Interest is a fundamental concept in the world of finance and economics. At its simplest, interest can be understood as the fee charged for borrowing money, or the amount earned on invested money. Understanding interest is essential for anyone seeking to manage their finances effectively, whether they are borrowing money, investing their savings, or simply trying to make informed decisions about their financial future.

In this article, we will explore the basics of interest, including how it is calculated, the different types of interest, and how to navigate interest in various financial situations. We will also provide real-life examples and valuable tips to help you make informed decisions about your money.

Types of interest

There are two primary types of interest: landed money interest and earned interest. Landed money interest refers to the interest paid on borrowed money, while earned interest refers to the interest earned on invested money.

Landed money interest

Landed money interest, also known as borrowing interest, is the interest paid by a borrower to a lender in exchange for the use of money. This type of interest is charged on a wide range of financial products, including mortgages, car loans, personal loans, and credit cards.

The interest rate on a loan is typically expressed as a percentage of the amount borrowed, and is determined by a variety of factors, including the borrower's credit score, the term of the loan, and the lender's own risk assessment. The interest rate on a loan can have a significant impact on the overall cost of borrowing, with higher interest rates resulting in higher monthly payments and a greater total cost over the life of the loan.

For example, let's say you take out a $10,000 car loan with an interest rate of 5% per year, to be repaid over a five-year term. Over the course of the loan, you will pay a total of $1,322.74 in interest, in addition to the $10,000 principal amount. If the interest rate were increased to 8%, the total cost of the loan would rise to $1,845.87, a difference of over $500.

Earned interest

Earned interest, also known as investment interest, is the interest earned on invested money. This type of interest is paid to investors by banks, governments, and other financial institutions in exchange for the use of their money.

The interest rate on investments can vary widely depending on the type of investment, the term of the investment, and the risk associated with the investment. For example, savings accounts and certificates of deposit (CDs) typically offer lower interest rates but are considered low-risk investments, while stocks and other securities can offer higher potential returns but are also considered higher risk.

For example, let's say you invest $10,000 in a CD with an interest rate of 2% per year for a five-year term. At the end of the term, you will have earned a total of $1,047.13 in interest, in addition to the $10,000 principal amount. If you had instead invested the same $10,000 in the stock market and earned an average annual return of 8%, your investment would have grown to $14,693.28 over the same five-year period.

Calculating interest

The calculation of interest depends on a variety of factors, including the amount of the loan or investment, the interest rate, and the length of the loan or investment term. In general, the formula for calculating interest is as follows:
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Interest = Principal x Rate x Time

Where:
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• Principal is the amount borrowed or invested
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• Rate is the interest rate expressed as a decimal
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• Time is the length of the loan or investment term, expressed in years
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For example, let's say you invest $5,000 in a savings account with an interest rate of 2% per year, to be held for three years. Using the formula above, we can calculate the interest earned as follows:
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Interest = $5,000 x 0.02 x 3 Interest = $300
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In this case, you would earn $300 in interest over the three-year term, in addition to the $5,000 principal amount.

Tips for navigating interest

Navigating interest can be challenging, particularly for those new to the world of finance. Here are some valuable tips to help you make informed decisions about interest in various financial situations:

1. Understand the terms of your loan or investment. Before taking out a loan or investing your money, make sure you understand the terms of the agreement, including the interest rate, term length, and any associated fees or penalties.
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2. Shop around for the best interest rates. When taking out a loan or investing your money, be sure to shop around for the best interest rates. Compare offers from multiple lenders or financial institutions to ensure you are getting the best deal.
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3. Consider the impact of compounding interest. When investing your money, consider the impact of compounding interest. Compounding interest is interest that is earned on both the principal amount and any accumulated interest, resulting in exponential growth over time.
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4. Avoid overexposure. Be careful not to overexpose yourself to any one type of investment or loan. Diversify your portfolio and consider spreading your investments across a range of asset classes to minimise risk.
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5. Take advantage of tax benefits. Some types of interest, such as mortgage interest and student loan interest, may be tax-deductible. Be sure to take advantage of any available tax benefits when borrowing or investing.

