All my life, I've been told that rich people don't need to spend any of that wealth. Instead, they just have a bank account where they receive a percentage of the total sum on the account every year or month or whatever time period, simply for allowing the money to be there rather than at home in the mattress or as gold bars in a safe. And then they live off of that amount, meaning they never spend any of their "actual" money.

But if you own 10 BTC, that's 10 BTC... and then it's 9.999998... and then 9.999997, and so on. Its absolute number slowly decreases until 0, unless you keep buying new coins for fiat money (or otherwise obtain them) to add to your wallet.

I frankly don't understand why any bank would give you money (rather than charge money from me, as my bank does) for simply keeping your money there, but since it's apparently a thing, I thought that I should at least ask if this is logically possible with Bitcoin.

And I do not mean sending my BTC away to some website or any kind of third party. I'm talking about retaining control of them in my Bitcoin Core fullnode wallet on my encrypted PC.

Is there some way, or planned future feature of Bitcoin, to get "interest" on your coins simply by holding on to them? So that they always grow a little, not just in terms of their "value" in the real world, but as in increasing ever so slightly?

Maybe they would never do this at this point, now that Bitcoin's rules are somewhat "established", and maybe it's not logically possible without sending your coins somewhere and trusting that party (which I would never do), but I need to at least ask.

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    No risk - no reward. It's possible (in my view) with a smart contract; but this involves the BTC leaving your wallet and you entrusting the code (contract) will perform as expected.
    – Newskooler
    Dec 30, 2020 at 22:04
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    Banks don't give you money for keeping your money there. Banks give you money for allowing them to use your money, which they do by loaning it to other people and charging those people interest.
    – Douglas
    Dec 31, 2020 at 6:56
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    "I frankly don't understand why any bank would give you money (rather than charge money from me, as my bank does) for simply keeping your money there". That is called interest, and in the times of my parents was quite substantial. Negative interest as is discussed today was unthinkable 40 years ago.
    – Polygnome
    Dec 31, 2020 at 11:03
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    "But if you own 10 BTC, that's 10 BTC... and then it's 9.999998... and then 9.999997". Is there some feature of bitcoin where they rot or is this decrease assumed spending? Dec 31, 2020 at 17:02
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    @wizzwizz4 The article you linked describes an interpretation of how banks do what I said banks do, it does not refute my statement. Sooner or later someone will demand actual cash, and without the money deposited in the banks they would be unable to fulfil their promises and would go out of business. How much money banks are able to create via promises to pay is proportional to how much physical cash they have on hand. Deposit more money, give them more cash, and they can make more loans.
    – Douglas
    Dec 31, 2020 at 18:54

9 Answers 9


This is possible, but not exactly in the way you're expecting!

Consider what you really want here: is it just an increased number of dollars or BTC? Nope! What you want is an increase in your buying power. Stop to think about the difference here for a second - it is important!

The goal is an increase in buying power, which means you want the ability to buy more tomorrow, than you could today.

Banks pay interest on deposits because they will use those deposits to make investments of their own, and those investments will (hopefully) do well and make the bank some profits. The actual cash money itself doesn't just magically grow! It is the investments that provide the profits. With the money itself, the opposite is true: as the money supply grows (unpredictably!), each individual dollar will hold less buying power than it did before. So just keeping dollars stored under a mattress is actually a pretty bad idea: that money will have less buying power tomorrow, than it did today. If the goal is to increase buying power, then clearly just holding dollars is bad, and so the prudent individual will find investments that can increase in value over time. With enough money invested, they can 'live off the interest' of those investments.

Bitcoin, on the other hand, is a very different type of money, in that the supply of it cannot be inflated, so the act of just holding coins does not suffer from the same issue of unpredictable dilution that dollars do. If BTC maintains current adoption/use rates*, and society progresses and grows in GDP, then each BTC will accrue more buying power over time.

The difference should be obvious: dollars are a bad asset to hold, they lose purchasing power over time due to an (unpredictable) dilution of supply. Bitcoin does not suffer from this, so a holder might expect their purchasing power to increase over time. Many people call bitcoin a 'hard money', as in, 'it is hard to produce more of'.

