One of the most common arguments against Bitcoin is that it is non-producing.
In fact the IRD came out and said the ONLY reason anyone would buy Bitcoin is to sell it at a later date. Meaning it cannot be an “investment” because it doesn’t produce any interest or dividends.
That’s not true.
You have been able to earn interest on your Bitcoin in a multitude of places since around 2013 (and many other cryptocurrencies pay interest too).
The difference in 2020 is, the companies that pay interest on Bitcoin deposits are far more reputable than they once were.
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They are still not regulated to the tune of banks and government institutions, so the risk is still higher. But they are certainly far more reliable than the wild west we had in the space 6 years ago.
I’m now at a stage where I believe this risk is manageable. As the industry matures, we can start to hold more companies accountable. Even exchanges that are getting hacked are repaying investor funds, like Binance did after their $40 million hack.
So where is the best place for Kiwis to earn interest on their Bitcoin?
I have two recommendations. I also recommend splitting your investment between the two of them, as a means of diversifying the risk. They also offer floating rates and see-saw one another in terms of whose is better, so it’s a good exercise in hedging as well.
Earning Interest on Blockfi
Blockfi is backed by some pretty big names in crypto, including Coinbase, the Winklevoss twins, and Peter Thiel’s Valar Ventures.
Their interest rates are floating but usually fall around 3-4% p.a. for crypto and 6-8% p.a. for stablecoins.
I like Blockfi because the user interface is excellent and the platform as a whole is just a pleasure to use.
Very simple, interest is paid monthly and you can withdraw at any time. Withdrawal fees are also minimal, 25 cents for stablecoins or 0.0025 BTC.
Here’s what it looks like on the inside:
You can deposit in LTC, BTC, ETH and various stablecoins.
Interest is deposited directly into your account at the end of the month.
Setting up an account is free. Use this link, and you’ll get $10 of free BTC when you make your first deposit. Anyone in New Zealand can join.
Earning Interest with Celsius Network
I love Celsius, because not only can you earn interest on BTC, LTC, ETH and XRP, you can also earn interest on other coins that don’t offer the possibility to stake.
You can also deposit other popular cryptocurrencies like 0x, Omisego, EOS, Stellar and many more.
Here’s what the inside of the account manager looks like:
The other cool thing about Celsius is they pay interest every week! Rates also change every week, but move between 1-5% depending on the coin.
They have also been around for a lot longer than Blockfi, and also have their own token (CEL).
There are no fees other than withdrawal fees which are all minimal.
Anyone in New Zealand can join Celsius. You click here to set up your free Celsius account.
Earning interest with Binance
The final option to earn interest is with Binance.
Binance is currently the biggest crypto exchange in the world and the fastest growing. It’s been one of the industry’s biggest success stories, and far superior to almost every other exchange I’ve tried.
They’ve had a “Savings” account available for a while now, and offer interest on many popular currencies.
The downside with Binance is the interest rates are significantly lower.
Here’s what it looks like inside the account manager:
As you can the rates are less than 1% on all these major coins.
However, I would also say it’s the safest option out of the three on this list.
Anyone in New Zealand can join Binance. You can click here to set up a free account.
The best way to earn interest on Bitcoin and crypto in New Zealand?
There are many other platforms you can earn interest on, but these three are the only ones I’ve found to be reliable enough to use.
I also aim to diversify my risk by investing across the three platforms.
That way if one happens to go down, I only lose part of my investment.
Limiting my downside is always central to any investment decision.
If I am keeping a lot of altcoins on Celsius, I will aim to keep most of my BTC on Blockfi. Then keep a balance of each on Binance too.
This is just common sense investing and how I would approach any investment decision whether it’s crypto or not.
I also don’t send all my assets to interest-earning platforms. I still keep a majority in my Ledger Nano for now.
Hopefully that helps.
This article is not financial advice. Do your own research and consult your own professionals.