The 3 Best Bitcoin Lending Sites to Earn Interest

HODL: Hold On For Dear Life.

It means that no matter what the markets are doing, even if they are burning to the ground, you hold on.

But who says holding on needs to be so stressful? These days, some of the best bitcoin lending sites reduce your HODL stress by allowing you to earn interest on bitcoin by making bitcoin loans.

This is one of the best advantages of lending your crypto: passive income. Studies show when you have passive income, your stress and anxiety are reduced, you spend more time with friends and family, and you enjoy greater freedom to pursue the hobbies and interests you've always wanted to pursue.

Going forward, I’ll explain why and how you should take advantage of the best bitcoin lending sites to earn passive income. Read on.

  • What is Crypto Lending, Exactly?

    Bitcoin loans are becoming a hot topic. Cryptocurrency lending sites and Cryptocurrency backed loans are fast becoming a new way for the investors, miners, hedge funds, and even the unbanked to leverage their finances and support their business ideas.

    All the while, the HODLers with crypto bags can earn interest on their bitcoin holdings and thus gain more financial freedom through passive income.

    In this article, we’ll be focusing on HODLers who want to earn interest.

    The concept is simple:

    • For borrowers: if you need a loan, then you put up a small bag of crypto as collateral. You then get fiat or a stable coin to spend as you see fit. You pay back the loan according to the agreement.
    • For lenders: you put up X amount of crypto and earn Y amount of interest from it.

    If you plan on HODLing, lending is one of the best ways to earn passive income. Your digital assets can grow, and you can earn interest from them. Naturally, there are risks, but we’ll dig into those.

  • The 3 Best Bitcoin Lending Sites

    What makes cryptocurrency lending platforms good platforms?

    You should consider the following factors:

    • Security of your funds
    • Insurance on your funds
    • Interest earned
    • And more.

    To be fair, banks have a bit of an advantage over bitcoin lending sites: if a bank fails, their customer’s money is insured by the government; if they go down, their customers are safe.

    But in this brave new decentralized world of finance -- how do we stay safe and make profits? Let’s compare my favorite lending platforms.


    NEXO.IO

    Nexo Wallets are provided by BitGo, the leader in multi-signature encryption technology. Nexo, which was profiled by Forbes, was founded in 2017 and is backed by the founder of Tech Crunch: Michael Arrington. They have nearly 200,000 customers and back payments in 45 Fiat currencies. This ranks high among the best bitcoin lending sites.

    Pros:

    • Insured wallet. Users who are lenders and borrowers are insured for up to $100,000,000.00 by Lloyd’s -- a London-based bank --  in case of a hack or bankruptcy. This amount is for the total company, not per person.
    • Earn daily interest. Nexo allows lenders to have their earnings deposited each day, no waiting.
    • Flexibility: withdraw anytime.

    Cons:

    • Although borrowers can withdraw in 45+ fiat currencies, lenders can only deposit stable coins. NEXO is currently working on offering deposits of BTC and ETH, but there is no projected idea when this will happen.
    • 6.5% interest. Not a big con here. After all, 6.5% is more than a bank would give by far. But the fact remains that Nexo’s competitors do offer more.


    CELSIUS NETWORK

    Celsius Network was founded in 2018 by Alex Mashinsky -- one of the inventors and patent holders of VOIP (voice over IP) technology. He holds numerous awards for entrepreneurship. Forbes named the Celsius Network in their Top 10 companies to watch for in 2018, saying they “are primed to disrupt traditional banking.”

    Pros:

    • Deposit multiple assets, not just fiat or stable coins. Deposit and HODL your BTC, ETH, and several other top 10 cryptocurrencies.
    • No withdrawal fees, no deposit fees, no transaction fees, no early termination fees, no origination fees.

    Cons:

    • Not insured. The interest offered by Celsius may be up to 7% -- but without insurance, the risk rises. Nevertheless, Celsius remains one of the best bitcoin lending sites.
       

    BLOCKFI

    This company was founded by Zac Prince and Flori Marquez. The company has raised over $20 million from firms, including Coinbase Ventures. They are young and growing and doing so at a fast pace.

    Pros:

    • 4.5% interest rate for borrowers. This is a plus for lenders. Why? Because it encourages people to borrow from the platform with attractive interest rates. Think of it as liquidity. The more liquidity, the better for everyone.
    • Your crypto assets are stored with Gemini. This 3rd party depository trust is a licensed custodian with insurance and has a perfect track record void of hacks or customer fund losses. In fact, Gemini works with many lending sites and other cryptocurrency websites you might use.
    • They accept deposits in ETH and BTC, offering a solid 6% for lenders, compounded. Granted, this is only for deposits over 1 BTC or 25 ETH (see cons).