So all of that is to say: just like dollars, if you hold enough BTC, you could maintain a certain amount of purchasing power over time, while still living off the nominal increase in purchasing power of your BTC. The actual number of BTC you own would slowly shrink, but this is somewhat inconsequential if your goal is to just live off the interest while maintaining your net purchasing power.

*of course, bitcoin is currently in a young stage of growth, so it is a fairly volatile asset in regards to purchasing power over short time frames. But consider what the situation would be if it were as widely adopted as dollars - that is the more interesting situation in regards to the idea I mean to put forth here. Of course, if bitcoin continues to grow in popularity and use, then we might expect the buying power of a coin to increase, and vice versa.

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    Speculation-driven volatility isn't the only thing affecting the purchasing power of a Bitcoin. Bitcoins aren't accepted as payment in many, many locations, which means the only thing you can reliably buy with them is other currencies, making its status as "money" somewhat dubious.
    – chepner
    Dec 31, 2020 at 14:28
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    @chepner sure that’s likely currently true, but whether or not you want to call it ‘money’ is just semantics, it’s of no real consequence when considering the buying power of the financial asset (as the buying power is decided by the market).
    – chytrik
    Dec 31, 2020 at 14:38
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    Technically, Bitcoin is an inflationary currency in that the supply increases, but most of the increase occurred early in the history, and is exponentially slowing down. Dec 31, 2020 at 22:36
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    There's this thing called mining... That produces more bitcoin every day. Less and less of it, but still, the amount of bitcoin is increasing, at a relatively predictable rate. However, its relationship to other currencies or any goods or services is indeed very volatile and unpredictable. Holding bitcoin is just speculation hoping that its value will increase, it has no advantage over most traditional currencies.
    – jcaron
    Jan 1, 2021 at 0:22
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    @chytrik While I can't create more bitcoin, I can create a new crypto currency which works in parallel to Bitcoin, increasing the total supply of such digital assets. Jan 3, 2021 at 1:57

You misunderstand the fiat banking system.

You aren't really maintaining custody of the dollars in your bank account when you earn interest. You have actually lent your money to the Bank and the interest is a reward for the risk of losing your funds if the Bank becomes insolvent. This may happen if too many debtors default on their loans.

When you log on to your Bank account and see that you have $1,000 in the account it's an illusion that you can get that money any time. It's an illusion that only persists as only as long as people believe the illusion. Once the belief fails, there is a Bank run meaning too many people trying to get money out at the same time. This was at least true in the days before Central Banks and QE forever - which his why Central banks were created.

Earning interest on deflationary cryptocurrency makes even less sense than inflationary fiat currencies. Any crypto system that offers interest payments is almost certainly a scam.

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    Just to note: the interest isn't just a reward for taking the risk - it's a incentive to attract and retain customers; the bank assigns a slice of their investment income to stay competitive.
    – SusanW
    Dec 31, 2020 at 15:34
  • This is the kind of answer that makes me wish I could bookmark answers.
    – Clockwork
    Dec 31, 2020 at 22:47
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    @Clockwork you can - see the "share" word in the bottom left of the answer - it's a permalink to this exact answer
    – Caius Jard
    Jan 1, 2021 at 13:15
  • @SusanW Keep in mind they aren't just competing against other institutions for access to funds but also the decision by depositors to instead store physical cash in a vault at (relatively) zero risk of loss or perhaps other vehicles like collectibles, metals, crypto. They are competing for where you decide to risk your savings. We live in interesting times where zero interest rate policy is distorting all these decision metrics that a saver inherently makes even if not conscious of it.
    – troy ounce
    Jan 1, 2021 at 20:53
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    "Earning interest on deflationary cryptocurrency makes even less sense than inflationary fiat currencies." – Why wouldn't someone pay me interest when I lend them my bitcoins? Jan 3, 2021 at 2:01

Is there some way, or planned future feature of Bitcoin, to get "interest" on your coins simply by holding on to them?

Its not a feature of "Bitcoin" but interest is a feature in lot of financial applications which are possible using Bitcoin technologies:

  1. HodlHodl is a No KYC, Non-custodial, Peer to Peer exchange which recently started P2P lending of stablecoins and L-BTC.

  2. Sovryn on Rootstock (bitcoin sidechain) is a decentralized trading and lending platform: https://sovryn.app/ which can be used to lend bitcoins and make more bitcoin.

