» 7 Ways to Earn Passive Income with Cryptocurrency
If looking for ways to earn passive income with cryptocurrency, you have landed on the right page. Here, we have mentioned the most lucrative and safe methods to generate a considerable income stream through crypto investments.
So, without any further delay, let’s see what we got here.
Table of Contents
- Staking
- Crypto Interest Accounts
- Lending Platforms
- Cryptocurrency Mining
- Liquidity Pools
- Affiliates and Referrals
- Airdrops
- Final Thoughts
1. Staking
Staking is a viable method of earning passive income with cryptocurrency. This allows earning staking rewards for validating the transactions and similar other network-related functions. For this purpose, you need to keep or hold and keep a particular amount of cryptos in a specific digital wallet. There are multiple types of staking that can help you earn passive income, you can learn more about staking here.
Staking also involves adding or delegating funds to bigger platforms i.e. Staking Pools. Staking networks usually depend on Proof-of-Stake (PoS). It is a consensus algorithm, which is further divided into two types. These include:
- Delegated Proof of Stake
- Leased Proof of Stake
Delegated Proof of Stake
When it comes to the ‘Delegated Proof-of-Stake’ (DPoS), this involves an act where network participants vote and elect delegates for validating the next block. The delegates are referred to as the block producers or witnesses. Through DPoS architecture, you are permitted to vote on a particular delegate.
While doing so, you need to pool your tokens into a staking pool. Besides, you also need to link your tokens to a delegate of your choice. When using DPoS, transferring your token to a specific wallet isn’t necessary. On the contrary, you just require a staking service provider for staking your tokens in a staking pool.
Leased Proof of Stake
This is a consensus mechanism, which is particularly used in the Waves blockchain. Here, network participants lease crypto tokens to a node, which is expected to create the next network block. If a node has successfully gathered more tokens, it will be given the authority to create a new block and get the reward.
Platforms Offering Staking Services
Here are a few of the most popular platforms offering staking services:
2. Crypto Interest Accounts
Just like a conventional savings account, a crypto interest account allows you to earn interest by keeping your cryptocurrency in a digital wallet. This method of earning passive income with cryptocurrency is relatively safe. Generally, crypto interest accounts offer different interest rates depending on whether you want to collect your interest daily, weekly, monthly, or yearly.
When choosing a platform, make sure to go for an option that offers higher interests without compromising the safety of your cryptos. In addition, the platform must accept a variety of crypto assets. By keeping these aspects in mind, you can get the maximum return on your investment.
Popular Crypto Interest Accounts
Listed below are the best platforms offering a crypto interest account:
3. Lending Platforms
You can earn interest by lending your cryptos to a lending platform. There are four major types of lending platforms:
- Centralized Lending Platform
- Decentralized Lending (DeFi Lending) Platform
- Peer-to-Peer Lending (P2P)
- Margin Lending
Centralized Lending Platforms: These platforms offer fixed interest rates. You just need to transfer your cryptos to such a platform.
DeFi Lending Platforms: On the other hand, DeFi lending doesn’t involve any intermediary. Lenders and borrowers depend on a programmable and self-executing contract referred to as the “Smart Contracts”. DeFi Lending offers a variable interest rate, which depends on the term of investment.
Peer-to-Peer Lending (P2P) Platforms: These platforms give users an opportunity to define their own terms and conditions. For instance, you can set the desired interest rate and lending amount on your own.
Margin Lending Platforms: This platform relies on a specific strategy. Here, you offer cryptos to the traders. After borrowing cryptocurrency, these traders repay debts and strengthen their trading position.
4. Cryptocurrency Mining
Mining refers to a process where a blockchain network is secured by using computing power. It is one of the earliest methods of earning cryptos. You need specific mining equipment with ‘Application-Specific Integrated Circuits’ (ASICs). Mining requires upfront investment and technical knowledge.
In addition, there is a more user-friendly way of mining known as ‘Generalized Mining’. This method depends on cloud mining contracts. You just need to pay a fixed amount to a third-party platform for taking care of the technical aspects.
Top Bitcoin Mining Software
If you are interested in mining Bitcoin, here are the best Bitcoin mining software.
- CGMiner
- BFGMiner
- Awesome Miner
- MultiMiner
5. Liquidity Pools
Liquidity pools are referred to as the foundation of a DeFi ecosystem. Hence, these platforms serve as a trusted and viable method of earning passive income with cryptocurrency. A liquidity pool works on a simple yet effective principle. Here, cryptos are added to a platform for creating a huge pile of funds.
These funds are then utilized to facilitate DeFi-related activities such as lending, trading, and numerous other functions. The funds are secured via a smart contract. Being a liquidity provider, you can earn a sufficient amount of income in terms of trading fees charged by the lending platform.
Best Liquidity Pools
Take a look at these top-rated liquidity pools:
- Uniswap
- Curve Finance
- Balancer
- Convexity Protocol
- Bancor
6. Affiliates and Referrals
Affiliates and referrals also prove to be some of the most reliable ways to earn passive income through cryptocurrency. Numerous crypto businesses have introduced reward programs for referring new clients. If you have a large social medial following, this method can serve as an ideal option to earn passive income.
However, make sure to become an affiliate of a reliable and trusted platform. Because promoting a scam or less sustainable cryptocurrency could prove devastating for your credibility. So, do some research about a cryptocurrency platform before promoting it.
Top-rated Crypto Affiliate Programs
Here are the most popular crypto affiliate programs:
7. Airdrops
If you hold crypto-assets and interact with a crypto platform, possibilities are there that you would receive an airdrop. In fact, it is one of the easiest ways to earn passive income via cryptocurrency. Airdrops are associated with different blockchain-based projects. Here, developers distribute free tokens, which are received by the members of a crypto community.
In order to be eligible for airdrops, you require a crypto wallet address. This wallet is also used to collect an airdrop. A few popular crypto exchanges offer periodic airdrops to the members of their community.
Normally, airdrops are offered after a task has been completed. A few of the tasks include:
- Signing up for an account
- Sharing posts or Re-tweeting
- Trading crypto via a particular platform
Final Thoughts
To sum up, there are various ways to earn passive income with cryptocurrency. Some of these methods are more reliable and trusted. On the other hand, there are less credible ways with a high return on investment (ROI). Therefore, you should act wisely when choosing a method for earning through crypto.
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