The Best Place to Lend Your Bitcoin?
We have survived the summer dips and now the prices in the cryptocurrency market are once again rising. For many people; that would make make them thrilled that the value of their coins are going up. For others; it might give them a feeling of regret. Now that bitcoin and ethereum are becoming more expensive to buy, they will no longer be able to accumulate as much as they once could. Those dream years when bitcoin was under $10,000 and you could easily buy more than 0.01 BTC for just $100 will most likely never be seen again. That same $100 today will net you about 0.0015 BTC. This will only continue to become less and less as bitcoin continue to appreciate in value. The same goes for ethereum. While I believe that these two assets are still very cheap in regards to where they are heading towards. But, there is no denying that it is becoming more expensive to accumulate these assets.
So what can we do?
I'm a firm believer of maximizing my accumulating ability by lending out a large portion of my cryptocurrency, mainly bitcoin. And I have used most of the services out there. Companies will pay you a percentage of interest for the ability to lend out your crypto to other people. The great thing about this is that the interest is in-terms of your bitcoin and not in dollar-terms. So if the company pays a APY of 6%, it will be 6% of your bitcoin, not 6% of your dollar value. Bitcoin has historically gone up greatly in value in USD value, and this means the value of your interest can go up over time as well. Compound interest is a magical thing that will really surprise you how quickly it can help you to accumulate. You only need to be patient and constantly adding to your pile to increase it even further.
I'm sure many people are thinking the same thoughts as me, "crypto is getting very expensive, but I still want to accumulate more."
With that thought in mind, I thought it would be a good idea to give a general overview of most of the famous crypto lending services out there. I will not put any referral links in this article, as I'm not trying to sell anything. I have used these services and will tell you the pros and cons for each service. Each person has different needs, and what may be a great service for one person, may not fit the needs of the next person. After all, I have used all of these services and have had great experiences with many of them, but I still have yet to find the perfect service.
Without further delay, let's talk more about these crypto lending services.
There is a lot that can be said about BlockFi and it would be too long to talk about in this article. BlockFi is probably the most well-known brand in this portion of the industry. This is because they have large backing from VC's/companies and they also sponsored many of the top crypto influencers. When the service first began it was my absolute favorite and I didn't want to use any other service. They had a pristine image, trust and high interest rates. But then the year 2021 came along and all of that started to change. They went from offering 6% interest on bitcoin for up to 2.5 BTC, and then began dropping the rates. And nearly every month after that they continued to drop the rates and tiers. They then dropped the rate to 4.5% for up to just 0.10 BTC, 1.0% for 0.10-0.35% and 0.10% for anything over that. There are much better options out there to lend your bitcoin if you are looking for the best rate possible.
Aside from their rates, their service is good. I do like the fact that they don't have their own coin, unlike other services. They also do have some of the best customer service out of any of these services. BlockFi offers 1 free crypto withdrawal and 1 free stable coin withdrawal per month and also pay out interest once a month. After that you have to pay a withdrawal fee and the withdrawals can take up to two business days. They do offer a crypto swapping service, but I wouldn't recommend it because the spread on these trades are ridiculous. The best thing on BlockFi right now is their bitcoin rewards credit card. And this is the only BlockFi product that I am using. I have greatly enjoyed being able to buy anything and receive BTC as a reward. After your initial sign up period ends, you will receive just 1.5% interest back on your purchases. I have done the math on my rewards with the service. With BTC's recent price increase, my credit cards rewards average at around 8% back. Not bad. Once my rewards have been paid out to my account, I then either withdraw those funds to a higher paying interest service, or move it to cold storage. Remember that using these services does have risk, and right now keeping funds on BlockFi's site isn't worth the risk for me with their low rewards. At this point I would only recommend using BlockFi for their credit card rewards.
After taking most of my funds off of BlockFi, I then moved a large portion of them to Celsius. I really did enjoy this service. I loved the fact that they pay out rewards every week and that withdrawals are free and instant. (If you withdraw over a certain minimum amount). This feature alone has probably saved me hundreds of dollars worth of ETH and stable coin fees. Having the perspective of being an American user, they have consistently offered some of the best interest rates around. For a long time they offered 6.20% on up to 2 BTC. They have since lowered the tier and now offer 6.20% on up to 1 bitcoin. After that the rate drops. While I wasn't happy about the reward tier drop, 6.20% is still an incredible rate and one of the best rates you will find. While BlockFi potentially began with the best reputation and then lost it. Celsius reputation and trust has maintained the same level since starting business. This is a key factor if you are going to consider putting thousands of dollars worth of crypto onto their service.
