Crypto savings vs. traditional savings: What few people tell you | Personal opinion

josevas217 (80)in PussFi 🐈 • 28 days ago

Good morning, everyone. This week I've been reading a lot about personal finance, a topic I return to from time to time because I feel there's always something new to learn. Sometimes you think you know it all, but you don't. And precisely among those readings, I came across a comparison I found interesting: crypto savings versus traditional savings accounts.

We've been told all our lives that saving in the bank is the right thing to do: that it's safe, that it gives you peace of mind, that it builds financial discipline. And in many ways, that's true. In Colombia, for example, accounts are backed by Fogafín, which covers up to a certain amount in the event of an emergency. That gives you some confidence. Even so, you always have to be cautious.

_Source

The problem is that today, that security often goes hand in hand with fairly low returns. There are accounts that barely offer 1% annual interest, and meanwhile, inflation continues to rise. In other words, the money we keep in the bank loses value over time, even if we don't see it immediately. Saving money is no longer the same as earning money, at least not like it used to.

Imagine keeping money in Colombian pesos in an account that earns you 1% annualized, but the country's inflation, according to official figures, is 5.05%, and this being the lowest figure since 2021, this simply doesn't make sense; your money would be losing its value in an absurd way.

_Source

And this is where the topic of crypto savings comes in. Although for many it still sounds like something distant, complex, or even risky, more and more people are using platforms that allow them to save in cryptocurrencies, whether in Bitcoin, Ethereum, or stablecoins like USDT and USDC, which are pegged to the value of the dollar. Some of these options offer much higher returns, between 5% and 10% annually, depending on the platform and the type of investment made, such as staking or decentralized lending.

But it's not all profit. This type of savings is not regulated by the Colombian government, which means that if the platform collapses or is hacked, there is no entity to guarantee the recovery of the money. There have been high-profile cases, such as that of FTX, an international platform that collapsed overnight, leaving millions of users without access to their funds. This must be very clear. And although its founder and other directors have been accused and tried in this case, and part of the money has been recovered to return it, it is still risky for many.

_Source

Still, there are opportunities. I've tried platforms that allow you to save in USDT with returns of up to 6% annualized, and there are times when, for example, Binance can offer higher percentages. And when compared to what a regular savings account offers, the difference is obvious. The important thing is to understand that it's not about putting all your eggs in one basket, as the saying goes. You have to diversify, research, and learn. I also have cryptocurrencies saved in the hope that in the next bull market they'll increase in value and leave a good profit margin.

Steemit is a way to save and invest, since we can stake coins as voting power, and they can generate returns that can even be above 10% annualized, but with the risk of Steem price volatility, it's still a way to do it. Also on Binance, Steem can have APRs of up to 40-50%, which is crazy.

_Source

In a country like the one I currently live in, where salaries often aren't enough and the cost of living is constantly rising, exploring new ways to protect our money is becoming increasingly necessary. It's not about abandoning traditional practices, but rather about opening our eyes to what's happening in the world. This is very clear to me because I've been involved in the crypto world for years, but it's not something that's the same for everyone.

Sometimes we don't need large investments, but rather well-thought-out decisions, along with patience. The important thing is not to stand still. Because in a changing economic environment, standing still can be the biggest risk of all, don't you think?