How to Earn Interest on Crypto - A Beginner's Guide (2024 Updated)

Summary

The video script from 99Bitcoins.com, hosted by Nate Martin, offers an insightful guide on earning interest on cryptocurrency holdings. It emphasizes the importance of not treating the content as financial or legal advice and encourages viewers to seek professional guidance before making investment decisions. The video explores various strategies such as staking, savings accounts, and DeFi (Decentralized Finance), highlighting the pros and cons of each. It also cautions against high-yield investment programs (HYIPs) and doublers, which are often Ponzi schemes. The summary advises viewers to start with a small percentage of their holdings, prioritize safety, and conduct thorough research before investing. The video concludes with an invitation for viewers to ask questions and engage with the 99Bitcoins community.

Takeaways

• ⚠️ The video content is for informational purposes only and should not be considered as financial or legal advice.
• 📈 There are ways to earn interest on cryptocurrency holdings while maintaining possession, such as staking, savings accounts, and DeFi.
• 🔒 Staking involves locking up a portion of your funds to help maintain a network and earn rewards, with varying APR/ APY rates.
• 💻 Staking can be technical and is often easier for beginners through exchanges or wallets like Kraken, Bitstamp, Binance, Exodus, Ledger, and Atomic.
• 🚫 Staking on an exchange involves risks such as the platform being hacked or going out of business, and usually incurs fees.
• 💰 A crypto savings account allows earning interest by depositing funds with a centralized company, with no lockup period and available for coins that don't support staking.
• 🏦 Companies like Blockfi, Celsius Network, and Nexo offer savings accounts, and it's important to research interest rates and fees.
• 🌐 DeFi (Decentralized Finance) offers financial services through a network of independent computers, allowing for earning interest through various methods like lending and liquidity provision.
• 🤔 DeFi can be complex and requires understanding the service fully before use, and comes with risks including the potential for bugs or flaws in the programming.
• 📊 A good starting point for beginners is to use 10% of their crypto holdings to generate interest, adjusting based on risk tolerance and strategy.
• 🔑 It's crucial to avoid crypto HYIPs (High Yield Investment Programs) and doublers, which are often Ponzi schemes disguised as legitimate decentralized companies.
• ✅ Always check the legitimacy of a company or service, consider centralized vs. decentralized risks, lock-up periods, fees, payout frequency, minimum amounts, and APR/APY before making a decision.

Q & A

What is the primary purpose of the video?

The video is intended to provide educational content and discuss various aspects of financial investment in the context of cryptocurrency, specifically focusing on ways to earn interest on cryptocurrency holdings.

Why is it important to not consider the video content as financial or legal advice?

The video is for informational purposes only and does not account for individual circumstances or legal implications. Viewers are encouraged to seek professional counsel before making any investment decisions.

What is the recommended strategy for making money with crypto according to the video?

The recommended strategy is 'Buy and hold', or HODL, which is considered the best strategy in the long run by the presenter.

What is staking and how does it relate to earning interest on crypto?

Staking is the process of locking up a portion of your funds to help maintain a specific network, like Ethereum or Cardano. In return for maintaining the network, stakers receive a staking reward in the form of interest.

What are the risks associated with a higher interest rate in staking?

A higher interest rate usually indicates additional risks, which could be related to the stability or security of the network, or the potential for the value of the coin to fluctuate significantly.

Why might someone choose to stake through a wallet instead of directly from their computer?

Staking through a wallet can be less technical and more user-friendly, especially for beginners. Wallets like Exodus, Ledger, and Atomic offer staking services with potentially lower fees and without the need for dedicated equipment.

What are the potential downsides of staking on an exchange?

When staking on an exchange, you give up control of your funds to the exchange, which exposes you to risks if the exchange is hacked or goes out of business. Additionally, exchanges usually charge a fee for their staking services.

What is a crypto savings account and how does it work?

A crypto savings account is provided by a centralized company that pays interest for holding your crypto on their platform. The company uses your deposit to lend to others, who return it with interest, from which you earn a portion.

What are the advantages of using a savings account for crypto?

A savings account offers the advantage of no lockup period, allowing for more flexibility. It is also a good alternative for coins that do not support staking, such as Bitcoin.

What is DeFi and how does it allow for earning interest on crypto holdings?

DeFi stands for Decentralized Finance, which refers to financial services not controlled by a central authority but by a network of independent computers using predefined rules. DeFi services allow you to lock up your holdings and earn interest, which can then be used for lending, staking, supplying liquidity to decentralized exchanges, and farming.

What are some reputable DeFi services mentioned in the video?

The video mentions Aave, Compound, Uniswap, and Yearn Finance as reputable DeFi services that allow users to earn interest on their crypto holdings.

What are the risks associated with using DeFi services?

DeFi services carry risks such as the need to convert holdings into specific coins, less intuitive user interfaces, and the potential for bugs or flaws in the programming that could lead to loss of funds.

What is the recommended approach for beginners looking to earn interest on their crypto holdings?

For beginners, the video suggests starting with a small percentage of their holdings (e.g., 10%), choosing established networks and exchanges, and avoiding high-yield investment programs (HYIPs) and doublers, which are often Ponzi schemes.

How can one avoid falling for crypto scams or Ponzi schemes?

To avoid scams, one should research the legitimacy of a company or service, check if it appears in recommended lists from trusted sources, and consult community forums and platforms like Reddit for user experiences and advice.