7 ways to Earn Passive Income Using Cryptocurrency

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In this article, we’ll cover 7 of the best ways to earn passive income with cryptocurrency. From mining and trading to staking and investing in dividend tokens, there are many opportunities for generating a steady stream of revenue from your crypto holdings. As always, do your due diligence before committing any funds.

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1. Staking Coins

Proof-of-Stake (or PoS) cryptocurrencies secure their blockchains by having users lock or hold coins into a crypto wallet. In return, stakers are rewarded with newly created cryptocurrency.

Staking has become a popular way for long-term “HODLers” to earn interest on their crypto assets.

Staking coins like NEO, Reddcoin or Komodo allows you to earn around 5 percent interest on your holdings.

If you are considering earning passive income with cryptocurrency, it will require significant technical expertise and careful planning. A good way to stay in the know is by regularly monitoring the project’s overall profitability and circulating supply so that you don’t get scammed.

2. Interest-Bearing Crypto Accounts

An interest-earning account enables you to earn passive income while holding your assets. With up to 80% of its revenue processed into weekly passive interest payments, Celsius Network is making it possible for everyday people to earn an income with no credit checks.

3. Cloud Mining

Cloud mining is a method of earning cryptocurrency by renting computing power from specialised farms. In exchange, cloud mining operators charge monthly fees on their contracts.

4. Running a Lightning Network Node

The lightning network is a second-layer technology that can handle more transactions while keeping the fees low. It works by offloading transactions onto its own second layer, meaning they are processed without going through each and every transaction’s blockchain updates and entries. Transaction information about when a payment came in, where it went, who it was sent to is all recorded on chain but only an amount of space is needed for the number of payments handled with this system.

Running a Lightning node can be difficult and the profits aren’t guaranteed.

5. DeFi Lending

Decentralised financial applications like BTCPop operate without a central administration or third-party intervention. Unlike on centralised peer-to-peer lending platforms, DeFi loans are executed autonomously by smart contracts.

With decentralised finance, many crypto lending platforms such as Compound or Aave allow users to offer loans using their associated cryptocurrency instead of placing the burden on a third party. This way, borrowers take out the loan directly and lenders are able to earn interest.

The Compound platform, for example, empowers token holders by giving them voting rights over important decisions like the technical upgrades and protocol updates. It is also worth mentioning that you can earn a higher APY in cryptocurrencies because your money would be deposited in lending pools on this platform.

Despite the proliferation of DeFi lending, much like P2P loans in general, they face high risks. Protocol hacks on less-established platforms have been an almost weekly occurrence during the DeFi boom of 2020.

6. Yield Farming

One way to earn passive income with cryptocurrency is through yield farming.

If you trade using the Binance Smart Chain-powered yield farm PancakeSwap, you can earn income from trading fees by depositing tokens into your trading pool. LP tokens are now available for staking on this platform and they will reward with CAKE dividends.

Yield farming provides passive income if you can meet your investment goal. It is a risky venture, however, so be sure to do your pre-investment research well before beginning this endeavour.

7. Acquiring (And holding) Dividend-Paying Tokens

Cryptocurrency exchanges are creating their own digital assets which can provide discounts on trading fees and the platform profits to their holders.

These types of tokens work by rewarding their holders through dividends. Holders are rewarded with a percentage of the network’s profits in the form of transactions, while also securing their investment with an easy-to-use staking wallet.

Kucoin token holders, and Bibox token holders can earn passive income through dividends from KuCoin or Bibox. Nexo also offers its own token which offers a dividend.

Disclaimer: Cryptotravellers or the author are not a financial advisor and the information in this article is not financial advice and should not be construed in this way. This article contains affiliate links.

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