  3. Dmitry Petukhov has written a nice article about Asset based lending smart contracts on Liquid (bitcoin sidechain): https://ruggedbytes.com/articles/ll/

TDEX might also allow lending. With TDEX Beta you can build an unstoppable and anonymous exchange that trades all the assets based on Liquid.

  1. Lending is also mentioned in Omni BOLT specs which is a WIP: https://github.com/omnilaboratory/OmniBOLT-spec (Lightning)

OmniBOLT specification describes how to enable OmniLayer assets to be circulated via ligtning channels. Defi on Lightning or Lifi.

  1. LN routing fee earnings: https://twitter.com/alexbosworth/status/1342500349345591296

  2. I am sure this is also possible using DLCs but there isn't any live project so maybe devs from https://atomic.finance or https://suredbits.com or someone else working on DLCs might work on it in future.

Discreet Log Contracts helps in creating trust minimized financial applications using bitcoin which involves oracles. Recently multi-oracle support proposal was added in DLC specs: https://github.com/discreetlogcontracts/dlcspecs/pull/128

You can check the latest blog about synthetic dollar using DLC: https://suredbits.com/settlement-of-dlcfd/

  1. Two ideas that I had mentioned in one of my medium post and also discussed in two voice sessions with different devs involved in Bitcoin:

A. Yield and privacy by providing liquidity in Joinmarket

B. DCA using futures market by building a long position with minimum risk over time in a bull market using algorithms and APIs provided by DEX

Session recording links:

https://www.youtube.com/watch?v=TDsyAq8wMo8 with Matthew Black, CTO - Atomic Finance https://www.youtube.com/watch?v=Sp1qMoo9xuk with Hexa Wallet team

All the above solutions will help you make more bitcoin using your bitcoin. It is non-custodial but includes some tradeoffs and risks which can be checked by doing more research about each of them before using. If you care about "Number Go Up" meme and believe in USD value of bitcoin then you might experience issues in a bear market with the kind of volatility BTCUSD market has right now. In a bear market you might make 0.05 BTC from 1 BTC but its value in terms of USD may go down. There are solutions to hedge and avoid that as well and everything is possible using bitcoin projects (without any altcoins). So it depends on individual and you can make more bitcoin from your bitcoin holdings in non-custodial ways (lending markets and other decentralized financial apps on bitcoin will exist but yield may vary).


No, that is not possible.

Even in the fiat world this isn't possible. Bank accounts only earn interest because banks pay out interest. This isn't a feature inherent to fiat. The analogy to Bitcoin would be like if you kept all of your money in cash in a safe - you aren't going to be making any money by doing that.

Furthermore, people who are living off of interest are still spending money. The interest their accounts earn directly increases their bank account balance, which then decreases when money is spent. It is still "actual money" and is just an additional income to them because the bank is paying them. The same would apply if banks allowed you to have Bitcoin stored instead of fiat.


I consider the idea that any rich people are just living forever off passive wealth more a simplification of their weird little world than what actually happens.

When you accumulate any large sum of money in one place, wealth advisors of various sorts then compete for the service of managing that wealth. The Certified Trust and Financial Advisor (CTFA) job is the subset I'm most familiar with. The CTFAs worry about asset allocation, diversification, and your exposure to the capital itself devaluing. That last part is the tricky one with Bitcoin. For a few years now, how to fit its risk/return as a part of a portfolio has been one of the most popular topics in the CTFA press. I must have seen a dozen issues of "Futures" talking about BTC as a new gold rush of opportunity.

You know how at some point in middle class income, people start paying an accountant to worry about tax preparation? The wealth management worker bees are a higher tier of that to the rich, a Fleet (ha ha, bank pun) of professionals that do the grunt work of managing a fortune. Depending on the billionaire, the finance guys could be treated as anything from a trusted advisor to disposable hired help.

These advisors don't have to beat any particular market return to stay in business, and in the long term they of course do not. They just have to balance chasing high returns during the stable periods without risk going so high your original capital seems at large risk, what they call a "drawdown" to the money--the core problem you're asking about. I've easily read a dozen books that cover drawdown management. It is a Big Topic and not a solved problem.

