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How do interest payments work on crypto savings accounts?

I’m beginning to explore this option on websites like [crypto.com](https://crypto.com) and blockfi. I have also tried reading up a bit about it, but am still yet to fully figure this part out. No disrespect intended to the crypto crowd, but some of the article and copywriters tasked with getting the info out there regarding the world of crypto, they just seem to be really bad at explaining things. All too often important details are glossed over, while the written piece itself is just riddled with technical jargon and poor paraphrases of what others have already written. More times than not, I end up leaving a crypto-related article more confused than when I got into it.

Anyway, let me end that rant and get back to the question. if I make a deposit in Altcoin A of $1000, and 5 percent interest is promised p.a, what happens if I withdraw the money at the end of that year when Altcoin A’s value has risen to $1500? Do I:

1) Receive $1050.00 in total?

2) Receive $1550.00 in total?

3) Receive $1575.00 in total?

Sorry if this seems like a silly question, I just haven’t been able to find a proper answer to this query. I guess that this answer may vary with different platforms, but any info would help.



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6 Comments

  1. The value of the coin doesn’t matter when earning interest. You normally earn that interest back in the same coin. So if you have 100 of a coin, at 5% interest, at the end of the year you will have 105 of the coin. It doesn’t make a difference if the coin in valued at $1 or $10,000.

  2. I think you are confusing withdrawing and converting.

    If you deposit 1000$ worth of coins (let’s say 10 coins in total), you will receive the interests in that coin, 5%. If at the end of the year you have 10,5 coins, you are going to withdraw that amount, no matter if the value increased or not. There is a difference between what a coin is worth in FIAT and what they actually give you.

  3. On BlockFi you can select whether to receive your interest in the respective coin or have it converted at time of payment to a single coin. The latter costs a 1% “flex” fee.

  4. The interest you earn is merely the quantity of coins you’ll possess. Put 10 in take 11 out. Don’t even think about what the price of that coin is or you may get confused in that regard. Just know that whatever the price the coin is when you withdraw having 11 (10 + interest of 1 coin) of those coins is better than having 10 of them to sell. Barring that coin crashing.

    Obviously owning 11 coins on a tanked project is worse than holding 10 coins on a solid one. This is really the only place price matters in staking “do I think this coin’s value is going up long term? Then I want more of them”.

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