Investing

Save And Invest Your Spare Change In Cryptocurrency


There are a number of saving and investing apps available today that offer “round-up” features. Digital “round-ups” are like the modern-day version of a spare change jar. With each purchase that you make with a connected card, the “change” that’s leftover is moved to a savings account or used to purchase an investment of your choice.

But while many automatic savings apps are available today, you’d be hard-pressed to find any that will allow you to invest your round-up dollars in cryptocurrency. But that’s exactly what Donut has made possible with their mobile app.

With Donut, you can truly automate your investing in Bitcoin. And with Donut Savings, you can lend digital dollars to earn interest as often as every 15 seconds. Read our full review to learn more about the app’s features, tools, and pricing. 

  • Round-up investing in Bitcoin
  • High-yield cryptocurrency savings
  • Not available on Google Play Store

Cryptocurrency Investing and Saving

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Who Is Donut?

Donut is a fintech that specializes in cryptocurrency investing. Its founders are Jordan Abderrachid and Neel Popat. It was founded in 2018 and has offices in LA and Berlin. Currently, the company is in its seed round and has raised $1.9 million.

“We believe most people will have the majority of their wealth stored in digital assets within the next decade. That could be anything from cryptocurrencies to fractional ownership of art or owning a piece of unique land in virtual reality,” said Popat to fintechfutrues.com. “Our mission is to empower everyone to become an investor in that future.”

What Do They Offer?

Donut allows you to invest in Bitcoin and earn interest through cryptocurrency savings. Everything is done through its mobile app. 

Donut Bitcoin Investing

There are three ways that you can purchase Bitcoin investments through the Donut app. The first way to do this through Donut is through round-ups. With this feature turned on, Donut will round up your purchases from a connected card and invests the difference in Bitcoin.

The term “invest” may be misleading, depending on your view of Bitcoin. Basically, you are buying fractions of Bitcoin with each round-up.

For example, if you purchased a coffee for $2.30, Donut would round up the transaction to $3.00, adding 75 cents to your “Collect Credit.” Once you’ve reached a credit balance of $10, Donut will execute another investment purchase of Bitcoin.

You can also set recurring investments with Donut or you can initiate a “Quick Buy” at any time. Quick Buys are the only Donut investment purchases that are charged a transaction fee.

How is Donut different from a cryptocurrency exchange such as Coinbase? The round-up feature of Donut is what’s different. Donut also has a high-interest savings feature, as detailed below.

Donut Savings

In addition to buying Bitcoin, you can earn 1.12% APY on savings (as displayed on the Donut website, subject to change). Note that this is obviously not an FDIC-insured deposit account. Donut is able to pay a high rate of interest by using Compound as its backend provider. At the end of the day, you aren’t saving but rather lending your assets out and being paid interest from borrowers.

When a user deposits cryptocurrency into their Donut savings, it goes into a pool of funds via Compound, a protocol-based platform. This pool or funds, or marketplace, is available for other people to borrow from. Borrowers pay a rate charged by the marketplace. The borrower rate is higher than the lender rate, so there is a spread that Compound is able to capture.

Borrowing/lending is transacted on Compound through Dai (‘DAI’ or ‘Digital Dollars’), a stable coin. Stable coins are cryptocurrencies that try to create stability so that fluctuations common to cryptocurrencies are eliminated.

Imagine if the principal value of a loan fluctuated every day? Such fluctuations would make lending impractical. A stable coin allows the value of the coin to be maintained, making it an efficient vehicle for borrowing and lending purposes. Donut, and other startups like Outlet Finance, are trying to take advantage of this promised stability by building “high-yield savings” options on top of cryptocurrency lending platforms.

You can deposit and withdraw funds from your Donut savings at any time. There are no restrictions or fees when done via ACH. Deposits can also be set on a schedule so you don’t have to remember to move funds into your savings.

Mobile App

The Donut mobile app is available only on the Apple App Store. It is called “Donut: Save & Invest in Crypto” and has a 4.4 out of 5 rating from 34 people. While there is not currently an Android app, Donut says that they’re working to bring one to the Google Play Store marketplace soon.

Are There Any Fees?

There are no fees for round-up or recurring investment purchases. However, Donut does charge a fee for Quick Buys.

When using Quick Buy with your USD balance, the fee is 2.5%. When using it with your Visa/Mastercard debit card, the fee jumps to 4.5%.

These are fairly high fees. But the good news is that you can avoid them by simply sticking with round-ups and recurring investments.

How Do I Open An Account?

There is currently no desktop or Android option for Donut. So you’ll need to have your iPhone handy to get your account up and running with Donut. You can download the app and open an account from their website at https://www.donut.app/.

Is My Money Safe?

Like many other fintechs, Donut is not a bank. However, it does work with a bank and another fintech to provide custodian services for deposits (USD). The bank that Donut uses is Evolve Bank & Trust. The fintech that Donut engages with to utilize banking services is Synapse Financial Technologies, Inc. 

When you deposit cash with Donut, it is FDIC-insured. However, once your cash is invested into a cryptocurrency, it is no longer FDIC-protected. Also, “digital dollars” inside Donut Savings accounts are not protected by the FDIC either.

Unlike Coinbase and some other cryptocurrency exchanges, Donut does not have any additional insurance to protect your cryptocurrencies from hacks, theft, or breaches. However, they do use offline or cold storage for larger virtual currency deposits.

Is It Worth It?

For those who invest in cryptocurrencies, you will likely find Donut very interesting. Besides buying more Bitcoin through its round-up feature, earning a high rate of interest on savings may be worth it alone.

If you’re wanting to compare Donut with other crytpocurrency platforms, Coinbase is one of our favorites. Like Donut, can set up recurring investments with Coinbase. But they also offer an extra layer of financial protection by providing private insurance against digital currency theft on their exchange. Plus, the Coinbase app is already available on both Android and iPhone.

If you’re looking for traditional stock brokers that offer cryptocurrency trading, Robinhood is a strong option. They don’t charge any fees on crypto trades. But no matter which platform you use, you’ll want to limit your crypto investment holdings to a small portion of your well-diversified portfolio.

Donut Features

Cryptocurrency Investing and Saving

  • Bitcoin Investing: ~5% or more
  • Donut Savings: 1.05%
  • Round-Up investment via ACH: Free
  • Recurring investment via ACH: Free
  • Quick Buy using USD Balance: 2.5%
  • Quick Buy using Visa/Mastercard Debit Card: 4.5%

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