The Safest Method to 10% Annual Interest Right Now

As of November 2021, the best interest rate on savings you can find is less than 2% annually, while your cash dissolves by up to 10% in the same timeframe. Simply holding cash or investing it in safe places like treasuries, bonds, and most mutual funds is no longer effective against growing inflation. Traditional savings accounts seem safe, but the reality is they only lock in the devaluation of your wealth by 7 - 10% annually. This is a result of inflation. 

It's a difficult concept to wrap your mind around, so here's a quick example. Imagine holding $100,000 cash in a savings account for one year. The value of your holdings will drop to $90,090 by the end of the year if inflation remains the same. It's difficult to notice because the cash number you see ($100,000) will stay the same, but that money's purchasing power drops. Inflation is an invisible thief, but it becomes apparent as soon as you try to buy a house when real estate prices have risen 15% in that same year. If you stick your money in an investment that returns 2 - 3%, you're not gaining anything. You're only weakening the damage inflation is causing you. 

The circumstances seem miserable, and to an extent, they are. The amount of money governments have printed in the last year has never been done before. It's a trial, and we are the guinea pigs. It's terrifying and uncertain territory, but a new lifeboat has emerged that provides one of the strongest hedges against this growing inflation. Cryptocurrency. And with it, new strategies to build and maintain wealth are rising. However, the word cryptocurrency probably sparks a surge of fear for any of three reasons:

  1. It isn't easy to understand.
  2. It's volatile.
  3. It seems too risky.

Your feelings are valid. It's a tremendous new technology, but there are snake-oil salespeople ready to take advantage of newcomers with every gold rush. Crypto is no different, but I've been studying it for a long time and have discovered safe ways you can benefit from exciting innovation. 

This article will show you exactly how to place savings in an account that will yield more than a majority of your investments (10%+ annually) and be incredibly safe. The method uses the advantages of cryptocurrency and blockchain tech without exposing itself to volatility or risk. Here's a quick outline of the article:

The protagonist of this article is a crypto lending and borrowing platform named Celsius. Celsius is not paying for my opinion, but if you use the link at the bottom of this article, you and I will receive a kickback of $50.00USD. Nearly all platforms offer referral programs, so don't think this makes me favor Celsius over competitors. I merely have used and loved the product, so I want to share my experience. I also think they have the best track record and security of all their competitors. 

How Can Celsius pay 10% Interest?

Think of Celsius as a bank for cryptocurrencies. Traditional banks in North America currently offer a range from 0.60% to 1.75% interest on your savings on the best day. Check your interest rate now, and see for yourself. Banks offer these dismal rates because they take your deposits and lend them out to borrowers at higher interest rates, thus creating a spread in which they can earn profit. The interest they charge right now is low, so the interest they payout has to be even lower. Although not a bank, Celsius applies the same strategy to earn profits. The difference is that it's a decentralized financial (De-Fi) platform which allows it to return most of its revenue to the customers. Where traditional banks return 4% - 30% of their revenue in interest to customers, De-Fi institutions pay up to 80%. This allows platforms like Celsius to pay interest like 11.20% on anything deposited. 

How Does This Work?

Welcome to decentralized finance (aka De-Fi). A new form of banking that the nature of cryptocurrencies and blockchain technology makes possible. While traditional banks have operational costs that take up 40-60% of their revenue (Ie. Rent, real estate, high staffing costs, administration), De-Fi uses computer code that operates as a bank. Procedures are entirely digital, which means much of the value generated by the institution goes back to its customers. The code is possible because of blockchain technology, and the same tech will soon be in many more industries than financial, so get ready for radical changes. It's effective because;

  1. It removes subjectivity, meaning loan rates and amounts are determined based on formulas, collateral, and math, not race or credit history. 
  2. It's fully transparent. Anyone can look up transactions on the blockchain and verify decision-making and payouts anytime. 

There is more complexity to the differences between De-Fi and regular banking that are beyond the scope of this article. Still, in short, the advantages significantly reduce the cost and allow De-Fi to give more while working with less. Check out this instructional for more information on De-Fi. 

Celsius applies this formula. 

Why And How Is It Safe For My Money? 

Everything comes with risk, and this is no different. It's a new technology, so it should be scrutinized even further than traditional finance. However, the method I am showing you is nothing like your typical crypto investment. It's the crypto equivalent to setting money aside in your banks' savings account. Of course, there are always risks, and I'll shed light on what to watch out for, but if you follow the steps in this guide, the risk is as negligible as cash in your bank account. In many ways, Celsius acts just like a bank, except instead of dollars, it holds cryptocurrency. 

The two challenges to seeking a reliable savings account in the crypto space are;

  1. A trusted platform to hold it.
  2. Protection from volatility.

Why Celsius? 

It was founded in 2018 by Alex Machinsky, a serial entrepreneur who has founded several successful billion-dollar technology companies in the past. His sights are set on disrupting the financial industry now with the lending and borrowing platform known as Celsius Network. 

