Cryptocurrency is a relatively new form of currency that has exploded in popularity over the past several years, and with good reason: it allows for international transactions to happen at a much lower cost, and it’s completely decentralized, so there’s no centralized authority that could potentially be corrupt or unreliable.
But while most people are starting to learn about cryptocurrency and how they can earn more of it, many people don’t know about a simple way to supercharge their investment: compound interest.
Compound interest works by taking the interest earned from your original deposit and reinvesting it in more mining power.
If you are looking to earn compound interest through Stellar XLM, you may be at the right place to know the right price which is helpful to get better returns with XLM. The crypto market in the world is growing and so is the XLM price.
If you want to convert your crypto into fiat (and vice versa), and you want to keep your profits safe from market volatility, then you can start earning Compound Interest on your crypto assets by converting them into USDCs, which can be easily converted back into any other type of cryptocurrency or fiat.
If demand for a currency goes up, then the price will go up too. Based on this simple principle, we can assume that if more people want to buy or convert, the USDC price will go up as well.
What is Compound Interest?
When you’re just starting out with Crypto, it’s worth understanding the basics about how things work. The first thing you’ll need to understand is the concept of compound interest. Compound interest is when your interest on an investment continues to accrue along with any previous interest you’ve already earned. That means that your money has the potential to keep growing and growing over time, even if you don’t put in any more yourself.
This is especially important on Crypto because of how fast an investment can snowball—let’s say you have $1,000 in a crypto investment that earns 10% per month. This means that every month you’ll earn an additional $10 to add to your original savings, which will continue to grow at the same rate of 10% every month for as long as you keep reinvesting that money. You may only see a small increase in your account after one month, but after two or three months it will start to become very clear just how powerful compound interest can be.
Compound interest is gained on the principal amount of a deposit and any interest earned. The interest is added to the principal, and that total earns interest. Interest is earned on interest, so over time, your money can grow exponentially. This can lead to some serious gains if you invest in something that offers a high rate of return.
How Does Compound Interest Work?
Compound interest is just one of those things that makes you feel smarter when you learn about it. It’s not a big difficult concept, but it’s worth knowing because compound interest over time adds up to some pretty wild numbers. Compound interest is simply interest calculated on the initial principal and also on any accumulated interest.
Let’s say you deposit some amount of crypto into your investment portfolio (the Compound Interest equivalent of a bank account). A few hours later, you find that your stash has grown thanks to interest payments from other users who have deposited crypto alongside you.
You can then choose to reinvest your interest payments in the same instrument—effectively allowing you to double-down on the instrument that’s already working for you—or you can withdraw it as bitcoin or ether (although there is a withdrawal fee that scales with how much you’ve earned).
A good way to illustrate this is by referring to compound interest as “interest on interest,” or “interest on top of interest.” If you were to lend someone $1,000 and they were to pay you 10% compounded annually, the amount of money they would owe after one year would be $1,100 (because 10% of $1,000 is $100, and $100 plus the initial $1,000 gives you $1,100). After another year, your investor would owe you $1,210.90—not only does the original amount grow with simple interest (10% of $1,100), but that 10% grows itself because now it’s 10% of $1,210.90.
How To Earn Compound Interest Using Crypto Exchange
If you are new to the crypto world or just want to diversify your portfolio, there are numerous exchanges available. One of these is the KuCoin exchange. It might be more suitable for those traders who seek a more relaxed approach to investing.
KuCoin cryptocurrency exchange offers many different trading pairs at low fees compared to other exchanges. It also supports other cryptocurrencies like NEO, GAS, ZRX, XLM, USDC and others.
Compound interest is the idea that you earn interest on your interest. In crypto, compound interest is more than just a dream—it’s a reality. The way it works is that when you hold a crypto asset, it may pay you dividends or interest in the form of that same asset or another currency. This can add up over time like compound interest does in the stock market.
You can earn profit on your profits! You’ll need to be patient, as it takes time for your dividends to start rolling in, but once they do it helps to accelerate your investment portfolio and get you closer to hitting your crypto goals.