Real-life examples

Let's look at some real-life examples of interest in action:

1. Car loan: You take out a $20,000 car loan with an interest rate of 4% per year, to be repaid over a five-year term. Over the course of the loan, you will pay a total of $2,164.17 in interest, in addition to the $20,000 principal amount.
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2. Savings account: You deposit $10,000 in a savings account with an interest rate of 1% per year, to be held for three years. Over the three-year term, you will earn a total of $308.18 in interest, in addition to the $10,000 principal amount.
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3. Mortgage: You take out a $300,000 mortgage with an interest rate of 3.5% per year, to be repaid over a 30-year term. Over the course of the mortgage, you will pay a total of $184,968.79 in interest, in addition to the $300,000 principal amount.

In conclusion

Interest is a fundamental concept in the world of finance and economics, and understanding how it works is essential for anyone seeking to manage their finances effectively.

Whether you are borrowing money, investing your savings, or simply trying to make informed decisions about your financial future, understanding interest can help you make better decisions and maximise your potential returns. By considering the tips and real-life examples presented in this article, you can navigate interest with confidence and make informed decisions about your money.

Bear markets are riddled with panic selling, the act of exiting the market at a low price based on fear. While FOMO tends to apply more to buying when the markets are on the incline, panic selling is more closely associated with bear markets. The Fear and Greed index differentiates between the two using a scale based on market sentiment, allowing anyone to observe the market sentiment before making a trade.

Panic selling is not exclusive to the crypto markets, in fact, it can be found across stock markets and financial markets too. People have an ingrained characteristic that allows fear to override logic, often resulting in poor choices, particularly in the investment sector. 

Fear is often instigated by the news, particularly in the U.S, China and UK, where FUD spreads like wildfire and share prices can drop in an instant. Take Elon Musk's tweets about Bitcoin and Dogecoin and the media hype surrounding this as a prime example.

To avoid this, traders should create an investment plan that they can adhere to and refer back to when emotions get the better of them. To avoid any pain when it comes to investing in crypto, we suggest you pay close attention to the following pointers.

How to avoid panic selling

If you've found yourself tempted to take unprofitable action, consider the following tips on how to avoid panic selling entirely.

Always come back to the basics

When it comes to making any decisions in the crypto trading space, always come back to the primary objective: cryptocurrency's value proposition. While there weren't too many early investors, many since then have entered the market to tap into the incredible innovations that crypto has presented over the recent years. 

When in doubt, don't get sucked into price activity and instead return to crypto's value proposition. If you've invested in a cryptocurrency with impressive fundamentals that you believe in, there should be nothing to worry about in the long run. Similar to buying a property in a good area of a city, as long as the suburb remains that way, your investment is a solid one. 

Consider reading a research paper or two on a cryptocurrency to become familiar with its use case, and use case potential, in order to weed out the more risky assets.

Start by investing capital that you don't need

You've heard the saying "never invest more than you're willing to lose" but consider this: if you invest $100 that you rely on each month if the market dips you'll want to pull the money out as soon as possible to cut your losses as you need that money to survive. 

On the other hand, if you invest money that you don't need that month or in the months to follow, small price changes will carry less emotional weight and have more chance of achieving long-term benefits. 

Focus on long term results

Anyone invested in the crypto market knows that in a matter of ten years the price of Bitcoin went from a couple of cents to $67,000. While these returns are almost unbelievable, bear in mind that they took a decade to achieve. 

Although the markets have since fallen, the long term returns are still impressive. Every savvy investor will always keep their eye on the long term perspective. As adoption increases with countries around the world incorporating Bitcoin into their financial systems (some even allow citizens to pay their tax in crypto), there is plenty more way to go.

