Cryptocurrencies have grown beyond just assets that became popular on the internet. They are the driving force behind a new financial movement that will sweep through the entire world.
Ever since cryptocurrencies became a part of the limelight, they have provided users with an impressive opportunity to earn money and grow their finances. The primary way to do this is usually to invest and trade, so you can make speculative bets using your assets. However, there are also means to make passive income through cryptocurrencies and grow your wealth.
People who understand how money works will know that passive income is the most reliable income stream channel for investors today. Thankfully, crypto investors can also use their assets to make passive income - or, complete tasks that will help them to earn more coins.
Below, we’ll look into some of the ways that newbie crypto investors can earn passive income using these assets:
When it comes to cryptocurrencies and passive income, mining is usually the first thing that comes to mind. Essentially, mining is using your computing power to secure a cryptocurrency’s network. For your work, you get rewards in the coin itself.
MIning doesn't require that you have any crypto. However, it has become increasingly competitive - and increasingly costly - today.
In the early days of Bitcoin, people could mine the asset on their computers without any problem. However, the network has grown, and competition to mine has become stronger. This means that you will need much higher computing power to mine, and your computer’s CPU won't quite cut it.
Today, you will need an Application-Specific Integrated Circuit (ASIC) to even have a shot at mining. ASICs are pretty expensive, so mining is a pretty significant investment. You’ll need about $4,000 to get a high-quality ASIC.
Also, you need to consider the cost of electricity. Mining takes up a lot of power, and you need to be able to offset those bills. So, while mining can offer some passive income, you also need to be ready to invest it.
Mining is the process by which several assets (such as Bitcoin, Bitcoin, etc.) are created. However, some coins are created by a process known as staking.
In its simplest sense, staking is an alternative to mining that uses much less energy. It involves keeping funds in a suitable wallet and performing several tasks in order to receive rewards. These tasks can include validating transactions, contributing to network stability, and much more.
Staking networks use proof of stake (PoS) as their consensus algorithm - unlike mining, which uses proof of work (PoW).
Usually, staking simply means setting up a wallet and holding the coins. In some cases, you could add your coins to a staking pool. Some exchanges will assist you in doing this - all you have to do is deposit your coins and they’ll handle the rest on your behalf.
Staking is easy because it doesn’t require any effort. In most cases, all you have to do is deposit the funds and you’re ready to go.
Get an Interest-Bearing Account
Another interesting way to generate passive income as a crypto enthusiast will be to get an interest-bearing crypto account.
Several companies offer this service. For instance, BlockFi enables crypto holders to earn a 6.2 percent annual yield on their crypto holdings by storing them in a BlockFi Interest Account. The account accepts Bitcoin and Ether, and you need at least 1 BTC or 25 ETH to qualify.
BlockFi lends these funds to institutional and corporate borrowers on an overcollateralized basis, so the loans perform well and customers get their interest.
With interest-bearing accounts, you can get passive income in the form of regular interest payments while your coins also stay in your possession.
If you would like to be more involved in how your coins are being used, you could simply engage in crypto lending to generate your income.
Several peer-to-peer lending platforms allow you to lend your assets to crypto companies or professional traders. They need funding. You want returns. It’s perfect. For instance, on BTCPop, you can lend crypto to marketplace participants and get your interest.
Or, if you think that peer-to-peer loans are a bit too risky, you could always lend to margin traders or exchanges.
For instance, Bitfinex allows you to lend fiat and crypto to margin traders who use your money to fund their trades. In exchange, you earn interest. The interest is pretty small, but it could easily compound over time and grow from there.
Of course, you should understand that lending cryptocurrencies will carry risks. The borrower could default on your loan, so you need to diversify your loan portfolio to several loans and be careful to assess the borrowers before you give out loans.
Some crypto companies will also give you rewards for bringing more users to their platforms. You get an affiliate link, refer people, and show them how to use the platform. In exchange, you get coins. It’s basically affiliate marketing, but for crypto.
If you have a blog or a social media platform that gets views, affiliate marketing can be pretty lucrative for you. However, try not to get affiliated with scam companies and low-quality projects. Do your research before joining and be sure that the company is legitimate.