Crypo Interest Account Terms and Definitions

Understanding crypto interest accounts is very similar to traditional finance interest products. The main difference in crypto is that you earn interest on a crypto asset instead. Lean the terms below to become familiar with crypto interest accounts.

Interest Rate

Figure that defines how much interest will be paid on an account balance, typically quoted in daily, monthly, and yearly rates.

Compound Interest

The continuous reinvesting of interest earned on the principal balance of a crypto interest account. Compound interest greatly increases the returns on Bitcoin and other crypto interest account balances over extended periods of time.

APY (Annual Percentage Yield)

Yearly interest rate that includes compound interest on the principal balance.

APR (Annual Percentage Rate)

Yearly interest rate that does not include compound interest on the principal balance.

Interest Account

Bank account with low deposit requirements that pays interest on an account balance. In blockchain finance, these take the form of crypto interest accounts.

Savings Account

Bank account with low to moderate deposit requirements that pays interest on an account balance. Savings accounts typically have less flexibility than interest accounts, with banks usually imposing transaction and withdrawal limits per calendar month. In blockchain finance, savings accounts and interest accounts are the same concept: crypto interest accounts.

Money Market

A savings account that earns higher interest rates than standard interest accounts but also requires a high minimum deposit. Money market accounts have less flexibility than interest accounts and are designed for users looking to not withdraw or transact with their balances for extended periods of time. In blockchain finance, Compound currently offers a crypto version of a money market account powered by smart contracts.

Interest Wallet

Another term used to describe a crypto interest account.

Crypto Assets

Term describing the type of assets used with crypto interest accounts.

Interest Calculator

Tool used to determine the interest earning potential on an account balance. Blockfer’s crypto interest rate calculator is ideal for calculating daily, monthly, and yearly compound interest on Bitcoin, Ethereum, stablecoins, and more.

Asset Lockup Terms

Conditions set by a crypto interest account provider outlining the required amount of time before a user can withdrawal their assets without penalty. Example: A user deposits Ethereum into a Compound smart contract as collateral. Compound’s smart contract then issues a loan in the form of DAI to the users ERC20 compatible address.

Custodial

Describes a crypto interest account provider that stores and maintains user balances in their own internal company wallets.

Non-Custodial

Describes a crypto interest account provider that does not store user balances in their own internal company wallets, instead electing to use smart contracts or partner with a trusted custodian.

Withdrawal Fees

A fee charged by crypto interest account providers when a customer withdrawals a crypto asset from their account balance.

KYC

Centralized crypto interest account providers usually mandate a ‘Know Your Customer’ process. This process requires customers to submit documents that verify their identity prior to opening a crypto interest account.

Minimum Interest

The absolute lowest interest rate to be paid on a crypto interest account balance

Maximum Interest

The absolute highest interest rate to be paid on a crypto interest account balance

Minimum Deposit

The least possible amount of a crypto asset allowed for deposit when opening a crypto interest account. Users should be aware there are often minimum balance requirements to obtain higher interest rates.

Maximum Deposit

The largest possible amount of a crypto asset allowed for deposit when opening a crypto interest account. Users should be aware there are often maximum balance restrictions for higher interest rates.

More Crypto Interest Account Resources:

Make Better Decisions With Your Crypto.
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Make Better Decisions With Your Crypto.
How We Earn Revenue