Machinsky and company have a fantastic track record and are known for safety and security in the crypto space. Celsius Network has raised $843.8 million in funding as of November 24, 2021—A result of heavy due diligence and trust in the companies capabilities. They've also hired Fireblocks, a security firm that holds their assets in cold storage and provides insurance on the purchases. When Celsius lends to borrowers, they have to put collateral of up to 150% of the loan value down first, which ensures Celsius retrieves capital lent out.  

What Are Stablecoins?

The second challenge to reliably holding cryptocurrency lies in reducing volatility. In my opinion, Bitcoin is a safe long-term investment, but it's incredibly volatile, making it unreliable in the short term. If you hold $5,000 and want to use it in 3 months, Bitcoin is not the spot because it could have a poor quarter and drop by 20%! The solution to crypto volatility like this is stablecoins. 

Stablecoins are the bridge between cryptocurrency and the physical world. They're a cryptocurrency pegged to a real-world currency or commodity, which means they hold the reliability of physical world currency but still hold advantages of being crypto.  For every one stablecoin, it's physically backed by $1 in value from a commodity, cash, or another similar asset (treasury bills or bonds). The 1:1 ratio is vital, or else the stablecoin backed incorrectly. 

In the past, fiat currency (Ie. USD) was backed by gold to guarantee its value, but in 1961 the US cut off the link between gold and the US dollar (many countries followed), so its value is based on a collective belief—which works. Stablecoins are just a new layer of currency that is supported by fiat currencies in the same way they used to be backed by gold. It's projected that real-world banks will soon offer stablecoins because of their low transactional costs and rapid transferability. 

If you hold a stablecoin, you're basically holding an IOU note of whatever supports it. In this case, it's the US Dollar. For all of its faults, the US Dollar is reliable and stable. You can count on it to stay steady, especially in comparison to other currencies. The stablecoin we will earn 10.20% interest is aptly named USDC (The US Dollar Coin). It's supported 1:1 with USD and is regulated by the US government. It's one of the safest stablecoins there is. 

Final Thoughts

Celsius is one small step into an entirely new world of opportunities that De-Fi and blockchain technology unlocks. A company at the front of a revolution will make traditional banking models extinct in the next 50 years if they don't adjust. Of course, there are risks, but the world is changing so fast right now; risk is abundant and guaranteed with every choice you make. If you're willing to accept your wealth sitting and depreciating rapidly while you shove your head in the sand and ignore the inflationary landscape, then that's the choice you make. However, if you want to adopt the new world of finance early, or at least begin dipping your feet in the water, you'll be rewarded for being on the leading edge of change. As long as you do your homework, act thoughtfully, and follow the smart money, you will stay safe and benefit from the drastic changes to come. 

How Can I Start? 

Here is how you can get involved in the crypto space safely. First we'll download the necessary app (working for a computer or mobile). You'll convert your domestic currency into the stablecoin (USDC), and finally, transfer your USDC into Celsius to earn interest. 

Step 1: Download the Celsius app (this link will give you and I $50US for a limited time when you deposit $400 or more).

Step 2: Once logged in, click Buy Coins. Buy USDC. You have the option to transfer money in or purchase using a credit card. Money transfers can take a few days but cost significantly less (0.01% - 0.5%). Credit cards work much faster but charge much more (3.99%). Note: These fees are not charged by Celsius, they are charged to Celsius from the bank/credit company and Celsius shifts the fee to you.

Step 3: Make sure to use all security measures Celsius recommends to protect your account from hacking. This means using a entirely different password then elsewhere, using biometry (finger print), two-factor authentication, and HODL mode. The world is becoming increasingly more and more digital, you should use all the tools available to you to protect your wealth from digital robbery. Celsius will prompt you and walk you through all of these components.

Step 4: Done! By holding USDC in Celsius, you will receive 10.02% interest immediately. The rates are subject to change weekly as Celsius adjusts lending rates every Monday. The best part? You'll receive interest every Monday-a powerful element in compounding growth.

Bonus Step 5: If you are not in the US and purchase Celsius (the platform's native token), you can earn up to 12.68% interest. As long as you hold 25% of Celsius along with your USDC, you achieve platinum status as a customer and can attain higher interest rates (and lower interest rates to borrow). For example, if you hold 1,000 USDC (worth $1,000USD), you must own $250USD or more worth of Celsius tokens. 

To withdraw funds:

Step 1: Find a safe, secure exchange in your country; download and sign-up.

Here are the top ones in no particular order:

  1. Gemini
  2. Coinbase
  3. Binance
  4. FTX

Most of these exchanges offer fee free transfers and tiny (0.01%) fees to exchange USDC to cash and withdrawal however I only have personal experience with Binance and Coinbase.

Step 2: Convert USDC to USD (or domestic currency if available).

Step 3: Withdrawal funds to your desired bank account.

The strategy above presents a secure and easy way to earn 10.02% on your savings account instead of the traditional banks' dismal 2% or less. It's a reliable and low-risk step into the crypto space and, hopefully, will have you learning more about this exciting new world. I wish you high earnings and great wealth!

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