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7 Popular Ways to Earn Passive Income from Crypto

Trading and investing in cryptocurrencies can be extremely profitable due to the high volatility of the crypto market. If done correctly, of course. But the possibilities of large gains for investors don’t come stress-free. Investors have to regularly track their portfolio, make quick, informed decisions and try to capitalize on profitable opportunities. Managing this kind of risk in a dynamic economic system is no easy task and can lead to many sleepless nights, as the crypto market is open 24/7, 365 days a year.

There are other ways to generate good gains in the cryptocurrency market without active participation in the markets. Passive income from crypto can be a solid income stream, if executed correctly, without all that extra effort and stress. In contrast to the HODL strategy many investors implement, some of which try to sell at a high point and later purchase Bitcoin, Ethereum, or other cryptocurrencies at a lower price, successful passive income investors play a different game. While HODLers freeze their assets by purchasing and holding, passive income investors reap solid revenues from digital asset ownership, similar to compounding interest, reinvesting dividends, or renting investment properties.

In an economic system where there are so many options where to place your investment, the opportunity cost is high. Users should be making informed decisions, especially in the crypto world, not to bet on the wrong coin at the wrong time, as money can be easily made and easily lost. Passive crypto income strategies allow your crypto assets to work for you, requiring a few smart choices at the start, leading to a stable stress-free revenue stream in the future.

With the power of blockchain technology more and more upgrades and features keep being swiftly implemented in the crypto world. In this article we’ll be covering the following current 7 main ways to earn passive income with cryptocurrency:

1. Crypto Interest Accounts

Yes, crypto savings accounts do exist and provide a sustainable and low-risk method to earn passive income through a fixed interest rate. Instead of placing your digital assets in a wallet, you can deposit them into interest-bearing accounts which offer a range of flexible and fixed savings plans. Generally speaking, fixed savings accounts don’t allow you to withdraw your assets before a set amount of time and, in turn, offer a higher rate of interest. However, unlike traditional bank accounts, there are 30-day fixed saving plans on USDT which might sound rather flexible to many.

2. Earn Crypto by Staking

Crypto staking refers to holding your digital assets in a specific staking wallet which is used by the network to perform different functions, i.e. validating transactions. You earn staking rewards with little effort when such functions are performed via the Proof-of Stake (PoS) consensus algorithm. When choosing the right network platform, it’s important to take into account its reliability, user population, and rates of return on your staking rewards.

3. Lending Platforms

Receiving a loan by a bank at appropriate rates in many countries is a challenge. This is one of the main reasons crypto lending services have been surging in popularity each passing day. Reliable lending platforms, both decentralized and centralized, offer these and many other services. Hence, earning passive income in the form of interest from lending your digital assets to borrowers could be a good investment strategy. Below you can see the four major lending strategies:

  • Decentralized or DeFi Lending
  • Centralized Lending
  • Peer-to-Peer Lending (P2P)
  • Margin Lending

4. Mining

The traditional and oldest way to earn passive income with crypto is through mining. The process of mining doesn’t require you to hold any crypto but rather to borrow your computing power in order to solve complex mathematical equations, rewarding you in return. Back in the day, mining Bitcoin was achievable on a regular PC or general-purpose mining rigs. However, as the hash rate increased over time miners are now using top-notch expensive mining equipment to stay competitive. Even though mining can be a good source of crypto passive income, its complexity has pushed regular people out of it.

Alternatively, cloud mining lets you rent out the computing power of a specialized mining rig located anywhere geographically. By paying a fixed amount for the service, you can use such enormous computing power to increase your chances of generating a winning hash rate.

5. Liquidity Pools

The idea behind liquidity pools is straightforward. As a collective contribution of funds secured through a smart contract, these pools can be used to facilitate lending, decentralized trading, and various other functions on a DeFi ecosystem. As a reward for offering their funds, liquidity providers earn passive income in transaction fees from others’ trading activity.

Some of most popular ones include:

  • Automated Market Makers (AMMs)
  • Borrow/Lend Protocols
  • Yield Farming
  • Synthetic Assets
  • On-Chain Insurance
  • Blockchain Gaming

In our article about liquidity pools we cover this topic in great detail.

6. Airdrops

Who doesn’t like presents? Developers offer free tokens to members of the crypto community in order to gain the public’s attention in the form of airdrops. If you are the owner of a specific wallet address and have completed a particular task, you will be entitled to receiving an airdrop. Many crypto exchanges offer regular airdrops to users who completed any of the following tasks:

  • Holding a specific smart contract-enabled wallet
  • Signing up or creating an account for receiving regular updates
  • Performing a task like re-tweeting or sharing a post
  • Receiving or sending crypto through a particular platform

7. Affiliates and Referrals

Almost every crypto exchange offers rewards for bringing new clients to their platform. If you have a large following on social media and/or have many friends who want to open a crypto account, luring them to the platform you are using can earn you substantial amount of passive income as an affiliate.

Conclusion

As explained above, there are many ways to earn passive income with digital currencies, depending on your technical knowledge level, effort, crypto lock-up period preference, and associated risk. The largest crypto trading platforms, such as Binance, Coinbase, Uniswap, BlockFi, provide a wide range of passive income lending service options at different rates. So make sure that you inform yourself as best as possible, avoid scams at all costs, and pick the right platform for your needs.

The opinions presented in this article do not in any way constitute trading, investing or financial advice.

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