There's no denying that we have all become accustomed to instant gratification, but take a look at the following average annual prices of Bitcoin and observe the value in focussing on the long term: 

2015: $500

2016: $900

2017: $15,000

2018: $8,000

2019: $10,000

2020: $9,000

2021: $40,000

Prepare for pullbacks and accept the risks

The crypto market is notorious for being volatile, the best way to tackle this is to accept it. The markets have been known to lose thousands of dollars in a couple of hours. If you want to invest in the best-performing asset in history, you need to be prepared for that. 

While the Bitcoin price has lost over 85% of its value several times in its existence, it has reclaimed that value every single time. Even the individuals that bought BTC at $20,000 in 2017 regained their value and then some in the bull run of December 2020. 

Be prepared to sit through some market dips, but know that it will recover. If you're focused on the long term perspective and have used capital that you don't rely on, pullbacks and market dips should not be damaging factors. 

Use a dollar cost averaging strategy

The DCA strategy involves buying Bitcoin at a certain time of the month as opposed to based on market activity. Buying Bitcoin, or any other cryptocurrency, on certain days of the month will mean that you pay varied prices for the coin. 

Say you decide to invest $100 a month in BTC. One month you might get 0.002 BTC while the next month you get 0.003 BTC. Dollar cost averaging levels out the entry price when accumulating the coin and allows you to become less emotionally attached to the market's movements and therefore less likely to panic sell. 

In conclusion

The best crypto investors are able to commit to some degree of emotional detachment, have a strong investment strategy focused on long term gains, and only invest in highly vetted, functional coins. Building a portfolio of coins from strong projects will help alleviate any market-related uncertainty and allow you to ride out the dips more confidently. If ever you feel tempted to panic sell, revisit this list of factors and resist the urge!

Remember, investing in cryptocurrencies is considered high risk and any participants should conduct their own research and consult a financial advisor to iron out any uncertainties.
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While you might be well acquainted with how to buy, sell and store cryptocurrencies, did you know that you can also earn interest on this money? Without getting too technical - we're certainly not going to throw you into the DeFi deep end - we're going to point out the vital information that you will want to look out for when selecting a crypto savings account in this article.

What is a crypto savings account?

A crypto savings account refers to an account where users can store their digital currencies and earn interest or rewards. Instead of engaging in or trading on any DeFi (decentralized platforms), these accounts typically offer a safer alternative and more reliable returns with no added cost. Having said that, there are a number of factors one should consider before depositing any capital onto a platform. 

How to find the best crypto savings account

See our checklist of the top factors to consider before using a crypto savings account. 

Verify the platform

Before you get started, ensure that you don't get lured into any crypto accounts that sound too good to be true. As a golden rule of thumb piece of advice, always ensure that the platform or exchange hosting the account is reliable, trustworthy and regulated. Currently there are plenty of choices on the market, ensure you find one that suits your needs.

Currencies supported

Next, you'll want to check which currencies are supported in the specific earn program. Some interest-bearing accounts only support Bitcoin, while others support a range of cryptocurrencies. Some accounts even offer interest for fiat currencies. Some platforms will allow users to purchase cryptocurrencies directly through them or might require users to deposit the funds into the allocated account.

Interest rates

According to Bankrate, the average interest rate for savings accounts is 0.06%. Interest on crypto tends to be much higher, so always check that the interest rate you are committing to is competitive. 

Lock-in periods

Some crypto interest accounts require users to lock away their funds for a certain period of time. This can range from days to months, depending on the platform and often the interest rates too (the longer the lock-in period the higher the returns). Ensure that you are aware of the lock-in period prior to depositing your funds as once they are in they cannot be accessed. 

Minimum amounts

Some earn programs require a minimum amount to be deposited in order to earn interest on the funds, while others offer higher interest rates but only to larger deposits. Ensure that you are aware of how much needs to be deposited in order to earn the promised interest, as well as the minimum required amount. 

Fees

Check if there are any fees associated with using the crypto saving account before joining the platform.

Finding the best crypto savings account

We might be biased but we did create our Earn program to provide the best product offering on the market. Our Tap Earn program is available through the mobile app and offers users up to 8% APY (annual percentage yield), available to users around the world including UK and EU.

