Whether you work in the private or public sector, money is essential. You want enough money to cater to personal needs and take care of your family. However, we know this is not possible if your only source of income is your salary. You require a passive income to complement your salary like wealthy people. Crypto provides many ways to earn passive income with crypto.
Today, there are numerous opportunities for middle and small earners to gain passive income from crypto. The cryptocurrency and blockchain industry provides a new digital economy that ushers in fresh ideas on passive income from crypto.
Therefore, if you are wondering how to make passive income from crypto keep reading. If not, you might want to visit our other niches for a more suitable topic.
Table of contents
See 15 Best Passive Income Ideas to Make Money While Sleeping in 2022
Excerpts from Readers Digest show that the financial plague affects over 50% of the American populace. Therefore, the need to find other ways to meet up with financial demands is now essential. While passive income may not be able to care for all your financial needs, it can go a long way to assist in financing the basic requirements.
If you have come this far, then congratulations, you are on your path to financial freedom. Nonetheless, before you proceed, it is essential to understand the concept of passive income and crypto.
What Does Passive Income Mean?
Passive income/residual income is the money you earn asides from your salary. Passive income does not necessarily require you to put in effort daily. You can make money from the comfort of your home or while enjoying your summer vacation in the Bahamas.
Passive income is different from your active income (salary). While active income requires you to be physically or remotely present to earn, the case is not so for passive income.
Active income usually places you on a fixed salary. On the other hand, the amount you can earn as passive income can vary.
Lately, the crypto and blockchain industry has made it easier to earn even while asleep. The question is, what then is cryptocurrency?
What Is Cryptocurrency?
The concept of digital currency (cryptocurrency) has been in existence since the 1980s. However, Bitcoin became the first officially launched cryptocurrency in 2008 by a pseudo developer, Satoshi Nakamoto. Bitcoin uses a peer-to-peer network that allows remote transactions between individuals.
The idea is to eliminate third-party interventions or central monetary authorities during payments. The system depends on complex mathematical algorithms to effect transactions in a safe digital environment.
Crypto makes direct transactions between two individuals possible via a P2P network. The identity of the users remains anonymous throughout the transaction. As it stands currently, hacking Bitcoin software is almost impossible to achieve. Hence, it remains a secure and great option to explore for passive income.
Below are the ten ways to earn passive income with crypto.
Top 10 Ways To Earn Passive Income with Crypto
Many people own Bitcoins that sit dormant in their accounts today. If you fall within this group, there are ways you can put these Bitcoins to use. First, you need to set up an effective system. The system will enable you to earn even while you are not actively available. Online platforms like Mine Dollar can be a great place to set up an account.
Once you have an effective system, you can combine different options to allow you to generate recurring passive income with crypto. The various ways you can earn with crypto are:
- Cloud mining
- Staking PoS coins
- Running Masternodes
- Interest-bearing crypto accounts
- P2P bitcoin lending
- Lending to margin traders
- Affiliate marketing programs
- Lending
- Yield farming
- Buying and holding dividend-paying tokens
Related: Is cryptocurrency investment the right option for your money in 2022?
#1. Cloud Mining
Among all the methods of earning passive income from cryptocurrency cloud mining is very popular. While the process of mining still has a lot of controversies, it is arguably one of the best ways to earn with crypto. Cloud mining requires you to rent digital mining hardware from specialized farms to allow you to earn income daily. You do not have to own and maintain hardware to start earning.
Many cloud mining operators like HashNest and Genesis Mining charge their clients a daily maintenance fee. There is no doubt that many people find this method a convenient way to earn with crypto. However, mining can take a lot of time to produce returns (over a year). There is also the risk of price fluctuation within this period.
What happens when the mining is no longer profitable? The operator cancels the mining contract. Hence, you lose your funds. Lately, several scam reports mar the mining industry, making investment difficult. Besides this, it is one of the best ways to earn passive income from crypto in your free time.
#2. Staking PoS Coins
PoS (Proof-of-Stake) cryptocurrencies make their blockchains secure through staking. In staking, the users lock or hold their coins in secure wallets. The process differs from the process of Proof-of-Work, which requires users to contribute their computing power to the network. Staking helps t secure the network. and in return, users earn newly minted crypto as rewards.
Lately, staking PoS coins is fast becoming a reliable way to earn passive income from crypto. Staking coins like Resscoin (RDD), NEO (NEO), and Komodo (KMD), you can earn as much as 5% interest per month on your holding. Staking cryptocurrencies can be a great way to earn passive income. However, it requires some level of technical professionalism. Therefore, before you stake any currency, it is best to become familiar with the process.
#3. Running Masternodes
Just like staking PoS, running masternodes can also be a great way to earn passive income with crypto. A masternode refers to a blockchain node that performs a specific function in the network. Community members establish nodes. Among the requirements of masternodes includes an initial investment of stake coins.
DASH, a privacy-based digital currency was the first to launch a masternode to help promote its PrivateSend functionality. To run a DASH masternode, you need to hold 1,000 DASH (current worth is around $230,000). When you become a DASH masternode operator, you earn a 6.45% ROI. You also enjoy the privilege of making suggestions in the governance decision of the project.
As an average investor in cryptocurrency, running a masternode can be an expensive venture. However, there are other masternodes available that you can set up. Masternodes. Online is of the view that over 250 masternodes coins are available online. For example, when you lend altcoins like ZCoin and PIVX you can operate a masternode with an excellent ROI. You will no longer need a huge sum to do so.
To become a PIVX masternode operator, you need only 10,000 PIVX, which equals $15,000. Holders can make as much as 10 percent yield per annum.
