There are ways to achieve a steady flow of cash without the daily commitment of a 9-to-5 job, but none are as passive as you’d like to think. Passive income requires effort; it’s just that your physical presence isn’t necessary at all times. You do what you do in the hope that it will pay off months afterward.
The world of cryptocurrency abounds with opportunities, so you can achieve a lot if you put your mind to it. Without further ado, this is how to earn passive income with crypto, which will lead to increased financial stability and security.
Give PoS Staking a Try
Ethereum is now a proof-of-stake (PoS) consensus mechanism, so the processing of transactions relies on validators that have a specific stake (an eligible currency). Staking involves locking up tokens on the blockchain to help validate transaction blocks, for which you’re rewarded. You’ll need a minimum of 32 ETH to get started.
View the latest Ethereum price, besides information about market capitalization, trading volume, and so on. The amount you can potentially earn is influenced by how much you stake and the current interest rate. Staking can yield anywhere between 4% and 10% annually, but you must store your ETH for years. You might be hesitant to accept this option if you want to spend your coins right away.
Learn To Earn
Applying blockchain technology in the education sector has given rise to an entirely new concept, i.e., learn to earn. It’s aimed at beginners but doesn’t neglect experienced enthusiasts. Incentives are offered for the acquisition of knowledge, which come in the form of cryptocurrencies.
Simply put, it’s an earning model that encourages technical know-how, therefore promoting cryptocurrency trading. An example is Binance’s “Learn & Earn” program, where those interested can learn the basics of everything related to blockchain and complete quizzes for the chance to earn free coins. In the future, we might see the adaptation of incentivized learning in traditional education.
Earn Interest by Keeping Your Crypto on An Exchange
Keeping your digital assets in an exchange wallet can turn out to be profitable. You can earn interest on your holdings, just like you would in a bank account. Crypto exchanges go the extra mile to draw in users and keep funds on the platform, so it doesn’t come as a surprise that they offer great returns.
Of course, the interest rates differ based on the cryptocurrency you choose and the supply and demand for crypto loans, often leveraged by savvy investors.
Most exchanges will let you buy cryptocurrency directly with your bank account. Popular tokens that people choose to earn interest on are Bitcoin, Ethereum, and Litecoin.
Related Reading: Here are some of the exchanges where you can purchase crypto.
Lend Your Crypto to Borrowers
Lend your funds to trading platforms, protocols, crypto users, or exchanges to generate dividends. The amount earned depends on the total value of the coins, the duration of the loan, and, last but not least, the interest rate.
At present, crypto enthusiasts want to borrow quickly without a credit check, so you can make passive income on the assets you’re holding. Common types of crypto lending are:
- Decentralized lending. It involves lending your funds to pools on lending and borrowing protocols and is similar to the traditional service offered by banks. The platform offers loans to the public or businesses without any intermediaries. You lend your digital assets and earn lucrative interest.
- Centralized lending. All loans are filtered via a central lending department/location, providing an alternative for those who don’t want to use decentralized lending protocols. Quality isn’t compromised for efficiency.
- Peer-to-peer lending. Individuals and businesses can lend to one another through an Internet platform. The repayment consists of the capital that was borrowed and the interest rate that was due, plus additional fees. Lending may generate extremely high-interest rates.
Invest In Dividend-Paying Coins
Some cryptocurrencies are backed by shares of equity in an organization, and dividends are paid on a quarterly basis to investors as part of the project’s revenue and fees. The distribution of the company’s earnings is decided by the board of directors.
It’s a kind of long-term crypto investment, meaning that you reap potential long-term rewards. Not counting currency tokens, pretty much every token represents an investment contract, offering a promise for passive income. Some blockchains have dividend-like features, so their currencies are similar to dividend tokens.
As opposed to stocks, holding dividend-paying coins doesn’t give you the right to ownership in the company.
Play Online Games
The explosion of popularity of play-to-earn games can be attributed to the emergence of games such as Sandbox, Decentraland, and Axie Infinity. The online games let players earn cryptocurrency by completing tasks, fighting other players, and progressing through game levels.
Simply put, you can earn passive income by having fun. In some countries, play-to-ear games allow people to make a living. Attention must be paid to the fact that some games require an initial investment while others can be played for free.
Before you get started, check the token’s total supply, the release cycle, the incentive to hold or stake, use cases, and so forth.
Run A Lightning Node
In case you didn’t know, a lightning node is a piece of software that attaches to the blockchain network (i.e., Bitcoin, Litecoin); in other words, a gateway to the ecosystem. The Lightning Network only needs one node to verify transactions that connect with it.
Owing to decentralization, anyone can run a node, no matter what network they’re using, and receive a small reward by passing payments across the network. The fees tend to be low, so running a lightning node doesn’t generate too much income. It’s not a good way to earn a substantial income.
To sum up, there are several strategies to generate passive income with cryptocurrency, some offering better returns than others. These endeavors require a lot of work and constant effort, so it’s not possible to make money while you sleep. Genuinely passive income exists, but it only applies to the rich. Understand what rewards and benefits come with using your crypto holdings to decide what suits your needs or not.