Posted 4 months ago | by Catoshi Nakamoto
Let’s be real. If you walk into your local bank to make a new account and you ask them about their interest rates…you’re about to have a pretty sad conversation. You would think that the banks would want to give you a real incentive to choose them over their competitors, right? Wrong. Unfortunately for us, they won’t even give us 1%. Many banks these days are offering a “high yield” savings account for the grand total of 0.5% APY. This means, if you were to deposit one thousand dollars into one of these “high yield” bank accounts and didn’t spend a penny for an entire year, you will make staggering 5 dollars. Oh hang on BENS HOLD UP HIS CELL PHONE. Inflation is at least 7%? Ok so you actually lost $65. This is not sustainable or fair and it’s why crypto is well on its way to changing the face of finance forever. When that happens, the banks will be the first ones to go. One thousand dollars has much more financial leverage than you think, but you have to look outside of the box of the legacy system for that to be true. There’s an array of crypto lending/ borrowing platforms you could use to outperform the banks, but today, we’re going to focus in on the high interest rate accounts available NOW using crypto.Read More
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Welcome to BitBoy Crypto. My name is Ben and my mission is to help you find financial freedom through crypto assets. If that sounds good, click that subscribe button and don’t forget to hit that bell while you’re at it so you get updated on the content we make every single day.
You’ve been told since you were born that the safest way to store your money was to put it in the bank. And for a time that was true. But after 1971, when Richard Nixon took the dollar off the gold standard, the foundation for banking has started to fracture. And today it’s a husk of what it used to be for the average investor or even working class American. The interest rate on a savings account in 1970 as about 8%. Since then it’s slid to .55% in 2021. That’s hardly keeping up with anything and losing to inflation every year. So that’s a scam if I’ve ever seen one. But what if you just need a safe place to store your cash for a while, away from scallywags, robbers or your deadbeat father in law. But “banks keep my money in a safe and all the money is insured right”? Wrong.
As of March 6th 2020 the reserve rate for Banks, or how much cash they must hold on hand, was reduced to zero. So if there is a crisis like a hack, or global internet outage and a bank run ensues….there won’t be anything to hang out except crusty old lollipops. Crypto Lending Services started popping up around 2017; Nexo, Celsius and Blockfi were some of the first crypto loan platforms and the first in the world to offer its users instant loans. All of these platforms boast millions users, support dozens of different cryptos and has over tens of billions in assets under management. What’s great about a CLS is that all of your assets are placed directly into a custodial savings wallet, instead of just sitting in a position with your fingers crossed hoping the price goes up; you’re earning interest on your assets just by keeping them on the platform.
This is a great way to put your money to work, earn passive income and it’s an especially attractive feature for traders who plan on hodling for the long term. Also, unlike banks that pay out interest once a month a CLS will pay out your interest once a week or even every day. If you like learning about crypto and financial freedom, we make videos every day, so go ahead and smash the like and subscribe button and don’t forget to hit the notification bell so Youtube stops hiding our videos from you.
So compared to the generous half of a percent a bank would give you to keep your money with them, you can expect to make somewhere between 5-17% on your assets by using a CLS. How much interest you make depends on what asset your holding and your loyalty level. (breakdown) Keep in mind, this is not staking, this is simply the interest rate you’ll earn on your assets for keeping them on Nexo. Unlike several other platforms, Nexo and Celsius have their own token, named NEXO and CEL respectively. Your loyalty level correlates to your interest rates and is based off what percentage of your portfolio is made up of their tokens.
For instance Less than 1% of NEXO is the base loyalty level, 1-5% for Silver, 5-10% for Gold and above 10% for platinum. If you live in America, you can hold and gain interest on NEXO tokens, but you currently cannot sell them. There’s still an incentive to hold some NEXO to increase your interest rates and decrease your loan rates. You can add an additional 1-2 percentage to your interest rate if you agree to get paid in NEXO or hold your assets in a “fixed term” for a specified amount of time. So compared to the 0.5% at the bank, how much are we talking here? On a fixed term, with base level loyalty, i.e. having no NEXO in your account at all, you can earn 10-13% if you hold DOT, MATIC or AVAX, 5% for most other coins, including BTC, ETH, ADA and XRP, and for stablecoins, which are coins pegged to the dollar, the interest rate is 8%.
Why is this important? Well first of all, with stablecoin interest, you can make 8-10% on your money without taking the risk of trading. Compared to the banks, is it even up for debate for which is better? Some people will argue that the “banks are safer” and all that jazz, but Nexo is insured up to 375 million by BitGo and Ledger. The reason they are able to pay this much interest on your assets is because they generate money by lending your assets out to institutions on an over-collateralized basis. This means that the collateral is worth more than enough to cover potential losses in case they were to default.
This is a crucial ingredient to how their business works because it protects their users and keeps their interest rates stable. Because crypto isn’t regulated the same way banks are, there’s much more wiggle room to give a percentage of the money they generate back to their users. Companies like Celsius also generate money through the interest rates they charge from giving out loans to their users. On this platform, the loan rates are between 0-13.9% APR based off your loyalty level, how much you borrow from them and how much of your crypto you decide to put up for collateral. With Celsius, you can get a loan without a credit check and get approved instantly.
There’s no paper work, no impact on your credit score and you’ll receive your funds within one day. If you need to leverage some crypto to make a big purchase, the best part is, with a crypto credit line, when you spend it, you don’t have to pay capital gains taxes like you would have had to if you converted your normal crypto to fiat. (source) Yes, you still have to pay them back plus interest, but you can do this on your own time and there’s no installments or fixed payment schedule. They will automatically charge your collateralized crypto if your LTV ratio exceeds 83.33% in order to keep that ratio below 83.33%.
The LTV or “Loan to Value” is the amount of crypto you have to put up in order to take out a loan. For example, if you put up $5,000 and you borrowed $2,500, your LTV would be 50%. It’s best to make sure you keep your LTV ratio in a safe range to avoid losing some of the crypto you put up for collateral. Once you pay off your loan, you get your crypto you put up back, no questions asked. Celsius recently put out a tweet celebrating their winning 2021 BlockchainFest award for Best Cefi Lending Platform.
The point of this video is to educate and inform our viewership, the Bitsquad, so you can empower yourself and gain financial freedom. If you’re new to crypto, I highly suggest checking out these financial services and learn how to put your money to work. You don’t even have to deal with the risk of trading if you don’t want to; get your feet wet and make 8% on your money using stable coins instead of losing to a bank. You’re not doing yourself any favors by making 0.5% a year. Life hack. The goal is to accumulate wealth over time. A great way to do that is to get out there and provide yourself with multiple streams of passive income. Everyone has to work to make money, but once you have money, put that to work too! When you add it all up at the end of they year, you’ll be glad you did.
That’s all I got, be blessed. BitBoy out!