Passive Income Crypto
Passive income is one of the ways of 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 OF GENERATING PASSIVE INCOME FROM CRYPTOCURRENCY
With the traditional financial infrastructure on its knees, the bond, as well as treasury bill markets, are plagued by ridiculously low-interest rates, and savings account interest as low as 1.2%.
Crypto trading provides better and more 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 the 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.
Coin holders can choose to lend their coins out to the network, to be used to process transactions.
The more coins you lend to 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 cryptocurrency 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 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 in 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 discounts 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.
INVESTING IN BITCOIN AS A PASSIVE SOURCE OF INCOME
BTC trading is much like investing in the stock market, except for the fact that BTC trading is more volatile due to daily fluctuations in price.
The following are the steps required investing in BTC:
1. Open an account with a cryptocurrency platform.
2. Transfer your capital from your bank account to your crypto account.
3. Buy BTC by depositing.
4. Sell afterward to realise a profit.
In most situations, these steps applies, however it is dependent on the trading platform.. You can purchase BTC by using your credit card or bankrolling your crypto account from your bank account.
In other platforms, you will be required to send BTC directly and this is called BTC direct deposit.
HOW TO MAKE DEPOSIT OF USD TO BUY CRYPTO USING COINBASE AS AN EXAMPLE
Coinbase is among the most popular exchanges, and the process is simple. This approach will be followed by some of the platforms listed below.
You are required to sign up on Coinbase and then connect your bank account to it.
You will then either transfer funds from your bank account or use your credit card to purchase BTC.
BTC purchases made with a credit card are the most expensive.
Buying BTC involves either entering a USD or a BTC sum.
Then the website converts other currencies. Click to purchase your BTC once you’ve filled in the amount.
Although credit card transactions are very expensive, they are the quickest in execution.
It can take as long as few days for a bank account to be opened.
Keep in mind that the currency rate at the moment you bought BTC will apply.
Direct Deposit of BTC
If the exchange doesn’t allow you to buy BTC using your credit card or by making cash deposit, you can make BTC deposit through another trading platform.
This is accomplished by obtaining your wallet address from the exchange in question.
Then enter it, together with the quantity of BTC you want to transfer to the new exchange, on the source exchange.
The exchanged BTC takes a few minutes before it appears in the wallet.
BEST CRYPTO EXCHANGES AND INVESTING PLATFORMS
The three best cryptocurrency exchanges and investment or trading platforms are listed below:
Coinbase is by far the most popular and one of the best cryptocurrency trading platforms. More than thirty coins and tokens, are currently available on the platform.
You can as well also earn interest on your assets by participating in various tasks.
i. Most user-friendly UI
ii. Wide range of tokens and coins to invest in
iii. High level of security and trustworthiness
i. High fees unless you use Coinbase Pro
ii. Limited user control
iii. New cryptocurrencies are being adopted slowly
As one of the earliest publicly traded platforms, Voyager is a prominent cryptocurrency investment platform.
They operate through an app and provide a commission-free trading platform.
Voyager accepts the majority of major cryptocurrencies, offers excellent customer service and involvement, and offers reasonable interest rates on assets.
i. The app-based interface is very simple to use
ii. A trading framework that is free of commissions
iii. Voyager offers competitive interest rates
i. Slow withdrawals (can take up to 1 day)
ii. Not available everywhere
Binance is an highly recommended platform to use if you intend o invest in coins like Cardano.
Binance offer one of the most encompassing exchange platforms even though some other platforms are more user-friendly than it is.
They also have offer a good mobile app that is easy to use.
i. Huge amount of supported coins and tokens
ii. Transactions are completed quickly.
iii. Inexpensive fees
i. It is restricted in some parts of the world.
ii. It is not widely available
iii. Customer service is limited.
There is an increasing rise in the number of options available to earn passively in cryptocurrency.
Some of these methods have been used by blockchain companies that provide generalist mining services.
As commodities become more dependable and safe, they may eventually represent a viable option for a reliable source of income.