The cryptocurrency industry has created a new digital economy that provides people with a variety of completely new ways to earn passive income online
Obtain Passive Income Online with Crypto
The cryptocurrency industry has created a new digital economy that provides people with a variety of completely new ways to earn passive income online.
In this guide, you will discover 8 ways to earn passive income with cryptocurrencies that you can start today.
What is passive income?
Trading or investing in projects is a way to make money in the blockchain industry. However, that usually requires detailed research and a substantial investment of time, but it still does not guarantee a reliable source of income.
Even the best investors can experience prolonged periods of losses, and one of the ways to survive is to have alternative sources of income.
There are other methods besides trading or investing that can help you increase your cryptocurrency holdings. These can pay ongoing income similar to accrued interest, but require only a little effort to set up and little to no effort to maintain.
This way, you can have multiple streams of income that, in combination with each other, can add up to a significant amount.
This article will explain some of the ways you can earn passive income with crypto.
What are the ways you can earn passive income with crypto?
Top 8 Ways To Earn Passive Income With Crypto
- Affiliate programs
- Blockchain-based content creation platforms
- Forks and airdrops
- Running a Lightning node
Best 8 Ways to Earn online Passive Income with Crypto
Some crypto companies will reward you for attracting more users to their platform. These include affiliate links, referrals, or some other discount offered to new users that you introduce to the platform.
If you have a larger following on social media, affiliate programs can be a great way to earn extra income. However, to avoid spreading the word about low-quality projects, it's always worth doing a little research on the services beforehand.
If you are interested in earning passive income with Binance, join the Binance Affiliate Program and get rewarded when you introduce Binance to the world!
Blockchain-based content creation platforms
The advent of distributed ledger technologies has enabled many new types of content platforms. These allow content creators to monetize their content in a number of unique ways and without the inclusion of intrusive ads.
In such a system, content creators maintain ownership of their creations and generally monetize attention in some way. This may take a lot of work up front, but it can provide a steady stream of income once a substantial backlog of content is ready.
Forks and Airdrops
Taking advantage of a hard fork is a relatively straightforward tactic for investors. It simply requires holding the forked coins on the hard fork date (usually determined by the height of the block). If there are two or more competing chains after the fork, the holder will have a balance of chips in each one.
Airdrops are similar to forks in that they only require ownership of a wallet address at the time of the airdrop. Some exchanges will do airdrops for their users. Keep in mind that receiving an airdrop will never require sharing private keys, a condition that is a tell-tale sign of a scam.
Loans are a completely passive way to earn interest on your cryptocurrency holdings. There are many peer-to-peer (P2P) lending platforms that allow you to lock your funds for a period of time and then collect interest payments. The interest rate can be fixed (set by the platform) or set by you based on the current market rate.
Some exchanges with margin trading have this feature natively implemented on their platform.
This method is ideal for long-term holders who want to increase their holdings with little effort. It is worth noting that locking funds in a smart contract always carries the risk of errors.
Binance Earn offers a variety of options that allow you to earn interest on your holdings.
In simple terms, a masternode is similar to a server, but it is one that runs on a decentralized network and has functionality that other nodes on the network do not.
Token projects tend to grant special privileges only to actors who have a high incentive to maintain network stability. Masternodes generally require a considerable initial investment and a considerable amount of technical expertise to install.
For some masternodes, however, the token holding requirement can be so high that it effectively renders the bet illiquid. Projects with masternodes also tend to inflate projected rates of return, so it is always essential to do your own research (DYOR) before investing in one.
Mining essentially means using computing power to secure a network and receive a reward. Although it does not require you to have cryptocurrency holdings, it is the oldest method of earning passive income in the cryptocurrency space.
In the early days of Bitcoin, mining on a daily Central Processing Unit (CPU) was a viable solution. As the network's hash rate increased, most miners switched to more powerful graphics processing units (GPUs). As competition increased further, it has become almost exclusively the playing field of application-specific integrated circuits (ASICs), electronic components that use mining chips tailor-made for this specific purpose.
The ASIC industry is very competitive and dominated by corporations with significant resources available to implement in research and development. By the time these chips hit the retail market, they are likely already out of date and it would take a considerable amount of mining time to break even.
As such, Bitcoin mining has become primarily a corporate business rather than a viable source of passive income for the average individual.
On the other hand, mining proof-of-work coins with a lower hash rate can still be a profitable endeavor for some. On these networks, the use of GPUs may still be viable. Mining for lesser-known coins carries a higher potential reward, but carries a higher risk. Mined coins can lose their value overnight, be illiquid, experience an error, or be hampered by many other factors.
It is worth noting that the installation and maintenance of mining equipment requires an initial investment and some technical expertise.
Running a Lightning Node
Lightning Network is a second layer protocol that runs on a chain of blocks, like Bitcoin. It is an off-chain micro-payment network, which means that it can be used for fast transactions that are not immediately transferred to the underlying blockchain.
Typical transactions on the Bitcoin network are one-way, meaning that if Alice sends a bitcoin to Bob, Bob cannot use the same payment channel to send that coin to Alice. However, the Lightning Network uses two-way channels that require the two participants to agree to the terms of the transaction beforehand.
Lightning nodes provide liquidity and increase the capacity of the Lightning Network by blocking bitcoin in payment channels. They then collect fees for payments that run through their channels.
Running a Lightning node can be challenging for a non-technical bitcoin holder, and the rewards are highly dependent on the general adoption of the Lightning Network.
Staking is essentially a less resource intensive alternative to mining. It typically involves keeping funds in a suitable wallet and performing various network functions (such as validating transactions) to receive rewards for participation. Participation (i.e. holding of tokens) incentivizes the maintenance of network security through ownership.
Staking networks use Proof of Stake as their consensus algorithm. There are other versions, such as Delegated Proof of Stake or Leased Proof of Stake.
Gambling usually involves setting up a gambling wallet and simply holding the coins. In some cases, the process involves adding or delegating funds to a stakeholder group. Some exchanges will do this for you. All you have to do is keep your tokens on the exchange and all technical requirements will be taken care of.
Gambling can be a great way to increase your cryptocurrency holdings with minimal effort. However, some engagement projects employ tactics that artificially inflate the projected engagement rate of return. Investigating economic token models is essential as they can effectively mitigate promising participation reward projections.
Binance Staking supports a wide variety of coins that will allow you to earn rewards. Just deposit the coins on Binance and follow the guide to get started.
What Are the Risks of Earning Passive Income with Crypto?
Buying a low-quality asset: Artificially inflated or misleading rates of return can entice investors to buy an asset that would otherwise have very little value. Some betting networks adopt a multi-token system where rewards are paid out in a second token, creating constant selling pressure for the reward token.
User Error: Since the blockchain industry is still in its infancy, establishing and maintaining these revenue streams requires technical expertise and an investigative mindset. For some incumbents, it might be better to wait until these services become easier to use or use only those that require minimal technical competence.
Lockdown Periods - Some lending or betting methods require you to lock your funds for a specified period of time. This makes your holdings effectively illiquid during that time, leaving you vulnerable to any event that could negatively affect the price of your asset.
Risk of mistakes: Storing your tokens in a betting wallet or smart contract always carries the risk of mistakes. There are usually several options available with varying degrees of quality. It is imperative to research these options before committing to one. Open source software could be a good starting point, as those options are, at the very least, audited by the community.
Ways to generate passive income in the blockchain industry are growing and gaining popularity. Blockchain companies have adopted some of these methods as well, providing services commonly known as generalized mining.
As products become more reliable and secure, they could soon become a valid option for a steady source of income.