Compound Interest BTC vs USD
BTC vs TUSD
Compound interest is the one where interest is added to capital period by period, on this new interest will be generated, so the interest grows in each period.
In this review I will compare compound interest on two cryptocurrencies, Bitcoin (BTC) and TrueUSD (TUSD).
Various wallets (wallets) and exchange wallets (exchanges) have the option to generate interest on selected cryptocurrencies at an annual interest rate, APY for its acronym in English.
Some platforms, wallets and exchanges where interest is generated:
ledn.io
*ledger
*Binance
ABRA
*Staking is the action of locking up crypto assets to protect the network and receiving interest for doing so.
BTC vs. TUSD
I will use 2.15% compound interest for Bitcoin and 8% for TUSD, interest obtained from Binance and ABRA app. (ABRA owns the same interest as Binance in stablecoins).
Interest is compounded daily and paid weekly.
5 years BTC vs TUSD
For this analysis, data will be taken from January 1, 2017 to December 31, 2021.
Initial investment in each cryptocurrency will be $4000.00
In the following graph we see how the return of bitcoin has volatility compared to TUSD, if we analyze the return in each cryptocurrency there is no doubt that bitcoin has a better return, 4734% in 5 years.
3 years BTC vs TUSD
Many of the people who are reading this analysis did not have the facility to enter the world of cryptocurrencies 5 years ago, so this analysis will focus on a period of 3 years from January 1, 2019 to December 31, 2020.
Initial investment in each cryptocurrency will be $4000.00
As in the 5-year chart, Bitcoin has too much volatility, but with impressive returns for a 3-year period compared to TUSD.
¿What happens to the return if the interests of TUSD are transferred to Bitcoin?
For this last analysis I will take the interests of TUSD and transfer them to Bitcoin and compare the returns obtained.
Since the interest is capitalized daily and paid weekly, the compound interest of TUSD will be affected, the weekly interest generated will be the same every week and those interests are the ones that will be transferred to Bitcoin, so each week there will be a small increase in the amount of Bitcoin.
2 years BTC vs TUSD interest to Bitcoin
As can be seen in the graph, the interests are affected by the volatility that bitcoin possesses, but at the same time the returns are greater even than the returns at 5 and 3 years, in a shorter period of time.
Bitcoin with the same initial investment at a lower interest rate obtained triple-digit returns 586%.
The average purchase price of Bitcoin with TUSD interest in the 2-year period analyzed was $35,538.
Bitcoin vs other Assets
charlie biello
@CharlieBiello (twitter)
Compare the returns of Bitcoin with other assets listed on the US stock market, we can see that Bitcoin is the one with the best return in 8 of the 10 years analyzed, higher returns than real estate (REITs), companies with capitalization of market greater than 10 Billion dollars (US Large Caps) and Nasdaq 100.
NOTE
The higher the risk, the higher the return and risk equals volatility.
The growth and therefore the return that Bitcoin has over time is evident, generating interest is an added value to what is already a great investment.
TUSD at 8% APY is no better than Bitcoin at 2.15% APY.
It is not necessary to trust the interest percentage that cryptocurrencies have, as TUSD seems like a good investment, when comparing it with other cryptocurrencies it is evident that after doing an analysis it is not attractive, when you can get better results with the same amount initial investment.
Rolling interest from TUSD to Bitcoin periodically is a better strategy, with better returns in the two years of analysis, compared to the compound interest returns of TUSD in the 5 and 3 years analyzed.
The funding and withdrawal fees to the bank account, as well as the purchase and sale spread fees are not considered in this analysis, but you can read how it directly impacts the return in the following LINK
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