Catering to both crypto enthusiasts and the most risk-averse investors, Tap offers a convenient passive income generation programs on both crypto and fiat currencies, allowing users to earn interest across a wide portfolio of assets. 

With no minimum amounts or lock-in periods, the Tap Earn program offers the easiest and most convenient means to earn passive income for assets you already own. On top of that, interest is paid out weekly, offering users the chance to earn compound yield on their crypto and fiat savings.

Tap is authorized and regulated by the Gibraltar Financial Services Commission. For more guidance on passive income generation and credit bearing accounts please contact your financial advisor.

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Etherscan is a free and widely used blockchain explorer that allows anyone to see any transactions made on the Ethereum platform. Not just transactions, blocks, gas fees, wallet addresses, smart contracts, and other on-chain data can be found on the page. Learn more about what Etherscan is and how it works below.

What is Etherscan?

As mentioned above, Etherscan is an Ethereum-based blockchain explorer. Aside from offering a peek into the advantages of blockchain technologies, Etherscan also provides an insightful look at the status of transactions, gas fees, smart contracts and dapp content. Etherscan is the tool that leverages blockchain's transparent nature.

Acting as a search engine and source of blockchain information, one doesn't need an account to access anything. However, users can create an account in order to access extra functionalities associated with their Ethereum portfolio, such as developer tools, enabling notifications for incoming transactions, and creating data feeds. Whether you're utilising a dapp, monitoring a wallet, or depositing funds to a blockchain-based game, all activity can be tracked through this browser-based service.

Why is Etherscan popular?

Etherscan is the most widely used Ethereum blockchain explorer and is highly regarded in the industry due to its seamless experience. While it won't allow you to store or trade ETH, it offers a reliable look into the functioning of the network, blockchain analytics and all Ethereum and Ethereum-based token activity.

Using Etherscan also provides a better understanding of how the blockchain works, providing insights into its operations and potential ability to spot suspicious blockchain activity (like project leaders selling their tokens, or large whale movements that will affect the token's price). 

How to use Etherscan

Whether you're wanting to look up a transaction or verify the validity of a smart contract, you can use Etherscan. Below we will guide you through how to look up a transaction.

How to find a transaction on Etherscan

Understanding how to track your transactions can be a powerful tool in the world of cryptocurrency, from seeing how many confirmations it has gone through to the amount of gas fees paid. 

Each transaction on the blockchain is given a transaction ID (TXID) or transaction hash which identifies the specific transaction (similar to a person's identity number). It looks something like this: 

0x3349ea4144aed83291f87b3904b02f8f1e76c3b5bfed0d95a000fafddaed01bc

In order to get the real-time updates on a transaction, you will need to enter this TXID into the space provided on the Etherscan website. 

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It will then display all the information pertaining to this transaction, as below:

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See our breakdown of the terminology below.

Etherscan terminology

Transaction Hash: the TXID associated with your particular transaction.

Status: status of your transaction (in progress, failed, successful) 

Block: the number of the block that your transaction was included in (block confirmations indicate the number of blocks that have followed since then). 

Timestamp: the date and time that this transaction was executed.

From: the wallet address that the transaction was sent from

To: the wallet address or smart contract receiving the transaction.

Value: the value of the transaction.

Transaction Fee: the gas fees or transaction fees paid.

Gas Price: the cost per unit of gas at the time of the transaction execution (displayed in Ether and Gwei).

How to find gas prices on Etherscan

When using the Ethereum network you will be required to pay gas fees in order to conduct any activity. Gas fees are assigned to blocks and fluctuate depending on how busy the network is at the time. 

Etherscan provides a Gas Tracker which observes the current gas prices and indicates how busy the network is at the time. 

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In conclusion

Etherscan is a great tool for anyone using Ethereum or any other cryptocurrencies relating to its ecosystem. From confirming transactions to checking gas prices, this tool provides a great oversight of the network, highlighting the transparent benefits of using digital assets.

