investors, access to a crypto-exclusive savings account and interest-bearing loans are preferable ways to expand your portfolio.
This solves an instant issue with digital currencies – opportunity costs. That is to say, rather than leaving your digital coins sitting idle in a private wallet, YouHodler allows you to earn a yield on your holdings. At the same time, you get to keep hold of your investment and thus – you can cash out your coins whenever you see fit.
YouHodler implements some innovative strategies to boost your returns, so it is an ideal platform for those who like to tweak things and see what works best. The company is registered in Cyprus and is regulated in Europe, while client funds are stored securely within the Ledger Vault platform.
You can also use YouHodler as an exchange to trade cryptocurrencies. If you’ve already made some amazing profits on your Bitcoin, perhaps it’s time to give yourself a break. For example, YouHodler savings accounts pay 12% annual interest on stablecoins. Hence, you could do a Bitcoin to fiat exchange with just a 2% fee right on our platform, and then convert fiat to your favorite stablecoin in orer to start earning interest.
You can read my full review of YouHodler if you want to learn more about this platform, or just click the link below to go to the Youhodler website directly and get started.
With Binance, you have several ways of earning money on your cryptos.
The easiest way is probably using their Flexible Savings product. Flexible Savings is your Crypto savings account. Subscribe your crypto to earn interest, with the flexibility to redeem your funds at any time.
To quote a few estimated annual yields available at the moment, we have:
- BUSD at 2.44%
- USDT at 2.11%
- DASH at 1.83%
There are 24 coins you can use for the flexible savings account.
For higher returns, you will want to opt for the Locked Savings product. By subscribing your crypto to locked savings periods you will in return get higher interest earnings. You can choose from several durations depending on the coin you are using, but it’s typically one or more options from the following:
- 7 Days
- 14 Days
- 30 Days
- 90 Days
For example, with BUSD you get an annualized interest rate of 7.42% at the time of writing, while USDT gives you 6.79%. Both of these are stablecoins that can be easily bought from the Binance exchange itself.
The range of coins available for locked savings is more limited, we can only choose between 6 coins: BUSD, USDT, COCOS, ONE, EOS.
Nexo – The All-Round Financial Service
Nexo is an excellent platform for those investors seeking an active strategy for their crypto holdings by providing access to a crypto-exclusive savings account, interest-bearing loans, crypto exchange and a Nexo card which will give you access to fiat without needing to sell your crypto.
Once you top up and buy crypto you can start earning up to 17% annual interest immediately without further action being required from your side. Apart from earning interest on cryptocurrencies, you can also earn up to 12% APR on USDx, EURx and GBPx stablecoins. The actual APR is determined based on Loyalty Tiers depending on the ratio of Nexo Tokens against the balance of other assets in your portfolio.
Read my in-depth review of Nexo’s plethora of services here.
Nexo also offers crypto-backed loans where your digital assets act as collateral without any further need for a credit assessment. Put simply, Nexo gives you fiat or stablecoins, and you provide crypto as security for repayment. Apart from the tax benefit associated with not selling your crypto, Nexo provides you with the opportunity to access fiat funds at the touch of a button, something that with legacy banks is unimaginable.
I’ve tried out all these platforms and found YouHodler and Nexo to be the ones I liked most. The platforms mentioned in this post all work fine, but you’ll need to find the one that has the best branding and user interface for your tastes. Some of them also reward you in their native tokens, but in general, I prefer going for Bitcoin rewards.
Read more: The Best Books about Bitcoin and Crypto
What do you think of P2P lending platforms that provide crypto-backed collateral? I think it’s a nice upgrade on the traditional P2P lending platforms and as an investor, it gives me more security.