Cryptocurrencies have become one of the most important digital assets in modern technology.
However, cryptocurrencies are still in their early stages, and some are still under development. Nonetheless, cryptocurrencies like Bitcoin, Ethereum, Litecoin and Dash have enormous potential to transform the traditional global financial system.
You should also ask yourself if it is possible to earn passive income from crypto assets. There are many ways to generate passive income from crypto assets. In this article, we will be discussing 12 ways to make passive income from crypto.
What is Passive Income?
Passive income is an income stream that requires minimal interaction or time-consuming activities to generate a profit. With the collapse of traditional financial infrastructure, ridiculously low-interest rates plaguing the bond and Treasury bill markets, and savings account interest rates as low as 1.15%; the crypto industry may offer people a more lucrative opportunity than traditional systems with some cash to make their money work for them and receives a passive income in addition to their active income.
Passive income is one of the strategies for building and maintaining wealth. The average millionaire has at least seven different sources of income, at least half of which are passive. This means that High Net Worth Individuals (HNIs) are not actively trading their time for money. Instead, they let their money work for them.
12 Ways to Make Passive Income From Crypto
Mining is based on a consensus algorithm called Proof of Work (PoW). Cryptocurrency mining is the process of validating transactions between users and adding them to the blockchain’s public ledger. The mining process is also responsible for introducing new coins into the existing circulating supply and is one of the key elements for cryptocurrencies to function as a decentralised peer-to-peer network without needing a third-party central authority.
Mining is the most well-known method of generating passive income with cryptocurrencies. Bitcoin is the most popular and mature example of a mineable cryptocurrency, but it’s worth noting that not all cryptocurrencies are minable.
Staking is based on a consensus algorithm called Proof of Stake (PoS). Staking requires the purchase of certain cryptocurrencies running on PoS.
Those who own coins can lend the coins to the network, which can be used to verify transactions. The more coins you lend, the more the network rewards you. Staking is an easy way to earn passive income as the market pays you to hold cryptocurrencies for a period of time. It offers investors a more predictable potential return than others and does not require investment in hardware like mining.
Interest-bearing Digital Asset Accounts
Holders can use interest-bearing crypto accounts to earn fixed interest on idle digital assets. Imagine you put money in an interest-bearing bank account. The only difference is that the service only supports crypto deposits. Instead of holding digital assets in a wallet, you can deposit digital assets into these accounts and receive daily, weekly, monthly, or yearly income based on predefined interest rates. Crypto service providers offering such products include Nexo, Celsius Network, SwissBorg, BlockFi, e.t.c.
Certain tokens offer holders a fraction of the company’s revenue that issued them. You simply hold the tokens and are automatically eligible to receive a percentage of the company’s earnings. The number of tokens you own determines the percentage of earnings you receive. An example is KuCoin Shares (KCS), where holders receive a daily share of transaction fees generated by KuCoin blockchain asset exchanges. The amount received is proportional to the amount of KCS tokens held by each holder.
Yield farming is another decentralised or DeFi method to generate passive crypto income. This is achieved through the dynamic operation of decentralised exchanges, which are basically trading platforms where users rely on a combination of smart contracts (programmable and self-executing computer contracts) and investors to provide the liquidity needed to execute trades. Here, users do not trade with brokers or other traders. Instead, they trade funds that investors (liquidity providers) deposit into special smart contracts called liquidity pools. In return, liquidity providers receive a percentage of transaction fees from the pool.
Liquidity Provider (LP)
As a liquidity provider, investors with capital can provide liquidity to lending platforms by depositing equal amounts of USD trading pairs into smart contracts, thereby earning passive income in interest charges and other incentives. When liquidity providers make liquidity available to the platform, they receive transaction fees as a reward. Uniswap, the most popular decentralised cryptocurrency exchange, is a platform that enables liquidity in DeFi (Decentralized Finance).
An airdrop is a marketing gimmick that sends coins or tokens to wallet addresses to raise awareness of a new virtual currency. A small amount of the new virtual currency will be sent to the wallets of active blockchain community members for free or in return for small services, such as Retweeting posts sent by the company that issued the currency.
In order to receive a blank investment card, recipients may need to hold a minimum amount of cryptocurrency in their wallets. Alternatively, they may need to perform specific tasks such as posting about the currency on social media forums, connecting with a specific member of a blockchain project, or writing a blog post.
Centralised Lending Platform
Lending strategies that generate passive income on cryptocurrencies have a clear trend toward centralised lending. Investors rely on third-party platforms with fixed lock-up periods and interest rates.
Peer-to-Peer Lending (P2P)
Peer-to-peer or P2P lending offers people the opportunity to invest in small businesses without intermediaries.
Investors who want to borrow money can use the P2P lending platform to check how much money and interest rates they can get back after the loan is repaid.
P2P lending platforms are very similar to peer-to-peer trading platforms. Crypto lending platforms can help investors access passive crypto income calculators. They also give you more control over how you want to lend or invest your wealth.
Margin lending can generate passive income by lending assets to traders who wish to trade. Traders use borrowed funds to expand their market positions and repay the loan at a specified interest rate.
DeFi lending is an innovative method used by leading passive income generators to fund their borrowers. In decentralised finance (DeFi), intermediaries have been removed from traditional lending.
Browse the Web
Do you want to earn passive income with cryptocurrencies while surfing the Internet? Brave Browser might be for you. You can earn Basic Attention Token crypto by using your browser as long as you have the Brave Rewards program open.
Brave blocks typical ads and cookies but still gives you the option to view some ads in exchange for cryptocurrency. The program is available in most countries, and the company shares 70% of advertising revenue with users every month.
Read or Write Articles on Publish0X
Publish0X is a cryptocurrency platform that shares its advertising revenue with writers and readers in the form of free cryptocurrency. You can sign up for a free account using your Facebook or Twitter credentials or email sign up.
If you want to become an author, submit an author application, and you will be notified within 24 hours if you are accepted. Once you start writing articles, you get paid because readers give you tips on the site.
In addition, readers can keep some of the tips for themselves and thereby get paid in free cryptocurrency. You may get cryptocurrency in the coin described in the article, so you may end up with an obscure altcoin.
But reading or writing Publish0X articles is still a relatively easy way to earn passive income in cryptocurrency.
The passive crypto income opportunities listed in this article are just a few ways you can earn extra profits from your idle digital assets. Note that none of these opportunities is risk-free. Therefore, it is recommended that you do your own research, seek professional advice from a qualified financial advisor and determine the method that best suits your investment objectives.