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How to Earn Interest on Bitcoin Through Passive Income

There’s a certain monetary dream that almost everyone on the planet shares: how to make money without working. The richest people in the world do it. They have investments in real estate, business, intellectual property, or other forms of assets they own and control — and they earn interest from it.

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Is that possible for you?

With blockchain technology and smart contracts — yes it is. 

Of course, first you need to own an asset — in this case some Bitcoin — but once you own it, you can earn interest on Bitcoin

How? Let’s examine this new phenomenon and how you can take advantage of it. 

Bitcoin — Here to Stay

First, we should address the concern of Bitcoin and its classic volatility. Many mainstream media outlets and even respected old investors believe that Bitcoin could go to zero. Is that true?

A senior commodity strategist for Bloomberg Intelligence, Mike McGlone drafted a report which said:

“Bitcoin is winning the adoption race, notably as a store-of-value in an environment that favors independent quasi-currencies,” stated McGlone. “In 2020, Bitcoin supply should increase about 2.5%, an all-time low on the way to zero growth. Gold prices will keep climbing in 2020 and so should Bitcoin.”

These are powerful predictions. 

So with that fear at least partially quelled, how can you earn interest on Bitcoin?

Bitcoin — Prepare for Passive Income

During most of the last decade if you bought any bitcoins your only option was to hold them and wait for them to increase in value before selling them.

Now, with the rise of smart contracts, you’re able to earn passive income on your bitcoins.

Smart contracts allow for agreements to be made between people and companies without any form of third party verification. 

In the financial sector this gave rise to DeFi: Decentralized Finance. 

If you want to earn passive income, you buy bitcoin or other accepted cryptocurrencies, sign up for a DeFi platform and follow these steps:

  1. Deposit your Bitcoin with the DeFi platform of your choice.
  2. Earn passive income
  3. Withdraw your bitcoin when you’re ready.

How and why do you earn that passive income?

These DeFi platforms are able to pay you interest on your deposited Bitcoin because they lend it out and earn a bit more interest from it. 

That’s right. Your bitcoin goes out and is lent to someone else or used to secure loans. 

Is this safe?

Yes. 

These smart contracts request collateral from anyone borrowing money. So if a borrower signs up for this DeFi platform and happens to borrow your deposited bitcoin — they must first deposit their own crypto or fiat as collateral. Then, if they default on their loan, their collateral is immediately sold on the open market so that you (the lender) get all your money back.

If, of course, the borrower simply pays off their loan then you earn interest and the DeFi platform earns interest. 

These types of secure and fast contracts are only possible thanks to smart contracts. Of course, this technology has not been thoroughly tested yet. There may be bugs. 

So be sure to research the best DeFi platform for you and invest only an amount you’re okay with losing. As the tech gets better it’ll get safer too.

Here’s looking at a brave new world of financial control and financial freedom!

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Bentley Kapoor

Bentley is a cryptocurrency enthusiast and trader, his articles are news and platform review based. His writings are brought to you through his 10 years of experience in the cryptocurrency markets.

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