Crypto lending and staking platforms are very popular these days. And if you want to earn passive income with your digital assets, you need a platform that supports either lending or staking.
Both Coinbase and Uphold offer staking, which involves locking-up crypto to validate blockchain transactions. In return for validating transactions, you earn crypto rewards.
At the time of writing, Uphold lets you stake nine different assets and pays up to 19.5% APY.
In contrast, Coinbase supports six different assets for staking and only pays up to 5.75% APY. This is much lower than Uphold, making Uphold the better choice for those interested in staking.
Just note you can also explore various crypto savings accounts that offer more lending or staking options. Companies like BlockFi and Nexo lend out your crypto and pay you interest, much like a high-yield savings account. And these platforms support more cryptocurrencies, giving you more choice.
Winner: Uphold supports more assets and has better staking rewards than Coinbase.
The Only Way to Protect Your Data is to Never Provide it
Decentralized exchanges also exist. These let you connect via a wallet address which you own the keys to, so any coins traded are sent directly to your wallet and straight into your custody. Trades are mostly carried out without human oversight, depending instead on smart contracts that settle trades between two parties. While this can feel safer from a data standpoint, Know-your-customer (KYC) and anti-money-laundering (AML) regulations still apply for larger deposits and withdrawals, exposing you to the same risk of data loss.
Peer-to-peer (P2P) trading has long been popular for more data-aware buyers, as they can help preserve privacy. KYC and AML are harder to enforce as the transaction takes place between two private individuals, and the decision to adhere to regulations (while still legally required, in most cases) is up to those individuals. Exchanges like Bisq serve to match sellers with buyers, without being involved in the actual settlement process. If using a P2P exchange, however, never agree to meet someone in person, as this exposes you to physical threats.
While it may seem that each option is a compromise, a fourth option exists: buy cryptocurrency directly from your Trezor hardware wallet, through Trezor Suite. Thanks to Invity, a company owned by SatoshiLabs, Trezor users can quickly, safely and easily buy cryptocurrencies from trustworthy exchanges and have their purchase sent directly to the wallet they hold the keys to. In a matter of minutes, you can buy Bitcoin at a competitive price and have it in your sole custody.
Managing risk when buying crypto from exchanges
As the Bitcoin price hovers just under new all-time-highs, the fact of the matter is that it has been profitable to hold Bitcoin for 99.9% of the days it has existed. While cryptocurrency trading can be very attractive, it introduces very high amounts of risk that hodlers are not exposed to. For many people, the best way to protect a bitcoin investment would have been to simply buy it, secure it, and wait, rather than taking unnecessary risks in the hope of greater returns.
If you do decide to try your luck at trading, it is essential that you learn to manage risk. Never invest more than you can afford to lose, be very cautious about entering a position with all your capital, and be especially wary of lending against your position (known as leverage trading). While a bigger position may promise bigger returns, very few traders are capable of consistently making the right move, and today’s big win may very easily turn into tomorrow’s heart-wrenching loss.
As with buying cryptocurrency, any gains which you may make in trading are still under the control of the exchange. If you do make a profit, make sure you think about withdrawing at least a portion of it so you are not exposed to potential hacks or bad actors within the exchange. Send your profits to your hardware wallet and you will probably feel much better about any losses that may follow.
Exchanges make a lot of money from trading fees, so there is incentive to make their customers trade more, even if the customer is not competent enough to do so. Leveraged trades and options are two of the very complicated financial instruments which more and more exchanges now offer. These should not be used by anyone who is inexperienced, and even then they should be approached with a high degree of caution.
If you want to simply buy an asset and sell it at some point in the future, you can just use Trezor Suite, which lets you exchange coins directly from the secure desktop app, all under the protection of your Trezor.