Understanding the Basics of Cryptocurrency as a Savings Account


“The savings account is the most liquid form of investment but the least interest generating one. The regular saving bank accounts yield very less interest and thus are unable to beat inflation. Crypto savings accounts can be a better option as the interest rates are higher and there is a chance of quick appreciation of the savings due to the rise in price of the crypto assets.”

Traditional Savings Account at a Glance

The traditional savings accounts are the most liquid form of investment as the amount can be withdrawn by the user at any time. Though, the savings accounts are always frowned upon by people due to the low annual percentage yield (APY) that they generate. The average APY of the saving accounts at Banks is around 0.6% which is unable to beat inflation (around 1.5%) by a huge margin. Thus, keeping an amount in a savings account would depreciate your money rather than growing it.

Crypto Savings Account

The crypto industry is the fastest growing industry today and with its mass adoption comes various services that can help people in optimizing their investment strategies and earn more as compared to the traditional financial instruments. Various crypto exchanges are providing the service of crypto savings accounts with annual percentage yield of around 5% and for some cryptocurrencies up to 40%. This provides an adequate option for people to invest in a liquid instrument that is able to beat inflation.

Should You Keep Your Savings in a Crypto Savings Account?

There are various reasons that make crypto saving accounts better when compared to traditional savings account:

  • High APY: The Crypto saving accounts usually have a high APY that can help in growing one’s assets at the same time beat inflation by a large margin.
  • Ease of Access: The crypto assets can be withdrawn at any time from the crypto savings account and the interest is calculated and paid on a daily basis.
  • Double Potential of Growth: The crypto is a new industry and hence, the growth potential is quite huge. This can lead to the price rise of the asset quickly increasing adding to the APY that is to be received. This creates a double opportunity for the investors to grow their money.

Points to Remember While using Crypto Saving Account 

Though there are benefits of using crypto saving accounts, there are certain points that need to be remembered while putting money into crypto saving accounts:

  • Highly Volatile Crypto Market: The crypto market is highly volatile and hence, there is a risk of depreciation of the money in the short term.
  • Unregulated Market: The crypto market is unregulated at the moment and we are at the mercy of the exchanges for paying back the interest on savings.
  • Stable Coins Are Better for Tackling Volatility: Rather than putting Bitcoin in a saving account, one must buy a stable coin such as USDT into a crypto saving account to ensure that the price remains stable and at the same time the return generated is higher on stable coins. 

Disclaimer: The article should not be considered as any financial advice. It is advisable to conduct thorough research before investment.

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