Customers can store Bitcoins and USD in separate accounts and both account types can earn interest, according to Delta Financial’s co-founder Euwyn Poon, cited by the same source. He explains further that interest rates are dynamically adjusted due to supply and demand. In addition, the firm guarantees a 5% minimum effective interest rate.
Delta Financial works in a similar way to traditional banking interests on accounts, which means that lending money from interest-bearing accounts to other customers is the implied process. Those other customers use the loan for trading Bitcoins against USD on the company’s own margin trading platform. As such, customers who save, rather than transact, are rewarded and active margin traders can take out loans with up to five times leverage, Poon expostulates.
Leverage implies that currency traders deposit a certain amount (a ‘margin deposit’) in an account that they’ll use for trading currencies. The currency trading platform then lends them multiple times that amount, so that they can make more money by trading.
That loan is called ‘leverage’, and it is necessary for currency trading, because currency movements generally are not that volatile. That means people need to make bigger bets on currency movements to earn significant amounts.
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