    Cons:

    • Only deposits over 1 BTC or 25 ETH will accrue interest. For some, this is too much skin in the game. But for those who do put the amounts in -- they earn a steady 6% interest.
    • They are not FDIC insured, though Gemini -- their wallet provider -- has a strong track record for security.
  • Best Bitcoin Lending Sites --- To Stay Away From

    Not all cryptocurrency lending platforms are created equal. It may be nice to earn interest on bitcoin -- but not if it gets stolen or misappropriated somehow.

    Below are a few bitcoin lending programs to avoid. This does not mean they aren't usable. It means that in my opinion, these lending platforms are not the best.
     

    XCOINS

    This company started in August 2018 by a fellow named Sergey Nikitin. He decided to leverage PayPal to make the operation work. Lenders allow people to borrow their BTC and in return, the lenders get monthly PayPal payments at various interest levels.

    The problem here is the XCOINS use of PayPal. Someone can borrow your BTC, claim they never got it, and either file a payment reversal with PayPal or stop using PayPal.

    XCOINS explicitly tells lenders that lenders themselves must deal with it -- no help or support from XCOINS. This is one of the largest red flags ever seen.
     

    SALT

    Salt made the news for being the first crypto lending site. The company was formed in March 2016 by Shawn Owen and quickly rose in-game through their ICO. However, their ICO promised many things that never happened -- such as loans in various U.S. states where Salt had no legal ability to provide loans.

    Since then, they've had many speed bumps. For one, they have been under investigation by the SEC for not listing their ICO as a security. This can lead to the freezing of their assets and thus the assets of all their users. Though they are working on this, their ICO and the SEC investigation raise too many red flags. Additionally, Shawn Owens has stepped down as CEO.

    All this compounded knock SALT off of our list of the best bitcoin lending sites.

  • Caution is the Watchword. Beware of Scams.

    The old saying rings true: if you don’t own your private keys, you don’t own your crypto. This holds for crypto lending platforms. The concept of lending Bitcoin and other cryptocurrencies is outstanding and will flourish. But as we ramp up, there will be growing pains.

    In January 2018 the cryptocurrency lending platform Davor Coin announced: “Lend us your money and you’ll have the chance to win $1,000,000.” People around the globe registered and lent their money to Davor Coin. A week later, the company received cease-and-desist letters from the state of Texas.

    Davor Coin’s lending scheme worked as long as values kept rising. But when cryptocurrency values went crashing -- lending companies ran with the cash. Others were fined by the SEC and given cease-and-desist letters from the same SEC regulators alleging securities fraud.

    Bitconnect is another great example, as is Lendconnect. Both companies offered 'too good to be true’ returns on investment -- and they were too good to be true. These ‘opportunities’ are also called Ponzi schemes.

    Source: memegenerator.net


    Bitconnect offered 1% per day compounded -- which cannot go on forever. And Lendconnect offered up to 164%! It's shocking, even more so because people fell for it.

    These examples raise awareness of the worst of lending sites. Be cautious, do research, and don't expect the moon -- and you'll be safer by far.

  • Crypto Lending -- The Future of Passive Income

    Money makes the world go round, they say. And crypto is no different. After some research, it’s evident that some cryptocurrencies are transitioning into crypto assets -- a new class of assets.

    Want More Awesome Tools? Check out the Ultimate List of Crypto Tools any Cryptocurrency Investor Should Use.

    Once these lending platforms find their footing and their audience (and insurance), we will see fantastic financial tools working to open the world of finance to the unbanked -- and we will be able to earn passive income from it.

    Lending your crypto is becoming safe, easy, and a great way to earn passive income. But for more safety and better returns, stick to the best bitcoin lending sites.

    Better to start early, so that compounding interest can work for you.

Posted by R.R. Hauxley

R.R. Hauxley traveled around the world ... 1 year on 1 Bitcoin. 20 countries, 12 months, 1 Bitcoin. He wrote a book about it: Stolen Wallets and Where to Buy Them. Along the way he met and interviewed the sharpest, brightest minds in crypto today: Vitalik Buterin, Charlie Lee, and more. Today Rafael educates the crypto curious and delves further into the incredible world of blockchain.

Comments

Add new comment

Share

text