How to earn passive income with cryptocurrency
Passive income is one of the ways for generating and preserving wealth. A millionaire has up to six income streams with half of them being passively generated. This suggests that high-network individuals (HNIs) aren’t aggressively exchanging their time for money. They rather make use of their money to work for them.
Passive income is a type of revenue that does not involve any engagement or time-consuming work to generate a profit.
Ways to generate passive income with cryptocurrency
With the traditional financial infrastructure on its knees, the bond as well as treasury bill markets plagued by ridiculously low interest rates, and savings account interest as low as 1.2%, crypto trading provides better and profitable opportunities than the traditional system for people with money to invest, thereby making their money work for them and earning passively together with their active income. Passive cryptocurrency income can be generated in the following ways
The process of verifying user transactions and adding them to the blockchain public ledger is known as cryptocurrency mining. It is also responsible for introducing new coins to the existing supply, and it is one of the main components that allows cryptocurrencies to function as a community decentralized network without need for a central authority.
The most well-known method of generating a passive income using bitcoin is mining. Although Bitcoin is an example of a well-known and well-established mineable cryptocurrency, not all cryptocurrencies can be mined.
Stacking is based on the Proof of Stake consensus technique (PoS). Staking entails purchasing certain PoS-enabled cryptocurrencies. Coinholders can choose to lend their coins out to the network, to be used to process transactions. The more coins you lend the network, the more you will be rewarded.
Stacking is a simple technique to generate passive income by receiving payment from the market for holding bitcoins for a certain length of time. It provides a more predictable return on investment than other options, and unlike mining, it does not necessitate the purchase of expensive hardware.
An airdrop is a marketing method whereby a new virtual currency is marketed by delivering free coins or tokens to the wallet addresses of participants. Little quantities of the new coins or tokens are awarded for free or in exchange for a small task, such as retweeting a tweet published by the firm that created the currency, to the wallets of participants of the community.
A recipient may be required to possess a minimum amount of the crypto currency in their wallet to qualify for the airdrop. They may also be asked to complete a specific task, such as promotion of the coin on social media platforms, connecting with another participant, or writing a blog post about it.
The UNI token from Uniswap is an example of an airdrop token. All liquidity suppliers to the platform received 400 UNI tokens, which was an unprecedented payout. The UNI coin reached a high of over $40 at one point, giving platform members free thousands of dollars crypto merely for participating.
4. Liquidity Provider (LP)
Provision of liquidity to borrowing and lending platforms by deposition of the equivalent amounts of USD of a trade pair to a smart contract gives investors with capital the opportunity to earn passive income as interest fees. Transaction fees are also paid to liquidity providers that supply liquidity to a cryptocurrency platform. The most prominent decentralized cryptocurrency exchange, Uniswap, is a platform that facilitates the provision of liquidity in DeFi (Decentralized Finance).
5. Tokens that pay dividends
Buying and holding dividend-paying tokens is another option to make passive income in the cryptocurrency market. Although they are uncommon, exchange-issued tokens are the most prevalent type of digital token that pays a dividend. Several digital asset exchanges have launched their own tokens, which offer customers lower trading fees and, in some circumstances, a portion of the platform’s revenues.
To receive dividends, holders have to either keep these tokens on the exchange platform or stake them through an external wallet. The more tokens owned, the more the passive revenue that will be generated. KuCoin (KCS) is an example of exchange tokens that pay dividends.
Lending is a way to earn income on your bitcoin investments while being completely passive. Many peer-to-peer (P2P) lending businesses allow you to put your money in a savings account for a certain period of time in exchange for interest payments later. Interest rates could be as set by the platform or by the user.
This feature is built-in to the platforms of a number of exchanges that enable trading options. This strategy is ideal for long-term investors who intend to build their portfolios without putting much effort. It’s worth noting that acquiring cash is important.
7. Affiliate Programmes
There are some cryptocurrency companies that pay for referring new members to their platform. These can include affiliate links, referrals, or other types of discount offered to new members who are brought to the network by you.
If you have a large social media presence, affiliate programs could be a terrific way to augment your income. It’s typically a good idea to do some background study on the firm to avoid informing people about low-quality projects.
All this seven are best ways to generate passive income with cryptocurrency