I started talking with a friend about what to do with Crypto in 2022.
How can we use the assets to increase earning potential? How could we leverage the assets without having to sell? And how could we prevent theft or mistakes with the currency?
Below is the research I did into hardware wallets, Coinbase, Binance, Gemini. I wanted to find ways to secure the Crypto I have and find ways to get loans or earn "interests" on Crypto.
Storing in Cold Storage - Hardware Wallet
Best Crypto Wallets
Transferring the Crypto to a hardware wallet will allow you to store it offline and in a bank/safe. This prevents someone from stealing it online or withdrawing the money instantly.
Ledger Nano X
- Mobile App & Bluetooth to Manage Crypto on Wallet
- USB C Connection, Battery for 8 Hour Standby
Ledger Nano S
- No mobile app requires being plugged into a computer
- Micro USB, No Battery
- Offline, physical hardware that can be stored in the bank
- Easy to transfer and manage with app/desktop software
- No ability to sell in the wallet - prevents theft
- Have to return to where the wallet is stored (bank, safe, etc.) if you want to sell
- Pay gas/transaction fees when sending Crypto to and from a hardware wallet (Gas fees vary but could expect at least $10 to send one way with ETH).
- If password/pin is lost, you cannot get access to the wallet
- The wallet could become corrupted or destroyed, causing you to lose the Crypto
Staking/Loans/Vaults - CoinBase, Gemini, Binance
Loan out your Crypto via the Gemini app. It allows you to "put your Crypto balance to work," earning interest on your coins within the app.
- Bitcoin: 1.49%
- Etherum: 1.76%
- BAT: 1.75%
- Earning money for letting Gemini use the Crypto in the account
- $96k in BTC could yield $2,897 in interest over two years at a $48k price point
- You can withdraw funds when needed, no lockout periods
- Interest is paid daily, with no limits on the interest or rules
- Still on an exchange where it can be sold/stolen
- None of the money is insured, which means money could be lost if Gemini fails
Coinbase offers "borrow" and "vaults" to protect and leverage the Crypto you have. The borrow is limited to BTC only. The vaults are limited to ETH, BTC, LTC.
- You can get a loan off your BTC for as low as 8% APR
- Cash can be deposited into PayPal or a Bank Account
- You can borrow up to 30% to 40% of the value of BTC in Coinbase
- That amount is $38,400 as BTC is $48k if you have $98k in BTC
- You don't have to sell BTC to have cash, no capital gains tax plus no FOMO
- Interest rate is better than a personal loan
- Bitcoin isn't lent out or used for other purposes
- Only have to pay interest each month
- Could have to repay the loan or have BTC sold if CoinBase fails/BTC crashes
- Minimum borrowing is $10,001 in CA, AZ
- The loan doesn't report to credit agencies
- Con if building credit/pro if you don't want it reported
Coinbase Vault allows you to protect your Crypto assets in a "vault." This is similar to having a hardware wallet. Coinbase claims that 98% of Crypto assets are stored totally offline in safety deposit boxes and physical vaults.
What Coinbase Vaults offers:
- Time-delayed withdrawals to prevent Crypto from being instantly sold or transferred
- You can have multiple approvers for extra security
- BTC, LTC, ETH are currently supported
- It is still online but stored in a secure system that prevents it from being stolen
- Free offering and doesn't cost any gas or transactions fees like a physical ledger
- As long as you have access to Coinbase, you know the Crypto is safe
- Still online, if Coinbase fails or is hacked, the assets could be stolen
- Having another person approve could cause issues if they don't respond or you are no longer on speaking terms
Binance Earn offers staking, Launchpool, and Savings of Crypto assets. This allows you to earn interest on Crypto but is locked up for varying durations.
HOLD Crypto in different products from Binance:
- Saving has stable earnings and zero fees
- Liquid Swap earns high yields from transaction fees and liquidity rewards
- DeFi Staking which is high risk but also high yield
Coin rates via staking:
- AXS (Axie Infinity): 101.12% for 30 days
- BNB (Binance Coin): 8.69% for 90 days
- Earning interest by using the blockchain technology
- Periods for staking range from 30 to 90 days, but they're shorter periods
- Crypto is locked into the staking period; you cannot use it or sell
- High risk for high yield but could lose Crypto
What I would do with my Crypto in 2022
For the Bitcoin, I would transfer to Coinbase for the "borrow" feature. Then take out a loan against Bitcoin. This gives you working capital without losing out on Bitcoin's growth or having FOMO.
Any BNB held should go into locked staking, earning 8.69% for 90-days. This allows you to earn a significant earning for holding the coin. I would even recommend buying AXS for the 101.12% interest. Purchasing a couple hundred dollars in Crypto could yield a substantial return each year.
Any other Crypto should go into a hardware wallet to prevent theft or being sold without consent. It can then be put in a US bank's safety deposit box.