How (and why) to earn compounding interest with crypto

Volatility Risk: Cryptocurrencies are highly volatile, and their prices can fluctuate rapidly. A significant price drop could impact the value of your loaned or invested assets.
Platform Risk: When using third-party platforms, your funds may be at risk due to hacking, fraud, mismanagement, or insolvency of the platform. Some platforms are not regulated, meaning investor protections may be limited or nonexistent.
Counterparty Risk: When lending crypto, you are trusting that borrowers or institutions will repay their obligations. If the borrower defaults, you could lose some or all of your loaned capital.
Liquidity Risk: Some platforms may impose restrictions on withdrawing funds, or market conditions could make it challenging to liquidate your assets quickly.
Regulatory Risk: Cryptocurrency lending and investment regulations are still evolving. Regulatory changes could impact platforms, assets, or your ability to access services.
Technology Risk: Blockchain technology and smart contracts, while innovative, are not immune to bugs, exploits, or failures, which could put your funds at risk.

How do you earn compounding interest with crypto (ie, bitcoin or ether)?

Simply put, the way to earn compounding interest is to ensure your interest savings account does, in fact, earn compounding interest. Do not assume that this is the case, as you might be earning out on significant, long-term interest gains.

Coin Interest Rate now lists compounding interest on each interest account platform listed on our site. If a platform/account offers it, we say so on the page. If not, we say it doesn’t.

So, why is this important?

You don’t have to have an MBA or a degree in finance to understand how compounding interest will help grow your assets. Compounding interest means you earn additional interest on the base amount plus the interest you have accumulated over time.

Long story short, you should prefer platforms/interest accounts that give you compounding interest. Over the long haul, you’ll really see the difference.