3 Tips For Opening A Crypto Savings Account – 2023 Guide
When it comes to uncovering ways to earn passive income in the digital crypto space, a viable option can be a savings account.
Cryptocurrencies are absolutely huge this 2023. Not only are we following the 2023 hype train, but we’re making new highs along the way.
This Bull Run is like no other before. In this Bull Run, Bitcoin managed to go over $65k and Ethereum reached the unreachable $2k mark. With such huge hype, it’s only a matter of time before you discover ways to passively earn income from your investments.
Considering that crypto savings accounts work differently than traditional savings accounts, it’s only smart that we explain to them before we give you our 2023 guide on the smartest way to open one.
So with all that said, let’s start.
What’s A Crypto Savings Account?
First things first, let’s talk about what crypto savings account actually is. Like any normal savings account, a crypto-based savings account allows exchanges to use your digital currencies and in return, you get a percentage of interest.
But the main difference is that with this type of savings account, you are getting a return in the native currency that you’re saving. For example, if your crypto savings account is made out of Bitcoin, then you’ll be getting returns in Bitcoin.
This is much better than the traditional model as you’re paid in a currency, not in USD, EUR, GBP, etc.
Now that we’ve got all that out of the way, let’s look at the best tips for opening one.
1. What Are Your Savings Options?
Not every savings account gives you the same options. Some will allow you to save in a stable coin, USDT, or in Bitcoin, Ethereum, and generally the bigger cryptos.
Bitcoin is the most popular option and used widely by millions of traders. And the reason why you need to consider your options is that different exchanges give you different yields.
Some give you BTC yields in the 5% region, while others much higher. It should be noted that yields constantly change. They’re dynamic and look at the market and how it performs. So if Bitcoin is on the rise, you might get bigger or smaller yields depending on how much of your BTC the exchange has to use.
Considering that you lend your currency to the exchange and allow them to use it, it only makes sense for the yield % to dynamically shift along with the needs of the market.
2. Look at the Features
It’s safe to say that we live in a capitalistic society where competition is getting bigger and better. With that competition comes a need to be better than others. And the only way to be better than your competition is to develop better features for your products.
That’s exactly what’s happening in the crypto space. Every exchange has different features that help lure the user to use their savings account. There are a few types of features users need to look out for.
Depending on the savings account and what features it uses, you can determine whether or not it is a good option for you. So let’s explain that.
- Minimum Deposit
There are two minimum deposit types on these crypto sites. Some have no minimum deposit, while others have a certain limit. For example, a crypto site might ask you to deposit at least 0.02 BTC to be able to open a savings account.
But it’s safe to say that this feature is slowly becoming obsolete as more and more sites move to the “no minimum deposit” type of deposit.
If you’re interested in finding out which crypto site has no minimum deposit, then make sure to visit bitcompare.net where you can also read in greater depth regarding the most popular crypto savings sites.
- Maximum Deposit
In total contrast to the previous feature, plenty of sites have no max deposit. This means that you can deposit however much you like. On the other hand, some sites do have a limit. For example,
BlockFi has a max deposit of 2.5 BTC. This means that you can’t deposit more than 2.5 BTC. But even so, can you think of how many people actually have 2.5 BTC to even begin with?
- Locking of Funds
It’s safe to say that when it comes to opening a savings account, this is a feature you have to be on the lookout for. If the particular site requires you to lock your funds for a particular time period, then that means you won’t be able to unlock them before. While plenty of sites do allow you to actually unlock locked funds, you will have to pay some sort of penalty.
With all that said, the vast majority of these sites are very liberal and don’t impose a locked system of funds.
Security is an important feature that you should always be on the lookout for. The more secure a platform, the more users it will have. No one likes to play with their money, especially not when it comes to things we don’t understand. And regardless of how much of an expert you consider yourself to be if someone would steal your crypto funds, they’re gone forever.
So security should be a top priority when opening a crypto savings account.
3. How Long Do You Have to HODL?
At the end of the day, a savings account is meant to keep your funds safe, secure, and generate APY. This means that you can safely use it for years to come. But there are those savings accounts that don’t allow HODLing.
Let’s look at Binance for example. Although Binance isn’t a crypto savings account, it does allow you to do that. But on Binance, you have the option to lock your funds for a 15, 30, 60, and 90-day period. This means that you’ll have to do it again once the locked period ends.
It should be mentioned that locked savings generate a greater APY than unlocked ones. So you will have to consider long whether or not you want your funds to be locked to generate more of them.