#4. Interest-Bearing Crypto Accounts
An interest-bearing crypto account is a relatively new practice in recent years. BlockFi is a popular platform that offers crypto holders up to 6.2% return on their holdings if they store them in BlockFi Interest Account (BIA). The cryptocurrencies that this platform accepts are Bitcoins (BTC) and Ethereum (ETH). The min deposit is 1BTC and 25ETH. BlockFi lends the funds you deposit to corporative and institutional borrowers with collateral. BlockFi uses over-collateralization to ensure that loans are effective.
Celsius Network, another decentralized financial platform, distributes up to 80% of its revenue to the Celsius community. The distribution process comes as weekly interest returns of around 13.30% APY on deposit coins. Interest bearing crypto account allows you to earn passive income while holding your coins.
SEE ALSO: What Is Collateralized Loan Obligations? How it Works, Pros and Cons
#5. P2P Bitcoin Lending
P2P lending is one of the direct approaches to earning passive income on your coin. Several P2P platforms allow you to lend cryptocurrency to crypto businesses and expert traders. An example of a platform that provides this privilege is the BTCPop. You can lend your crypto on a P2P basis and earn interest. The platform uses a reputation system to judge its members.
The risk of losing your funds is very high with the P2P lending option. However, study any borrower carefully before releasing your coin. If you are sure that you can handle the risk, P2P bitcoin lending can be a great source of passive income for you.
Also see: Top 10 Cryptocurrencies to Invest in 2022
#6. Lending to Margin Traders
If you a not comfortable with the risk of P2P lending, you can also try margin traders. Platforms like Bitfines and Poloniex are good places to find margin traders. They usually borrow to fund their leverage trades and pay daily interest on the funds they borrow. The daily funding rate for BTC stands at an average of 0.003537%. A cumulative of this sum amounts to a large amount over many weeks.
Lending to a margin trader is good if you want a more secure way to earn passive income. Nevertheless, not that this process also carries some risk. Since storing crypto assets on exchanges can expose funds to hackers, you should be careful before proceeding to payment.
#7. Affiliate Marketing Programs
Many crypto platforms are willing to pay you for refereeing new users to their sites. The good thing about affiliate programs is that you can join them for free. The first step to affiliate marketing is creating an account and obtaining your unique link to start sharing with others. Social media is great for sharing links and earning commissions.
One of the benefits of an affiliate marketing program is that it is easy to set up. You can also start earning almost immediately and continue for many years after your initial work. If you are a blog owner or enjoy large followership on social media, affiliate marketing can be a great way to earn passive income with crypto.
#8. DeFi Lending
Another way you can earn passive income with crypto is through DeFi lending. The system utilizes blockchain technology and works without the interference of a third party or a central administration system. Unlike other P2P lending platforms, DeFi lending uses an autonomous protocol driven by a smart contract. Platforms like Aave and Compound provide the opportunity to enlist their coins for lending and earn interest.
Because DeFi is transparent and does not require third-party permission to operate, it has become popular today. Lenders can provide loans, allowing borrowers to take them directly from the platform. The result is a reward in the form of interest on the initial amount.
#9. Yield farming
You can also try yield farming to earn passive income with crypto. Yield farming involves depositing your digital assets in a lending/ trading pool and staking the protocol token to earn interest.
E.g., if you are yield farming on Pancake Swap (Binance Smart chain-based yield farming), you will need to deposit two tokens into a trading pool. In return, you earn income from trading fees, and a pool token is known as an LP token. You then stake the LP token to receive yield farming returns in your protocol’s token known as CAKE.
Yield farming is a high-risk venture and not a good option for people that cannot tolerate high risks.
#10. Buying and Holding Dividend-Paying Tokens
One of the easiest and safest ways to earn passive income from crypto is buying and holding dividend-paying tokens. Today, many digital assets provide their tokens, and users can enjoy discount offers on trading fees. In other cases, they become eligible to benefit from the shares. KuCoin Token (KCS) and Bibox Tokens (BIX) are examples of profit-sharing exchange tokens.
Earning dividends from these types of tokens requires you to hold them on the issuing exchange. You can also stake them using an external wallet. The higher your tokens, the higher your passive income.
See Also: 21 Most Stable Cryptocurrency in The World Right Now
Summary
Note that there is no single way of earning passive income with crypto that is free from risks. So, before you try to earn passive income from crypto, ensure that you understand the risks. Mining, staking, and lending all have varying degrees of risk. Therefore, decide what you want and understand how to manage your crypto assets first. Ensure you know how to secure your asset holdings and private keys before trying out any passive earning methods with crypto.
You might also want to check out: Is CryptoCurrency a Good Investment? | Invest in Cryptocurrency
FAQs On Ways To Earn Passive Income With Crypto
Yes. There are many ways to earn passive income from crypto besides buying and holding.
Like other online businesses, investing in passive income with crypto has its risks and advantages. Taking the time to understand a passive income method will help you choose a safer path.
It depends on the method you choose. While some allow you to start earning immediately, others require time.
The difficulty depends on your method of earning. Some require only basic knowledge, while others require some expertise to comprehend the system.
Yes. The crypto ecosystem is one place that allows anybody to start earning. It also provides you with numerous fresh investment ideas to explore.
References
- repository.UPenn.edu —An Analysis of the Cryptocurrency Industry
- Osom.finance —10 Ways to Earn Crypto Passive Income
- National Library of Medicine — Bitcoin in The Economics and Finance Literature: A Survey
- Analyticsinsight.net — 4 Ways to Earn Passive Income with Crypto In 2022
- Blocksocial.com — Top 10 Ways to Earn Passive Income with Crypto
- Researchgate.net — An Analysis of Crypto Currency, Bitcoin, and the Future
Recommendations
