Top 5 Ways to Earn Interest on Cryptocurrency

Top 5 Ways to Earn Interest on Cryptocurrency

Technology has changed the world as we know it. Right now, anything you dream is possible to achieve if you have the patience and you are guided in the right direction. Ever since cryptocurrencies were introduced, this ocean of opportunities increased exponentially. These digital assets now have the potential to make you rich overnight.

However, you just need to know how to achieve this. The opportunities in the crypto world are so large that there are several ways in which you can earn interest by simply using a lending/crypto loan platform.

In this article, we are going to have a look at the top 5 ways which will help you earn interest on cryptocurrency.

Earn Interest through Crypto Loan platforms:

In a centralized financial world, there is no legitimate way for an individual to make money by lending money. In this case, the banks make most of the money by lending the funds that you have deposited in the bank. In return, you get paid only a mere 4% by the banks. With the decentralized cryptocurrencies, you get to lend your funds or borrow them and keep all the interest that you earn from it.

1- Margin Lending

poloniexThis is one of the quickest ways to make a lot of money in a very short duration of time. Several cryptocurrency exchanges provide users with the facility to do margin trading. When you do not have enough funds to buy a lot of cryptocurrencies, you can set the cryptocurrency that you already have as collateral and borrow funds. You can use this to buy more cryptocurrency. However, you will need to return the money within the agreed-upon period.

If you fail to do so, then a part of your collateral will be transferred to the lender’s wallet. Additionally, if the price of Bitcoin falls below the margin level, then the collateral is going to be transferred to the lender. Thus, by simply lending funds, the lender will be earning a pre-agreed interest rate which is going to be paid by the borrower.

A popular exchange that allows margin trading:

2- Collateralized Crypto Loans

btcpopIn this method, the borrower sets aside a certain amount of cryptocurrency as collateral.

By using a platform like Btcpop, borrowers can show their interest to borrow some Btc from the lenders. If the lenders are interested in the collateral that has been set aside, then they fund the borrower’s loan. This entire process happens in a p2p manner.

So, the entire interest that the borrower pays will be given to the lender. Unlike the Margin trading platform where the collateral gets dissolved if it falls below a certain level, Collateral crypto loans do not have this flaw. This means that the borrowers can invest in crypto for a longer period and thus, pay off all the interest as well as make a considerable profit for themselves.

3- Hybrid Crypto/Fiat loans

bitbondThese are currently one of the most popular methods of borrowing funds right now.

A popular platform for this is Bitbond. In this method, Bitcoin is used as a mere intermediary for all currency conversions. So, all lending and borrowing are going to be in the form of US dollars. This platform is widely used when getting a loan from the bank has not been approved. This system is advantageous for both the lender and the borrower.

Since you are paying in terms of USD, if the borrower borrowed 1 BTC worth of funds and the value of Bitcoin goes up, then the borrower would have to repay only the amount that he borrowed in addition to the agreed upon interest. This means that the lender will receive his share of interest whereas the borrower would get to keep the extra Bitcoin which was due to the increase in the price of Bitcoin.

4- Reputation-based Bitcoin loans

btcpopThese are loans that are provided to people based on their online value. The lender will receive his share of interest from the borrower. In the absence of any collaterals, reputation-based p2p lending is a risk that can pay off if the borrower keeps his end of the deal.

Popular platforms such as Btcpop and Bitbond have seen a great interest in these types of lending methods.

For a lender, this kind of p2p trading can prove to be very fruitful as it helps to gain the trust of the person you just lent your funds to. If the small business that you just funded does happen to grow rapidly, then you might get a whole lot more than just the interest that is paid when you lent the money.

5- Trade the cryptocurrency that you borrow

ethlendBorrowing cryptocurrency is not very hard in a world where several lenders are lined up to lend you funds. However, the problem arises when you want to repay the lender his money and the agreed upon interest. By simply holding the borrowed funds you will not be able to make a lot of money to pay off your loans. While this is possible in a bullish market, in a bear market like the one we are experiencing right now, you will end up losing more than what you can afford.

The crypto world really helps you even in such bad situations. Even in a bearish market, the cryptocurrencies experience wild price swings. For a trader to make money, the only requirement is this extreme price swings. Even though trading the funds that you borrowed is a gamble, it is worth the risk. If you are able to make winning deals several times then you will be able to pay back the lender as well as have enough funds to continue trading cryptocurrencies. You can make use of platforms such as SALT Lending, ETHLend and then trade the borrowed crypto on an exchange such as Binance.

Bottom Line

The crypto world does not have an upper limit when it comes to making money. The best part is that you can earn interest even when the market is not doing so well. You can even end up making a lot of money without even having any to begin with. So, if you are on the lookout to earn some interest on your hard earned money, then look no further than cryptocurrencies.

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