This sounds like a pretty silly subject, but it is not the same thing as saving dollars or some other “hard” currency. Why? Well, mostly because there are no Bitcoin paper bills or coins or hard stuff like gold or silver or platinum ingots. Bitcoin is a 100% electronic currency, and you can’t put that in your pocket or underneath your mattress or bury it in the back yard.
The way you save Bitcoin is electronically, in something generally called a “wallet” or “e-wallet”. There are various organisations that propose wallets for electronic currency, not just Bitcoin but also about 50 other electronic currencies. The function of the wallet is to hold the receipts for your e-money and keep track of what happens to them. Rather than talking about “Bitcoin and 50 other currencies”, I will shorten that to BTC to make it easier to read. You can transfer BTC into your wallet, and others can also pay into your wallet, for example to buy something from you or to pay for a service you performed for them. However, ONLY YOU can transfer BTC out of your wallet (unless you do something stupid like giving your payment information to someone else). There is a very good reason for this: once BTC has left your wallet, it is gone. You have about 0.000% chance of ever getting it back.
Saving BTC is pretty obvious – you (or someone else) pays into your wallet and you don’t spend it or send it to someone else. The balance is what you have saved. Up to now, I don’t know of anyone who pays interest on BTC in your wallet (as in a savings account), and I doubt there will be, at least in the near future. A recognised and widely accepted provider for a Bitcoin wallet is Blockchain, located at https://www.blockchain.com/. This is part of their main business and they are located in Luxembourg.
Interest and Fees
The reason for the existence of savings systems is usually attached to a system that increases the value of the money you have saved by paying interest, or sometimes dividends, based in turn on how much money – old plus new – you have saved during the period. This appears not to work with BTC. Why? Well, mostly because the value of the BTC is so volatile – either increasing or decreasing much more rapidly than you could ever hope to achieve by recovering interest. For example, during the 6 months from January to the end of July 2019, the value of Bitcoin increased from US$ 950 per Bitcoin to US$ 2745 per Bitcoin. That is not far from tripling in value, and there is no way that someone will commit contractually to pay you 3 Bitcoin (your initial 1 investment plus 2 more because of inflation against the USD) for every 1 Bitcoin you invested 6 months earlier. For comparison, a really good deal for USD might make 10% annual interest, this would give you about $1.05 back for every $1.00 you put in for 6 months. See the Bitcoin advantage?
The other reason that interest does not work for crypto-currencies is that interest paid to you is generally related to interest you would have to pay if you borrowed money from your interest partner. How can you figure out the fair interest on something as unstable as a crypto-currency? It just does not compute!
There is something that you should know about, however, and that is that there are the fees that money agents charge you to pay in to something or receive funds out of something or to exchange from currency “X” to currency “Y”. These fees are NOT REGULATED and generally speaking the person changing the fee can charge as much as s/he wants and can make work. If you say “NO – that is too expensive!” you have the choice of trying to negotiate with the present someone, or go looking for someone else. Usually, people just go somewhere else, except for major movements (say USD 5000 equivalent or more). There is nothing that says you have to stay with the same agent for any time longer than the first deal you agree to. Many times, the transfer fees are paid directly to miners and the funds go straight into their profit streams (assuming they are making a profit).
So, now you know about how and why to save BTC and about the interest and fee situations with crypto-currencies.
Craig Hesser for
Bitcoin Fortune Builder | http://bitcoinfortunebuilder.com/
Original 30. July 2017
Rev 22. January 2018