4 Easy Ways to Earn Passive Income With Crypto
Cryptocurrency has emerged as a popular investment option in recent years, and many people have purchased digital assets with the hope of making much more than just "a profit." The “true believers” in crypto who have embraced this new thought paradigm know never to sell their “digital assets,” but to use these new forms of wealth to create passive income. In this article, we will explore some of the best ways to use your cryptocurrency to generate passive returns. 1. Staking is a process where you hold a certain amount of cryptocurrency in your digital wallet or centralized exchange; and these holdings help to validate transactions on the blockchain network. In exchange for your contribution, you will receive a percentage of the transaction fees as a reward. This is a great way to earn passive income with cryptocurrency, as it does not require any active participation from you. Usually, the longer the duration you choose to “stake” your crypto for, or the longer the “un-staking” process takes, the greater the passive returns. Some popular cryptocurrencies that readily support staking include Ethereum, Cardano, Polkadot, and Solana. Some popular exchanges that allow you to stake your crypto are Binance/Binance.US and Coinbase; they do however have a limited number of cryptos available for staking. There are MANY different types of “staking;” the Cryptocurrency Crash Course at this time only recommends staking protocols/programs where you receive back more of what you stake. Some platforms will allow you to stake for example a $HBAR to receive back an $HBARx; which you can then utilize to borrow against in a sort of infinite banking system; but these solutions have not been tried and tested long enough to really know their safety/efficacy. If you'd like to learn more about staking, this article on Coindesk "Crypto Staking 101" is well done. 2. Lending Cryptocurrency: lending platforms allow you to lend your digital assets to other users in exchange for interest payments. These platforms operate similarly to traditional lending institutions, but instead of fiat currency, they deal with cryptocurrencies. Within the "lending" aspect of crypto, one can do both investing and borrowing. Investing involves loaning out your cryptocurrency or fiat currency to earn returns on the loan, much like a high-yield savings account. You can do this by opening a crypto savings account or by loaning funds directly to an individual through a peer-to-peer lending platform.
On the other hand, borrowing against your cryptocurrency allows you to receive cash without selling your assets. This is done through a crypto-backed loan that pays out in fiat or stablecoins. The process is quick and easy, with no credit check required, and most loans are processed on the same day that your crypto collateral is received. The most popular lending platform at this time is Nexo. These platforms offer attractive interest rates on your cryptocurrency holdings, which can provide a steady stream of passive income. With that said, entities like BlockFi and Celsius Network were extremely popular, but due to poor business practices became insolvent and filed for bankruptcy. Any company you use, make sure they have "proof of reserves" and a good track record.
If you'd like to read more about "lending," this article "How crypto lending works for investors and borrowers" is very well done. 3. Masternodes are nodes that perform advanced functions on a blockchain network, such as validating transactions and enabling privacy features. In exchange for running a masternode, you will receive a portion of the block rewards as a reward. Masternodes require a significant investment of cryptocurrency upfront, and you will need to have technical knowledge to set them up. However, they can provide a high rate of return and can be a great way to earn passive income with cryptocurrency.
Perhaps the easiest and certainly one of the best crypto projects you can set up a masternode for is Cardano. This article Best Masternode Projects – Most Profitable Masternode Cryptos is interesting, but with that said, it seems to be pushing many projects that are very new; so be warned and always do additional research. 4. Yield farming is a relatively new concept in the world of cryptocurrency, but it has gained popularity in recent years. Yield farming involves using your cryptocurrency to provide liquidity to decentralized finance (DeFi) protocols in exchange for rewards. DeFi protocols offer attractive interest rates for providing liquidity, and these rates can vary based on market demand. However, yield farming is a high-risk strategy and requires careful consideration before investing your cryptocurrency. Part of the risk is picking the platform itself; Uniswap, Compound Finance and Balancer are all very different and highly recommended because of their historical record thus far. Another risk is making sure to only click on valid links; there are many scams created to purposefully deceive you.
This article: "A Beginner's Guide To Yield Farming" provides more in-depth information if you'd like to continue learning about this option. Conclusion: These are some of the best ways to use your cryptocurrency to generate passive returns. Each method has its own benefits and risks, and you should carefully consider your investment goals before choosing a strategy. As with any investment, it is important to do your research and understand the risks involved before investing your cryptocurrency or consult a quantum financial educator whose affinity is towards teaching you what is best for you; rather than pushing specific technologies, protocols or environments.
If you'd like to learn about "mining" for cryptocurrency; this is an entirely different animal and not considered an "easy" way to earn passive income; especially if you'd like to mine for Bitcoin. At this time, the easiest barrier to entry; from the cost of your equipment, technological know-how, and electricity is: the people's network: Helium. The mining machines are about $500; they use about $1.50 in electricity per-month, and you receive HNT coins that you can keep or convert to Bitcoin to Ethereum.