To me as a tech person used to hard problems, the wealth management jobs have seemed fairly easy to succeed at since the 1940's. Stock equities around the major financial markets have exploded with so much inherent growth it's been impossible to lose on so many bets. To some extent that's driven this fable that can't lose investments exist. I like the story of the hilariously named Long Term Capital Management as a well dramatized one about how even the largest fortune under management can dissolve with a surprise currency swing.


The only "interest" on bitcoins is if they increase in value. If your bitcoins increase in value relative to the world economy, you can sell some of your bitcoins for income and still have more money than you started the year with. It is similar to buying a mutual fund. If you bought an S&P fund, it would pay about 1.5% dividends. If you want to spend more money than that, you have to sell shares. You will have fewer shares, just like you will have fewer bitcoins if you sell those, but the value will be higher even after the sale if the share price has risen enough. If you follow the advice that an investment should throw off 4% income, you would have to sell 2.5% of your S&P shares or 4% of your bitcoin to support that. If the price of the asset rises enough, you have more money than you started with. If not, you have less money than you started with. If you believe bitcoins will appreciate more than other things you would invest in, you should buy them. If not, don't buy them. As bitcoin has appreciated 50% this month (based on US dollar) I wish I had owned some. Don't focus on the number of bitcoins you own, focus on what they can buy, which is what they are worth in your local currency.


I frankly don't understand why any bank would give you money (rather than charge money from me, as my bank does) for simply keeping your money there, but since it's apparently a thing, I thought that I should at least ask if this is logically possible with Bitcoin.

I am going to post as an answer something that is not an answer to your question. I feel bad about doing this, but your question is based on a very fundamental misconception. And you need to fix that misconception before you can even understand your question.

Think about this. Would you rather have $10 today or $10 next week? Suppose I gave you your choice of either of those things. Which would you pick?

I hope you would pick $10 today. Why? Because with $10 today, you can shove those $10 in your mattress and have $10 next week. But you can also choose to spend the $10 today instead. So $10 today can do everything $10 can do next week plus more.

Therefore, $10 today is worth more than $10 next week.

Now, presumably there is some value that you would rather have next week than $10 today. Most people would certainly prefer $100 next week rather than $10 today.

So there is some number X, such that $X next week is worth about the same as $10 today. And X is more than 10 and less than 100.

So, now, let's think about your question,

"I frankly don't understand why any bank would give you money (rather than charge money from me, as my bank does) for simply keeping your money there..."

They aren't doing that! If you give them $10 today and they give you $X next week, they aren't giving you any money. The value of the money you gave them and the value of the money they gave you is equal (or more likely, less) even though X is greater than 10.

To know how much money 10 is, you have to know two things: what currency and what date. Just as 10 pesos is not the same amount of money as 10 dollars, 10 dollars today is not the same amount of money as 10 dollars next week. These things all have different values, and the amount of money you have is its value.

You likely are paying a fee for the bank's services. And even though the number of, say, dollars you get out may be more, the amount of money you get out will usually be less.


You can check out blockfi.com, nexo.io or even bininace.com loans. All seem to have good backing (coinbase venture, winklvoss etc) and a trusted product (trustpilot). You can earn 8-12% apy on your Bitcoin which is pretty good.

With regards to risk... These are lending services so you give them your Bitcoin, trust them to lend it out and return their promised interest to you. I think businesses where the business model is clear and if the business continues to build a reputation it will grow its profits are more trustworthy compared to businesses who do not have realistic business models e.g. "our trading bot will give you 2% a day".

I don't think there is a way for you to earn interest "risk free" as the risk would be way to high from the companies side to let you keep your private key.


Currently Bitcoin does not provide this feature.

It's possible that in the future the protocol may be updated to support such a feature via some mechanism such as 'Proof of Stake', or some other approach.

That said, the Bitcoin community is extremely conservative about protocol updates (with good reason) and so I would not expect any such feature to be added any time soon.

  • 3
    Proof of Stake is a consensus mechanism with known vulnerabilities, still in its infancy and less tested. The question is related to "getting interest" by Non-custodial ways on your bitcoin which is possible using bitcoin technologies and mentioned in my answer above
    – user103136
    Jan 1, 2021 at 12:13

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