When Satoshi Nakamoto created Bitcoin, they designed it in such a way that should the value increase dramatically, there would still be an inclusive decimal value for the masses. Satoshis could one day be how we buy a cup of coffee anywhere in the world, using the same currency from Britain to Japan.

How many Satoshis are in a Bitcoin?

Much like fiat currencies, cryptocurrencies can be divided into smaller units. While the US dollar and Euro has cents as its smallest denomination, Bitcoin has satoshis (also referred to as SATs). But unlike cents, satoshis are 100 millionth of a Bitcoin, meaning that Bitcoin can be divided into 100 million units, that's eighteen decimal places. 

See the table below illustrating the various values of Bitcoin vs satoshis.

How many Satoshis are in a Bitcoin, exactly?

1 Satoshi 0.00000001 Bitcoin
10 Satoshi 0.00000010 Bitcoin
100 Satoshi 0.00000100 Bitcoin
1,000 Satoshi 0.00001000 Bitcoin
10,000 Satoshi 0.00010000 Bitcoin
100,000 Satoshi 0.00100000 Bitcoin
1,000,000 Satoshi 0.01000000 Bitcoin
10,000,000 Satoshi 0.10000000 Bitcoin
100,000,000 Satoshi 1.00000000 Bitcoin

As defined by the technology, only 21 million Bitcoin will ever exist, meaning that there will only ever be 21,000,000,000,000 satoshis. That's a tough figure to wrap your head around. As indicated above the link between satoshis and Bitcoin is several decimal places, certainly not calculations we were taught in school. A less complicated notion to digest is that satoshis were named after Bitcoin's creator, Satoshi Nakamoto.  

Bitcoin measurement units

The creator of the peer-to-peer digital currency outlined in the Bitcoin whitepaper the decimal places that Bitcoin is divisible by. Throughout the whitepaper, they only referred to two measurement units, Bitcoin itself and satoshis. Several years down the line as the BTC price continued increasing, market research and various discussions resulted in the decision that more measurement units were required.

Five years after Satoshi Nakamoto disappeared from online forums, a universal ISO update was released that recognised two new Bitcoin measurements. 

• MicroBitcoin (μBTC) 

1 BTC = 1,000,000 MicroBitcoins (μBTC) = 100 SATs

• MilliBitcoin X (mBTC)

1 BTC = 1,000 MilliBitcoins (mBTC) = 100,000 SATs

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When taking a glance at your Bitcoin wallet you can usually choose to see satoshis, microBitcoins or miliBitcoins. By any account, it will likely take a few years before we're referring to buying goods in SATs.

How to calculate SATs

As we've already established in the information provided above, 1 BTC is worth 100,000,000 SATs. While one could do the maths, there are plenty of tools available online that can do the sums for you. Better yet, as satoshis are recognised as universal units of value, you can change the currency setting on several sites.

For instance, on CoinMarketCap, you can change the default currency to SATs by selecting the currency drop down option in the top right-hand corner. Select the Satoshi option under Bitcoin units.

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This will then display all values as satoshis. 

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Alternatively, you can use one of the many satoshi calculators available online, which will instantly convert your currency value into SATs. In the future when using SATs as a form of payment, the value owed will likely be presented to you in the same form, allowing for a much easier consumer experience.

‍Key Takeaways

SATs are used by the Bitcoin network and crypto exchanges. Miners on the Bitcoin blockchain use SATs to determine the fee owned to them for transactions validated, while some exchanges use SATs to measure altcoin's value and performance against Bitcoin.

It is likely if in the future Bitcoin is fully integrated into our financial systems that prices in shops and supermarkets will be reflected as a value in SATs as opposed to BTC.

Before you buy any crypto assets, the golden rule is to always do your own research (DYOR). Hearing about a new coin from your neighbour or cousin's friend on Facebook is great, but it still requires a sizable chunk of your own research. Before you part ways with your money in the crypto space ensure that you've weighed up both the risks and the potential, the responsibility lies with you.

Crypto investing has a track record of being volatile, so the more clued up you are on the crypto assets you invest in, the better. While market data and fundamental analysis are important, be sure to understand the basics of a project and the project's potential.

