Earning passive income on your idle crypto assets is a great example of how you can make your money work for you. To some people passive income might appear as getting something with putting zero effort or offering nothing in exchange.
Although it has a ‘get-rich-quick’ appeal, generating passive income still involves work upfront then you’ll be able to reap the reward over the long haul. Investing in cryptocurrencies can be well-paying if managed correctly, however, there are still risks associated with it. To cut that risk, remember, if you don’t take the required time to learn about the crypto industry, you could lose your investment.
Of course, there is no “one size fits all” advice when it comes to earning passive income from crypto. If crypto, airdrops, mining and blockchain sounds Greek to you, check out this article: 15 Crypto Terms You Must Know Before Trading!
However, since you’ve landed on this page, chances are that you already have crypto or at least heard about cryptocurrencies and you’re looking for ways to create a passive income stream of revenue that doesn’t involve you being somewhere doing something for extended periods of time.
Here are 5 ways you can generate passive income from crypto!
Airdrops is one of the best ways to start earning crypto to begin with. It’s a win-win situation that emerged prominently in recent times and involves a crypto project giving out free coins or tokens to those who sign up just to encourage people to use their platform and spread the word about their new experience.
But come with other risks, some scammers use it as a disguise to either steal info or steal from users. Remember, conducting a background check is essential to protect yourself and gain a better understanding of the project you’re opting to.
Stake Your Cryptocurrencies
Staking your crypto is excellent for obtaining additional value from your crypto assets. Crypto staking is a process that is used to verify cryptocurrency transactions on a blockchain that utilises consensus mechanism called the Proof of Stake (PoS).
PoS involves committing some of your crypto holdings to support that blockchain network and confirm the transactions and as reward the participants will earn passive income on the holdings that they risked or put on stake to insure the safety of the network. Blockchains like Solana, Polkadot, Ether, and Cardano use PoS. It is somewhat similar to earning interest from a regulare bank account.
This is a straightforward strategy that takes advantage of CPUs that you’re not using anyway and turns it into a money-making opportunity. The first key thing here is to understand that mining bitcoin means creating it.
Bitcoin is created through a process called mining in which a network of decentralized computers compete to solve very complicated mathematical problems to approve and verify transactions of the cryptocurrency on the network. The miner who verifies more transactions gets rewarded 6.25 bitcoins, a share of the mined bitcoin.
To avoid such high costs and maximize the returns, miners joined resources, computer forces and capabilities to create what is called mining pools.
You may be able to earn some extra money by simply lending to others on dedicated platforms just like in traditional finance.
This involves lending fiat money to a crypto-owning borrower or crypto in accordance with a specific interest rate. You can sit back and relax and just collect your interest payments while securing the said loan by taking a security interest over the borrower's crypto assets.
Yield Farming or Liquidity Farming
Simply put, yield farming means writing smart contracts in which you put your crypto holdings temporarily at the disposal of some startup's application to earn its owner more crypto liquidity; this why it is sometimes called liquidity mining.
This way you will earn interest on your crypto holdings in the form of annual percentage yields (APY). It is similar to buying shares or early investing in a project you believe in.
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