As countries such as the UK and US consider a negative interest rate approach in response to the worsening economic crisis, bank customers are now caught in a dilemma: Depositing their funds with the bank is a necessity, but why should they pay the bank to hold their money? Luno, a UK-based digital wallet service provider and crypto trading platform, and its newest product, the Luno BTC Savings Wallet, might just be the solution to that, especially for aspiring crypto traders who have just entered the market.
Instead of saving fiat with your local bank and earning an average of 0.05-1% annual interest on that, Luno’s BTC Savings Wallet is attempting to sway users to the crypto side by offering a targeted interest rate of 4% on the Bitcoin deposited in the wallet. Moreover, these earnings are paid out monthly, so users do not have to wait until the end of the year to draw out their interest in a single lump sum.
The Savings Wallet arrives at a time when traditional investments have shown vulnerability at a time of crisis. There has never been a better time to utilise a currency that doesn’t rely on a healthy economy to determine its value,” the Luno team said. “Almost 95% of our customers have said they want to earn interest on their bitcoin, and because of the nature of Bitcoin, we’re able to offer a much higher interest rate than traditional savings accounts.”
Results from a survey carried out by Luno indicate that a large proportion of individuals do not earn any interest from their cash savings with banks, and with the compound effect of disadvantageous monetary policies being implemented across the globe at present, these individuals will have to look for more viable saving options.
However, as with most products offered in the crypto market, Luno makes a disclaimer that there are risks associated with depositing funds into their savings wallet, and users should proceed with caution only after understanding these risks.
“You should be aware that any funds transferred into your Savings Wallet will be lent to our chosen lending partner. This is in order for them to generate a return, which is how interest is earned. Your savings wallet is not a traditional fiat currency bank account, and cryptocurrency accounts are not covered by deposit protection insurance.”
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