The concept of cold storage predates the rise of cryptocurrencies. For investors, retaining assets in a secure environment is absolutely necessary for future-proof funds. As far as digital assets are concerned, extracting your wealth from cryptocurrency exchanges and custodial wallets to place them in cold storage is a wise course of action.
The proliferation of lending protocols has made crypto cold storage even more tempting. Now, you can happily hoard your digital assets while earning generous dividends. All you have to do is open an interest-bearing account with a reputable crypto lender who will put your tokens to work; specifically by loaning them out to others, such as retail borrowers and money managers. The best of these platforms assure the security of funds, handsome interest rates, and the ability to access your funds with ease. Let’s take a closer look at them:
| Name | BTC | ETH |
| Blockfi | 6% (up to 5 BTC) / 3.2% (after) | 4.5% |
| Crypto.com | 8% (min 3-month stake) / 6% | 8% (min 3-month stake) / 6% |
| Celsius | 6.2% (up to 1 BTC) / 4.03% (after) | 6.2% (up to 100 ETH) / 3.82% (after) |
| Cred | 10% | 8% |
BlockFi
BlockFi supports interest payments on a range of cryptos including Bitcoin, Ethereum, Litecoin, and stable coins such as USDC and GUSD. Like others, the interest can be paid in the user’s particular choice of cryptocurrency. In the interests of making direct comparisons, we’ll consider BlockFi’s interest rate for the two largest cryptocurrencies by market cap, namely bitcoin, and ether: Currently, their rates are 4.5% for ETH and 6% for BTC.
Crypto.com
Formerly known as Monaco Coin, Crypto.com is a platform that professes to be on a mission to accelerate the world’s transition to cryptocurrency. As far as crypto cold storage is concerned, their rates are broadly similar to BlockFi: 6% interest on pledged ETH and 6% on BTC, with higher rates for longer staking periods and supported stable coins.
Celsius
Celsius provides a mobile wallet that can be used to store crypto, earn interest on it, and borrow against it too. The company was established in 2017 with the goal of creating a fairer, community-oriented alternative to the banking system. If you want to turn your cold storage into hot profit, Celsius Network offers rates of 4.03% for BTC and 3.82% for ETH.
Cred
Cred is one of the best options for commoditizing your crypto cold storage, not least because they’ve recently raised their interest rates – and not just on crypto, but also on gold, if that’s your thing. Having partnered with some of the biggest names in the cryptosphere (Binance, Bitcoin.com, TRON), Cred offers 8% on your ETH and up to 10% on BTC. Interest is paid out every three months in dollars, stable coins, or the crypto of your choice, and after six months, it’s possible to auto-enroll for additional three-month period. Holders of the LBA utility token, meanwhile, can access premium interest rates.
HODL and Earn
If you’re keen to earn cryptocurrency dividends on your cold storage assets, the options at your disposal are plentiful. Just remember to read each lender’s terms and conditions: you don’t want to be locked in for a fixed term you’re unhappy with. Take your time, weigh up the pros and cons, and start making your savings work for you.
FAQs
Pick a token that offers dividends, such as KuCoin Shares (KCS), NEO (GAS), or VeChain (VTHO). Evaluate the project, its tokenomics, dividend policies, and market performance. Purchase the tokens and transfer them to your wallet. Some tokens require staking or holding them in a specific manner to earn dividends.
How do I get crypto out of cold storage? ›
To transfer crypto out of a cold wallet, you must connect the hardware wallet to your computer, enter your passphrase, and gain access to the wallet. Afterward, select an asset, use the send button to initiate a transfer, input a crypto address and double-check it, preview any fees, and confirm the transaction.
How to stake crypto from cold storage? ›
To start Cold Staking the user first needs to create a special “coinstake” transaction that moves coins to their cold wallet for the purpose of Cold Staking and also makes the hot wallet eligible for mining.
Is cold storage good for crypto? ›
Cold storage is removing your cryptocurrency keys from your connected wallet so that they are more secure. Cold storage is less convenient than other security methods, but that means it is more secure. The less convenient a storage method is, the more secure it will be.
How do you generate dividends? ›
In order to collect dividends on a stock, you simply need to own shares in the company through a brokerage account or a retirement plan such as an IRA. When the dividends are paid, the cash will automatically be deposited into your account.
Can crypto be seized from cold storage? ›
The procedures for seizing cryptocurrency vary depending on whether the cryptocurrency is held in a hot storage wallet or a cold storage warrant. For cold storage, the seizing officer will move the cryptocurrency from the wallet subject to seizure to the wallet controlled by the seizing agency.
What happens if you lose your crypto cold storage? ›
While hardware wallets provide a secure way to store your private keys, it is crucial to keep a backup of your seed phrase separate from the device itself. If your hardware wallet is lost, stolen, or damaged, and you don't have a backup of your seed phrase, you risk losing access to your cryptocurrencies permanently.
How much Bitcoin is in cold storage? ›
Self custody
This also indicates that 78% of the circulating BTC supply is held in cold storage. Considering that only 550,000 BTC left the exchanges throughout 2022, it can be said that the remaining 450,000 BTC was moved from exchanges or hot wallets to cold storage in 2021 and the years prior.
Is staking on ledger safe? ›
By delegating your ETH to a validator through Ledger Live, you can earn staking rewards while maintaining control over your private keys. The combination of Ledger's robust hardware security and the convenience of Ledger Live makes staking ETH on Ledger a safe and user-friendly option.
Do coins leave your wallet when staking? ›
Cryptocurrency staking can also be custodial or noncustodial. Custodial staking requires crypto holders to transfer their tokens to a staking platform, while noncustodial staking lets you keep your staked coins in your own digital wallet.
Yes, you can trace crypto wallets via public transaction records on the blockchain, though identifying the actual owner may require additional information.
Can cold wallets be hacked? ›
Your Takeaway on Cold Wallet Hackings
Yes. But, staying up-to-date and informed on new hacking technologies, and scamming methods, in addition to using one of the best hardware wallets available with seed phrase storage will provide the best solution for keeping your crypto safe.
What is the safest storage for crypto? ›
The safest place to store crypto is in a hardware wallet, which is a physical device that stores your private keys offline and keeps them solely under your control. A cold wallet is the most secure for long-term crypto storage. It protects against online attacks and unauthorized access.
How do I get my dividend money? ›
Dividends typically are credited to a brokerage account or paid in the form of a dividend check. The dividend check is mailed to stockholders but can be direct-deposited to a shareholder's account of choice, if preferred. The alternative to cash dividends is additional shares of stock.
How do I collect my dividends? ›
Cash dividends are paid out either as a check sent to the investor or as a credit to a brokerage account, which can then be reinvested. Stock dividends are paid in fractional shares. If a company issues a stock dividend of 5%, shareholders will receive 0.05 shares in dividends for every share they already own.
How do I claim crypto profits? ›
Frequently asked questions. How do I report crypto on my taxes? Any cryptocurrency capital gains, capital losses, and taxable income need to be reported on your tax return. You can report your capital gains and losses on Form 8949 and your income on Form 1040 Schedule 1 or Schedule C depending on your situation.
What does dividends in crypto mean? ›
These include staking, yield farming, providing liquidity, lending, and participating in airdrops, all leveraging blockchain's unique capabilities to offer investors a pathway to passive income from their cryptocurrency investments. The core of crypto dividends is to democratize income generation using digital assets.