What is DYOR (do your own research) in the crypto space?

The holy grail of investing in crypto projects, DYOR has become a common abbreviation for do your own research. The phrase is used to remind crypto investors that they should conduct their own research on a crypto project thoroughly before putting any money in it.

Whether you're looking to buy crypto assets, tokens, NFTs, or in any way get involved with a crypto project, be sure to thoroughly investigate the following factors mentioned below when doing your own research. Don't be lured in by a project's fundamental analysis, ensure that you understand everything there is to know about the project. Crypto investing can have devastating consequences for uninformed investors.

The 4 dimensions of how to DYOR on a crypto project

Below we will outline the four main dimensions of conducting your own research on a new cryptocurrency. These four pillars will give crypto traders a solid understanding of what the project represents, how it's been received, and what might happen in the future. Be sure to do this before looking at any technical analysis.

Remember, doing your own research requires reading multiple sources and verifying that the information is correct. When conducting your own research you might find some disputing information, continue looking until you have the accurate answer.

Team

First and foremost, who is the team running this project? This information is typically presented on the platform's website or in its whitepaper (it's imperative that a project has both of these).

Take a look at the size of the project team, a small team might fall apart if one of the three members leaves while an excessively large team might be a red flag if it is still in its early days.

Check the experience of the leaders on the team. Ideally, you want leaders and executives to have experience in blockchain, Web3, finance, business, computer science, or any other related fields. Also, consider whether their current titles match their experience.

Is the team entirely anonymous? This is considered a red flag as the potential for them to execute an exit run is high. Consider the leaders of the project carefully and decide whether they have the means to steer this ship in the right direction.

Tokenomics

Tokenomics refers to the factors related to the supply and demand of a coin or token. The term merges "token" and "economics" and provides a key area of study for potential investors when establishing a coin's long-term viability. Below are the main aspects of tokenomics:

• Token supply: what is the maximum supply of coins or tokens?
• Token utility: what is the purpose of the coin (does it have governance rights, does it serve a specific function)?
• Market cap: How does the coin's market cap compare to that of its competitors?
• Issuance tactics: does the project intend on conducting token burns or any related activities?
• Minting, allocation, and distribution: how are the coins minted (all at once, gradually), when launched, how are the tokens distributed, do a small number of members hold a large amount, are any coins locked up that will be released to the market on a specific date?
• Trading volumes and liquidity: what kind of volumes does this coin trade and how much liquidity does it have?

Innovation

For this pillar of the project, you want to look at what problem this project is solving, and what edge it has over its competitors. It's also worth taking a look at the project's road map and whether it is delivering on its self-set milestones. No roadmap is a red flag, well-managed projects are transparent and eager to release their milestone accomplishments.

Ideally, you want to establish what solution this project is bringing to the greater industry and what competitive advantage this project holds over similar projects. Consider its weaknesses.

If you want to take things one step further, consider what the team might not be telling you, and what elements could work against the growth and success of the project.

Social

This might not seem essential, but social media platforms can offer significant insights into the project's community, achievements, and current state within the crypto space.

When conducting your crypto research check whether the project has active official social media channels, and how often these are updated.

Secondly, how big is their community both in terms of followers and engagement? Are people engaging with the platform or talking about it on their own channels? Community members can shed a big light on how the project has been received.

Lastly, what kind of discussions are being had within the community of these groups? Are people friendly and inviting, or are they blindly promoting the project and pushing "lambo" sentiments? Ideally, you want to have a space where open and honest discussions can be had and constructive criticism accepted.

Toxic communities along with shillers and abandoned channels are all red flags.

The bottom line for DYOR and crypto projects

Establishing these four dimensions of a project is important prior to engaging in the market. Not only does it give you the opportunity to learn about a new project, but also to become better acquainted with what is happening in the crypto space.

Through the process of conducting your own research, you might discover a viable gem or even gain access to exclusive airdrops as an early supporter. Bear markets are a great time for diving into DYOR explorations.