BITCOIN continues to grip the public’s imagination and has once again increased in value this year attracting the attention of several big investment institutions who have added the cryptocurrency to their portfolios.
Many of us dabble with bitcoin and have a few hundred or even a few thousand dollars’ worth in a wallet somewhere hoping that it will soar to new highs and we can cash out – the classic hodler’s position.
But wouldn’t it be nice if there was somewhere that you could store your bitcoins and actually earn interest on them at the same time like a conventional bank?
Daily Compounded Interest On Your Bitcoin
Well, you’ll be pleased to learn there is. There’s a bitcoin portal called FreeBitcoin that allows anyone with over 30,000 Satoshis to their name to deposit their coins and, at the time of writing, earn an annual interest rate of 4.08% paid daily and compounded.
August 2020 update: CoinPot microwallet has also started offering interest on your crypto holdings.
There is no-lock in period and your coins will earn interest from day one and can be withdrawn at any time. A passive income on your coins – pretty sweet huh!
For those who aren’t familiar with cryptocurrency terminology, a Satoshi is a fraction of a bitcoin.
To be precise, there are 100 million of them per coin making them the smallest unit of bitcoin recorded on the blockchain.
They are named after Satoshi Nakamoto – a likely pseudonym for the mysterious creator of bitcoin. To compare this with real money: if bitcoin is trading at $10,000 per coin, 100 Satoshis is worth one cent.
The exciting thing about bitcoin is that you’re already invested in the sense that you can ride the highs and lows of its price simply by holding it.
But having the facility to increase your actual bitcoin stash while watching its value grow is an additional bonus.
How Is It Possible To Earn Interest On My Bitcoin?
The owners of FreeBitcoin have addressed this point in some detail on the website which we’ve summarised here.
A third of bitcoins held on deposit with the site are used to expand their mining operation, and a profit. In return for saving your coins with them, FreeBitcoin offer a fixed rate of return while assuming the risks of the mining business.
To ensure that this is a legitimate claim, a signed message using the bitcoin address used to collect mining payments is posted on the website that can be verified by any bitcoin client to prove that they mine.
Is It Secure?
The world of cryptocurrency is rife with scammers and sometimes it can be hard to navigate through these murky waters and find the many completely legitimate sites that do exist. Some people are so afraid of losing their money that they steer clear of bitcoin altogether.
FreeBitcoin is a completely safe site to use and has been around since 2013. Search the web and you’ll find thousands of reviews from contented users who will vouch for its validity.
Not only that, but some of the large reputable cryptocurrency message boards also feature many positive threads on the site.
There are simply too many people who use the website on a daily basis, and have done for many years, for it to be anything other than legitimate.
We’ve have been using the site for more than two years now and have deposited bitcoin and made withdrawals on many occasions without any problems whatsoever so we are happy to vouch for the site as well. (Full disclosure here – we do run a small referral network through FreeBitcoin.)
What Else Do They Offer?
If you haven’t heard of FreeBitcoin before, you may be confused as to what it actually is.
In a nutshell, it’s a destination for people who are interested in cryptocurrency and want to either grab some free coins using the site’s faucet or try their luck at increasing their haul by playing a hi-lo game or gambling on a wide variety of sports and other events. You can even bet on where the price of bitcoin is heading!
Alongside the free faucet, which offers users the chance to win up to $200 in bitcoins every hour, there is also a free to play lottery which pays out in the region of $4,500 as a top prize each week, with nine runners up. You can earn free entries to this each time you roll the faucet.
The site costs nothing to join so you can simply deposit your coins and sit back and watch your savings grow. At no point will you need to spend any money here, unless you choose to do so.
They’re also running a pretty special ‘Golden Ticket’ competition right now where the winner will drive away in a Lamborghini (or $200,000 if they chose).
Tickets cost 25,000 Satoshi each (about $2.50 at the time of writing). But from time to time offers crop up where you can earn tickets simply by depositing Satoshi.
Can I Make Money By Building A Referral Network?
FreeBitcoin offers a generous referral system whereby you can earn Satoshi, lottery tickets and referral commissions on any interest earned by your referrals.
This means that the opportunity exists to generate an additional passive income through FreeBitcoin.
The only downside is that the site has grown in popularity over recent years and is quite widely known meaning many people with an interest in cryptocurrency have already signed up.
This limits the likelihood of building a large circle of referrals unless you’ve developed a clever marketing strategy.
Is it Safe From Hackers?
The official line on the site’s security is as follows: “We use a combination of hot wallets, hardware wallets (Trezor) and BIP38 encrypted paper wallets to store bitcoins.
“At no time do we keep more than 5% of our total bitcoins in the hot wallet which is used for making pay-outs. The hardware wallet is used as a “warm” wallet and bitcoins are transferred from it to the hot wallet as required.
“Our paper wallets serve as our “cold” storage with the wallets generated on an air-gapped computer running Tails OS.
“Our hardware and paper wallets are also secured against physical theft as the hardware wallet requires a pin code and encryption password to access and the private keys in the paper wallet are encrypted which means that the coins in the wallet cannot be accessed without having both the private key and the encryption password. We also keep physical copies of the cold storage wallets at multiple locations.”
The owners have clearly taken a lot of precautions to keep the site as secure as possible. Obviously there’s always someone who’ll figure out a weakness, but the steps listed above should prevent any serious amount of cryptocurrency from being stolen if the site is hacked.
That said, any bitcoin that you store on an external site is vulnerable to an extent. If you want complete security your cryptocurrency should be held on either a hardware wallet or a paper wallet and stored in a highly secure, fire safe vault.
This is not practical or affordable for most people so many of us are forced to keep coins in online wallets.
Most reputable sites have shored up their security in recent years after several high-profile hacks so the risk of losing your crypto are slim and it’s easy to become overly paranoid about this.
I Want To Use The Site But I Don’t Want To Earn Interest. Is This Possible?
Yes. You can switch off the interest payments whenever you please. There is an option on your profile page to do this.
The interest rate can change, although it has been pretty steady for a long time now. The site owners have promised to give everyone 30 days’ notice of any change via Twitter.
What Are You Waiting For?
If you’re in any way interested in bitcoin and cryptocurrency in general then head over to FreeBitcoin and grab a few free coins to a get a feel for this exciting world.
If you’ve got any questions about this site or anything crypto related then please get in touch and we’ll do our best to help.
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