How to Earn Passive Income with Crypto
You may think that the only way of earning money with crypto is to get in early and sell big when the prices go up. It’s a solid strategy, but not the only one worth pursuing. There are several ways you can earn income in the crypto world. Let’s look at a few!
Mining is an excellent way of making a passive income with crypto coins. Mining uses computational power to solve problems and verify transactions. A crypto miner has to show that they’ve solved the problem, known as “proof of work”, and receive coins in exchange. This used to be an easy way of earning coins, but mining has become expensive and competitive. The more power collectively working on mining for coins, the greater the difficulty. This increase is deliberate to keep production levels stable. With large mining farms using huge amounts of electricity, it’s become challenging for individuals to compete. However, it can be really profitable if you have an ASICS rig and the right tools in place, particularly in colder climates where machines are less likely to overheat. There’s another alternative to traditional mining, through the cloud. This does not require a hardware mining rig. Miners can rent hashing power from another operation for a fee. The contract owner receives the coins according to the size of their contract. Unfortunately, there are a lot of cloud mining scams doing the rounds, so it’s a risky avenue to pursue.
If you don’t want to invest in the equipment (and utility) cost of mining, you can try staking your cryptocurrencies. Staking is a means of using your crypto holdings to earn additional rewards, similar to earning interests or dividends on investments or stocks. If you have coins on a blockchain that operate on a proof-of-stake basis (like Ethereum 2.0), you can lend your coins to the network to validate transactions. The network will then reward you with extra coins for your efforts. The more you stake, the more you get paid. Users usually pool their resources to earn more. You’ll usually need a minimum investment to start a staking pool.
You can also earn free crypto coins through airdrops! Airdrops are a simple way to get started with crypto investing. Think of airdrops like samples given away at supermarkets or free products sent to influencers in exchange for coverage. Many crypto companies give away their coins to their blockchain users or social media fans to encourage them to use their platform. It’s literally free money, so you can see the appeal, but there are some risks you should be aware of. Scammers often fake airdrops to steal user information. The best way to safely take advantage of airdrops is to use a new coin discovery and auditing platform like Coinscope. The community can view all of the upcoming airdrops that will be held by audited crypto firms, as well as past airdrops.
Lending cryptocurrency isn’t quite the same as staking, although the concepts are similar. You can earn money by lending coins to others on dedicated decentralized finance platforms. You can loan out coins or fiat money at specific interest rates and then collect the interest over time. The loans are secured by the borrower’s crypto assets. There are different types of lending:
- Decentralized or DeFi lending, which lends money directly through the blockchain and smart contracts without intermediaries.
- Margin lending lets users trade through crypto exchanges.
- Centralized lending is controlled through a third party where users deposit their crypto before earning interest.
- Peer-to-peer lending lets users lend each other money by depositing cryptocurrency into the lending platform’s wallet. With this method, you can set your own terms and interest rate.
Are you interested in investing in some of the exciting passive income cryptocurrencies ventures you’ve spotted online? Yield farming is all about writing smart contracts which put your coins at the disposal of a startup so that they can have more liquidity. You’ll earn APY (Annual Percentage Yields) interest on your crypto holdings and help out with a project that you are passionate about. Yield farming is one of the most lucrative ways of earning money from cryptocurrencies, but it is very complicated, and you will need to do a lot of research before venturing into this option.
Earn Transaction Fees
Your blockchain has two layers, the app layer and the implementation layer. Developers build apps known as Dapps on the first layer, but the second layer has the ability to process transactions. You can invest in this layer through lightning nodes. Be warned: it’s slow going, and it takes time to earn returns this way, but as usage increases, so do your profits. Tokenized Stock Tokenized stocks are cryptocurrencies backed by equity shares. These tokens offer payouts similar to dividends. Businesses use tokenization to raise capital, and the investor earns a payout. These tokenized stocks are few and far between, but you can find them on licensed exchanges. Unlike buying shares, you don’t actually have ownership in the business but purely a derivative thereof that sees you earning a payout based on its performance.
There are many ways of earning a passive income crypto after investing in crypto coins. Like everything else in the crypto world, these investments may be subject to volatility, and there is always the possibility of falling victim to a scam. But if you play your cards right, you can earn a steady income with minimal risk, even without technical skills. Keeping an eye on sites like Coinscope will give you access to reputable investments and trustworthy airdrops.