How Can You Generate Passive Income With Crypto?
If you’re interested in finance, you’ve probably heard the term ‘passive income’ many times. In simple terms, passive income is the money you receive without having to work for it. It is the direct opposite of active income which is your regular 9–5 job. You make money even when you sleep.
You can generate passive income through things like real estate and dividend stocks, to mention a couple. The conventional way of generating passive income through crypto is by buying cryptocurrency coins and if there’s an increase in the value of the coin you purchased, Hurray!!, you have made money passively. However, if the value of the coin reduces you can still say you have lost money “passively”. The crypto market — as we all know — is a very volatile market and predicting it is like predicting the snowstorm in Africa.
In today’s article, however, I’m going to take you through some other ways you can generate passive income with crypto other than just buying and holding crypto.
Stake your Crypto
When you stake your crypto, what you are doing is that you are committing your assets to support a blockchain network and helping it to confirm transactions. The good thing is that by staking your crypto you get a yield on your holdings (staked assets). Coins like Polkadot, avalanche, Solana, Cardano offer staking rewards. Ethereum as well still offers its users staking rewards but this is via the beacon chain.
https://twitter.com/CryptoNecroman/status/1487359975378894851?s=20&t=TTq7m2BdB9UpT1EWAvL97g
Your yield is dependent on the amount you stake and other extra costs like commission. However, by staking you are expected to earn 5%-15% of what you staked, per annum. It is also important that you know that you get paid in the same cryptocurrency you staked. The implication of this is that if the value of the coin you used in staking drops you will lose money. All things being equal if the value of the crypto increases you can earn more as well.
https://twitter.com/JWeb777/status/1489595604032319492?s=20&t=TTq7m2BdB9UpT1EWAvL97g
Save your Crypto
No, I am not talking about holding your crypto. This is just like keeping your money in a regular savings account in the bank, just without the extremely low-interest rate that is beaten by inflation.
By keeping your crypto in a centralised savings account you can earn passively from the interests. Platforms like Huboi and Binance still make it possible for you to earn from your deposits. Decentralised platforms are not left out as you can still earn from your Stable coin deposits.
This is by far the most simple way to generate passive income from crypto on this list. You should however be worried about platforms that offer very high-interest rates as there is a 99.9% chance that it is a Ponzi scheme. You can expect an extra 5 to 20% per annum from your saved crypto.
Join a crypto fund
Remember at the beginning of the article I said something about being able to earn money even when you are asleep and you do not have to work at all when it comes to passive income. This was not entirely true as you still need to put in little work and carry out periodic maintenance.
This is not the case when it comes to crypto funds as it is entirely passive. A crypto fund is just like a hedge fund; crypto funds make it possible for you to be able to generate income from using your digital assets.
However, just like a Hedge fund you still need quite a huge sum of money to get started. An example of a crypto fund is Grayscale . How much you can earn is totally dependent on the crypto fund you joined. A report however of the past annual earnings will be shown to you. Not all funds will perform at the same level.
https://twitter.com/kratikl_/status/1489516130977083397?s=20&t=TTq7m2BdB9UpT1EWAvL97g
In the words of the great Warren Buffet, “If you can’t make money while you sleep, you will die working”. Generating passive income is one of the key steps to take when on a journey of financial freedom. You do not necessarily have to use all of these methods or spend a long time researching which of them is the best.
Just hop on any and ride the wave.
