How to make cryptocurrency generate passive income?
You have finally bought cryptocurrency. Question: what to do with it next? Trading is a rather risky and very nervous activity. The simplest strategy for making money is hodling, but this also requires remarkable endurance. There is no guarantee that the market will quickly move in the direction you want without sideways and rollbacks.
For those who do not plan to actively trade cryptocurrency, there are several ways to earn passive income from digital assets. Some of the most common methods include crypto deposits, mining and staking, although there are other options.
A crypto deposit is one of the easiest ways to earn passive income, and it can be used even by those who are not very familiar with the world of cryptocurrencies. Essentially, a crypto deposit can be compared to a traditional bank deposit, except that all processing of funds takes place in cryptocurrency.
The principle of operation is that the platform providing the service blocks the assets provided to it for a predetermined period and returns them to the owner with interest after this period. There are many such programs on the market, and their profitability depends on the level of interest rates, the terms of the deposit and the amount of investment.
Mining is an integral part of blockchains that use the Proof-of-Work (PoW) consensus algorithm, which includes cryptocurrencies such as Bitcoin, Litecoin, Ethereum Classic, Dogecoin and others. This method of generating passive income is one of the oldest and it is not necessary to own the cryptocurrency itself to start.
The mining process involves using the computing power of your own equipment to ensure the security of the blockchain network. In exchange for their computing efforts, miners are rewarded in the form of the blockchain’s native currency.
However, a significant disadvantage of mining is the need to purchase expensive equipment. Nowadays, mining cryptocurrencies with high market capitalization has become inaccessible to ordinary people. There is a way out, because many crypto exchanges provide access to mining pools. Some small cap coins can be mined on user level devices and then convert XMR to BTC or other cryptocurrency.
One of the less resource-intensive ways to earn passive income in the world of cryptocurrencies is by staking in cryptocurrencies that use the Proof-of-Stake (PoS) consensus algorithm. Its key difference is the need to hold a certain number of coins.
Staking involves using your own cryptocurrency assets to support the security and functioning of the blockchain network. In certain cases, these coins can be delegated to a specialized platform that will add them to its staking pool, increasing staking revenue. In exchange, the platform will pay the asset owner to “rent” his coins.
Another way to earn passive income in both Proof-of-Stake (PoS) and Proof-of-Work (PoW) networks is to run your own master node. A master node is a node on a cryptocurrency network that is used to validate transactions on a decentralized network and therefore either reject or add a new block to the blockchain.
To run a master node, you need to have the necessary equipment, a static IP and the appropriate skills. In return, network participants who are willing to make significant initial investments are given special privileges by the crypto project organizers.
Read Also: Possible to trade Crypto Securely
Another way to earn passive income offered by some cryptocurrency companies is not directly related to the cryptocurrency itself. These companies pay their clients rewards for attracting new users, so-called referrals.
Referral programs allow you to earn money by trading with other users you refer. For each transaction of your referral, be it an exchange of ARK to BTC or BTC to ETH, you will receive a small percentage.
Unfortunately, you won’t be able to earn money quickly, a lot, and without any investments. And the crypto market is also no exception, although at the present stage of development it already provides no less opportunities for earning money than the traditional financial system.