Ways to Earn a Passive Income with Cryptocurrency

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Ways to Earn a Passive Income with Cryptocurrency

To this date, trading is still one of the fastest ways to earn in Cryptocurrency, but this will require your time and efforts to gain substantial income successfully. In addition, you will have to study and research to at least have a safe prediction of the future value of your chosen coin. 

Fortunately, you can still earn in Cryptocurrency passively for those who do not have the time and energy to trade; here is a list of possible ways to make a passive income in the Crypto world.

Mining

Mining in Cryptocurrency is the process of solving cryptographic equations to gain a bit of Cryptocurrency in exchange. This is done via high powered computers. When a user invests, trades or makes a movement within their assets, the details of that movement will be recorded on a distributed ledger called the blockchain.

Cryptocurrency mining is often costly, and the rewards are irregular. Building a computer mining rig will require high powered computers so that the chances of you getting rewarded for a particular cryptographic equation will be increased. Nonetheless, mining cryptocurrency has garnered a lot of investors because of how passive it is. You will have to turn your computer on, run the software, and you are good to earn. 

Staking

Staking is the equivalent of a “time deposit” for banking. This technique allows investors or cryptocurrency holders to generate additional value from their assets just by lying idly. Investors lock up their cryptocurrency assets to help the blockchain network for the validation of transactions. 

The staking time frame varies; it will depend on you and the cryptocurrency platform you are in. Of course, the longer the time your assets are locked up, the higher the yield. But it is not always wise to lock in all of your purchases for a more extended time because if it is staked, you can not move it anywhere, thus limiting the options for your resources to grow.

As stated above, staking will be efficient in the long term. Having a bitcoin price prediction in 2040 or any other coin, in general, will help you decide how much you will invest.

Dividends

Some tokens offer investors a percentage of the income gained from the company that created them. You have to hold that specific token or coin, and you are automatically subject to receiving dividends from the creators of that token. 

This technique will benefit both the investor and the company that created the token, the payout is usually stable, and this approach does not dilute the coin’s overall value. The downside for this is although the payout is steady, it is just a tiny percentage yield compared to staking. 

Lending

Lending in Cryptocurrency is a relatively new way of earning, but it has become one of the most popular methods of gaining income in the crypto world. You may think that this technique is easy and self-explanatory: you lend assets and earn interest in return. As a trader and investor at the same time, you can lend your digital assets to other investors using these four different strategies:

1. P2P or Peer-to-Peer lending

Users or investors are free to select the amount to be lent and the interest to gain. This usually takes place on a lending platform where you have to deposit your assets for the transaction to take place. The platform will match lenders and borrowers, like how the P2P trading platforms work.

2. Centralized lending

For this technique, you will solely rely on a third party. The interest and time frame for this method is fixed. Similarly to P2P lending, you will be doing the transaction on a lending platform.

3. Decentralized or DeFi lending

This strategy integrates blockchain into its process. Unlike the first two strategies, you will not need a lending platform or any third parties for the lending transaction to happen. Instead, the borrower and the lender will agree on programmable and self-executing contracts or “Smart Contract”, automatically determining the loan terms.

4. Margin lending

Lastly, this method is straightforward. First, you will lend assets to traders. Then they will pay you with interest. For this case, cryptocurrency exchanges will process the lending for you; you will have to make your assets available.

These passive income generating ideas in Cryptocurrency are just a guide to help you in deciding what strategy will best fit you. But do note that all of these methods are at risk. Therefore, it is wise to do your research or seek financial advice from experts to determine the strategy that will best suit you.