The Top 2 Cryptocurrency Investment Platforms
May 3, 2021 (Investorideas.com Newswire) Let's face it; cryptocurrencies are becoming more mainstream with each passing day. Investment firms, large banks (like JP Morgan Chase), brokerages, and large public companies are beginning to see Bitcoin and other cryptocurrencies as investments. Along with the bull run that crypto is currently experiencing, many investors are experiencing crypto FOMO (Fear Of Missing Out) and the great returns on investment.
Cryptocurrency and the blockchain technology behind them are technologies that have changed investing for the better. Large financial institutions such as Fidelity use blockchain technology for transaction verification.
When you purchase a cryptocurrency on many platforms such as PayPal, Venmo, and Robinhood, you don't actually own the digital currency you're buying. Say what? These exchanges are only required to hold reserves of 3-10% of the assets (crypto) they provide to their customers. That means they can sell the same Bitcoin to multiple customers; they then peg the account values to the current price of Bitcoin each day. So although you get crypto exposure, you never have possession of it.
If you want to actually own a piece of cryptocurrency, you should only use the best platforms- enter BlockFi and Coinbase. To get investment exposure to crypto while minimizing taxes and optimizing security, you should plan to invest in cryptocurrencies with these industry leaders. To learn more about BlockFi and Coinbase, continue reading!
BlockFi
BlockFi is an intuitive cryptocurrency platform with multiple functions. It provides investors the capability to invest in a myriad of crypto assets. BlockFi is structured like a banking platform and is one of the best options for cryptocurrency investors. Check out this review of BlockFi with in-depth details.
With BlockFi, you can open an interest account, trading account, and a crypto-backed loan. We'll dive into each of these and explain their benefits.
BlockFi Interest Account
BlockFi's interest account (BIA) gives investors the ability to stake their cryptocurrency assets and earn up to 8.6% APY. The interest accrues daily and is paid to the investors' accounts monthly. 8.6% APY is a fantastic rate, many times higher than a savings account at a bank. However, cryptocurrency is more volatile, and if the crypto crashes, you'll still get 8.6%. However, it will be a percentage of a now lower account value.
BIA has no hidden fees and no minimum balances. Additionally, you can purchase a variety of cryptocurrencies in the account.
BlockFi Trading Account BlockFi
With the BlockFi trading account, cryptocurrency investors can make instant trades. In other words, they can buy or sell any cryptocurrency available on BlockFi or trade their current cryptocurrency to a different one (i.e., you can trade Bitcoin for Ethereum or Litecoin).
Crypto-Backed Loans
BlockFi has an interesting loan service that is unique to its platform- cryptocurrency-backed loans. Crypto loans allow investors to take out a loan against the digital currency they own on BlockFi. Essentially, the crypto serves as collateral for the loan. The crypto-backed loans are not very flexible and have the following requirements:
- $5,000 minimum loan
- Loan-to-value ratio of 50%-- your digital assets must be worth 50% of your loan. If your crypto value dips and your loan-to-value ratio goes above 70%, you'll have to put up more crypto as collateral.
- Minimum interest rate of 4.5%
There are significantly better options for loans outside of BlockFi. However, this is still a helpful feature if you are strapped for cash and don't want to sell out of your cryptocurrency positions (and suffer the tax consequences).
Coinbase
Coinbase is arguably the leading crypto platform today. They offer more digital currency investment options than almost every other exchange. Additionally, they offer their own stablecoin (USD coin, tied to the value of the US dollar) that investors own to reduce the volatility of their crypto investments.
Coinbase has also been around for a long time since 2012. It was developed during the forefront of Bitcoin and the other cryptocurrencies that followed. As such, it's had time over the last decade to improve and fine-tune into the fantastic platform it is today. Coinbase is not only a crypto exchange but a digital wallet and a learning platform as well.
Coinbase has many more features than this article aims to cover. For more details, jump over to this stellar review of Coinbase.
Cryptocurrencies available on Coinbase
Coinbase carries over 50 cryptocurrencies on their exchange. You can purchase, sell, and exchange your digital currencies easily on their app or website. Here are just a few of the coins offered on Coinbase:
- Bitcoin (BTC)
- Ethereum (ETH)
- Cardano (ADA)
- Uniswap (UNI)
- Litecoin (LTC)
- USD Coin (USDC)
Currently, Coinbase offers 54 cryptocurrencies for investors to buy, sell, and exchange.
Coinbase Earn
Coinbase earn is an excellent way for new cryptocurrency investors to earn while they learn about digital assets. This feature educates users through video classes about the major crypto assets offered on the platform. New users can earn over $100 in free cryptocurrencies by simply watching the videos.
Coinbase Fees
Unfortunately, Coinbase is not entirely free to use. While there are no account setup fees, Coinbase does take a 0.5% fee on every trade (which maxes out at $2.99). If investors are not happy with the 0.5% fee on every trade, they can upgrade to Coinbase Pro to reduce their fees per transaction.
Honorable Mention - BitIRA
Another unique cryptocurrency investment platform is BitIRA. As their name suggests, they help you invest Bitcoins and other cryptocurrencies directly in a self-directed IRA. Investing cryptocurrencies in an IRA has distinct advantages, primarily related to taxes.
Within an IRA, any transactions you complete are not taxed; you are only taxed when you take distributions from an IRA. Therefore, you can altogether avoid the tax consequences of trading and exchanging Bitcoin and other digital coins with BitIRA. To further benefit its customers, BitIRA has very low IRA maintenance fees. If you want to learn more, read this detailed review of BitIRA.
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