Now let's talk about the negatives with Celsius. I'm not a fan of them having their own token. While it has worked out fine up until this point, it does add to the risk level of the service. Also, their customer service has been extremely lacking and is nearly impossible to get a timely response. Things to look forward to in the future are in-app crypto swaps and they will soon offer their own credit card as well. Even taking into account the things I don't like about Celsius, it is still probably my favorite of all the services. I would highly recommend using Celsius.
After Celsius dropped their reward tiers I was in need of a new service to lend out bitcoin. I came across Ledn and have been using the service for several months now. I have had nothing but good experiences with them. It could be because the company is still small in comparison to both BlockFi and Celsius, but I had great responses from their customer service team. I was able to get quick replies anytime that I had an issue. Initially Ledn was offering 6.10% for up to 2 full bitcoin being lent out. But as I'm sure you already knew, they too had to lower their tiers. They increased their interest rate but changed the tier. They increased the BTC rate to 6.25%, but for only 1 BTC. After that the rate drops off significantly. But that is still an incredible rate to get on an asset like bitcoin.
Now let's talk about the negatives. The withdrawals are very slow. On the quick side it might take 48 hour for your withdrawal to go though, but it could take longer as well. They do not offer a free withdrawal, but at the same time they don't change a withdrawal fee penalty. However, you still have to pay for the sending costs. I have no problem that the service only offers BTC and a Stablecoins. But I am a bit concerned at the incredibly bare-bone app, and even their desktop UI isn't the most cutting-edge. As I said before, reputation and image in this sector is very important. They have stated that those will be improved in the future. They also do offer a crypto swapping service. If you are a HODLER and are in BTC for the long-term with no short-term plans to sell; then I would highly recommend using Ledn.
Nexo comes off to me as a very middle of the road type of service. They don't do anything better than the other companies and it would be hard for me to recommend it over some of them because of that. Especially being an American and not having the Nexo token. You may have already guessed that my first dislike is them having their own token and giving higher rates to those that earn in their token. If you don't earn in Nexo you are looking at earning 4% on most coins on the service, including bitcoin and ethereum, and then 5% if you agree to lock up for a 1-month term. I do have a nice portion of bitcoin on the service that I keep there for emergency collateral for the bitcoin loan that I took out during the summer dips. I keep that BTC locked up for 1 month terms to earn that 5% interest.
Something that I really do like about Nexo is that they do pay out their interest daily. It feels really nice to wake up each day to receiving my daily BTC reward. You can withdraw at any time which is better than BlockFi or Ledn and they do offer 1 free withdrawal per month. But after that, the withdrawal fees can be very expensive. They do seem to charge quite high penalties for withdrawing ETH or stable coins, even on top of the sending cost. They do offer an in-app exchange and swapping feature, but just like the other places, the spread is quite large. I would recommend to not swap on any lending service and instead just use an exchange.
Not Enough Information...
This is an incredible competitive marketplace and there are a lot of newcomers trying to enter the space as well. I am a huge fan of this. I have had to move my bitcoin across many services to maintain the best rates. Having more services in the space gives us more options to do so. Two of the newer services in the space are Hodlnaut, and Haru Invest. I have just begun to use these services and everything they offer, but with my audience size as large as it is, I do not yet feel comfortable giving a full opinion on these service. They are quite young and it does take time to build a reputation in this market. Crypto is an incredibly risky venture and sending your coins to a 3rd party service is even riskier. While I have no reason to believe that these new services are bad in any way, it takes me many months or even years for them to gain my trust. With that said, both Hodlnaut and Haru Invest are offering incredible rates, but they both have their drawbacks. Both of which I will talk about in a future article when I have more experience to give a full opinion.
How I rank them
With that said, how do I view these services themselves and how would I rank them? According to my own wants and needs I would rank them as follows;
(Not enough experience with Hodlnaut and Haru Invest.)
We don't know how long the opportunity will be around to be able to earn an interest by lending out our bitcoin for these great interest rates. In the future it could be very similar to the rates that you currently see at banks, or the rates could be higher. No one knows for sure. Taking that into mind, and also taking into account the rising prices of the market, I am trying to accumulate as much as I possibly can.
How about you? Which crypto lending service has been your favorite and why?
As always, thank you for reading!