Crypto Savings Account — How to Add Value to Your Cryptocurrency

Crypto Savings Account — How to Add Value to Your Cryptocurrency

Are you planning to increase your returns while testing the cryptocurrency waters? Then you should get a cryptocurrency savings account. However, this type of account does not offer the same security as your bank’s. So, before you start investing, you need to understand how the platform works.

CRYPTO SAVINGS ACCOUNT — WHAT IT IS

This platform works exactly as it sounds. It offers you the opportunity to invest cryptocurrencies or other assets and earn interest over time. For example, with a Pokket crypto account, you can earn interest at the rate of 11.5% per year (APY). This means that every year you will have an increase of 11.5 percent.

Moreover, your interest rate may vary depending on the type of asset you own. It can be Ethereum, Litecoin, Bitcoin, and so on. Also, the platform lets you choose the cryptocurrency in which you want your interest to be paid.

HOW DOES IT WORK?

The account works like that of a traditional bank. The money you deposit into your savings account serves as permission for the bank to lend it to third parties. The bank then pays you a certain interest rate each month.

In cryptocurrency savings, your digital currency such as Ethereum or Bitcoin is your deposit. The platform operators lend the cryptocurrency and pay you a certain interest rate in return.

TRADITIONAL SAVINGS VS CRYPTO SAVING

There are some differences between the two types of accounts. These are:

1. FDIC INSURANCE.

The Federal Deposit Insurance Corporation insures most banks. This is a guarantee that your deposited money is safe, even if the bank lends it to borrowers. Consequently, you cannot lose your money at a traditional bank because it is backed by the FDIC.

Crypto savings, on the other hand, has no insurance. Indeed, the crypto market is volatile and the value of your investment can drop at any time, so you can lose money. Therefore, you should consider it as an investment platform rather than another type of bank savings.

2. ACCESS TO FUND

With a traditional bank, you can withdraw money at will; there are no restrictions or fees. However, with cryptocurrency accounts, your access to funds is restricted for a certain period of time after you make a deposit. Also, you may pay a withdrawal fee if you pick up your coins before the maturity date.

3. YIELD

Traditional banks offer interest rates between 0.1–0.6 percent APY. But cryptocurrency accounts have higher annual percentage returns.

THINGS TO CONSIDER BEFORE OPENING CRYPTOCURRENCY SAVINGS ACCOUNTS

Before you open an account, you should compare different providers. Below are some things to consider before choosing a provider:

1. SECURITY

Since you do not want to lose your coins, it is important that you research the service provider to be sure that your investment is safe. We have already mentioned that crypto accounts are not secured by the FDIC. Therefore, you need to consider the financial stability of the provider as well as their cold storage solution for a safe investment.

2. SUPPORTED COINS

You can deposit different types of coins into crypto savings accounts. However, providers restrict, so you cannot make money with all coins on the market. So make sure you choose a provider that accepts the type of coins you have.

3. PURCHASE AVAILABILITY

You may want to choose a provider that offers a savings option in addition to market access. This will allow you to purchase coins using a variety of purchase methods.

IS IT WORTH HAVING A CRYPTOCURRENCY SAVINGS ACCOUNT?

We already know the differences between traditional banks and cryptocurrency accounts. So it’s up to you to decide if the risks are worth the benefits. If you are already investing, you are probably happy with the experience.

Traditional banks do not currently offer annual returns of up to 8 percent. But with cryptocurrency accounts, you can save and earn interest up to that amount.

You may also want to check out https://pokket.com/ to learn how to deposit your cryptocurrency.

CONCLUSION

In this article, we have discussed the basic things you need to know about cryptocurrency savings accounts. There are various providers out there. So, before you invest, you should find out about the provider that suits your needs.