The general public often equates people generating income in cryptocurrencies with traders performing multiple transactions daily and constantly monitoring future ICOs. Of course, some enthusiastic crypto people practice virtual currency investment in this way with passion and frenzy. Nevertheless, there are much less time-consuming and risky solutions to generate income in the world of cryptocurrencies.
In this article, we propose to discover 6 methods to generate passive or semi-passive income with cryptocurrencies. You will also find that some methods will be more appropriate than others depending on your initial investment capital and personal preferences.
Blockchains based on the Proof of Stake (PoS) will allow you to win additional tokens by using some of your tokens for transaction validation. People involving their tokens in Blockchains relying on Proof of Stake are called “minters”.
In exchange for their help to secure the network by blocking a token capital, the minters are rewarded with a certain amount of tokens. There are a number of Blockchains practicing this system and for each of them, the principle of operation as well as the amount of rewards may vary somewhat. A fairly extensive list of Blockchains allowing you to generate passive income through this mechanism can be found on the Proof of Stake Coins List page of the ReliableCoin site.
A variant of the PoS Consensus Algorithm is the Delegated Proof of Stake (DPoS) mechanism that we recently presented in our overview of the Cryptocurrency Consensus Algorithms. In the DPoS, minters will be elected by other community members and will be called delegates. They will be responsible for using tokens to secure transactions on the network. The rewards for staking on this type of Blockchain are generally higher as can be seen on Ark or Lisk for example.
The efforts required to participate in networks using this system will vary from one Blockchain to another. Some Blockchains will require you to become a full-fledged node of the network while others, such as Ark, require only a simple installation via a wallet. It is worth noting, however, that staking as a node is often much more lucrative than staking using simpler methods, but they require more effort in terms of time and investment via tokens.
Our goal being to propose methods to you to generate passive income in cryptocurrencies, we will therefore recommend you to go and see on the side of the Ark Blockchain where staking can offer a return on investment of around 10% with the only constraints of owning tokens and participating in the choice of a delegate.
2. Payment of tokens collected by the exchange platform
Some trading platforms such as Kucoin and COSS have set up a system allowing the owners of their tokens to collect a certain portion of the transaction fees collected by the platform. Of course, the amount you receive is proportional to the number of tokens you hold on the Blockchain in question.
As a source of passive income, this method is not always very profitable since it depends heavily on the volume of trade carried out on a Blockchain during the period of holding the tokens. However, it can quickly become interesting if you have a hollow nose and know how to invest in high-potential cryptocurrencies before they start to take off. In this case, the amount collected can become very interesting. It should also be noted that in the event of a fall in the rate of a cryptocurrency, you are the loser.
In most cases, the dividends received in this context are tokens from the trading platform and not portions of the tokens traded. This means that if you hold too few tokens from the trading platform, the dividends you will receive will be too low to be resold later.
3. Tokens paid as Dividends
Some cryptocurrencies encourage their investors to hold their positions by rewarding them with dividends. Holding the tokens of these Blockchains over the long term therefore becomes very interesting. This is the case, for example, with NEO, the Smart Economy Blockchain, which pays dividends in the form of specific tokens called Gas. The Vechain Blockchain generates dividends in the form of THOR tokens.
Typically, each unit of the original token will generate a predetermined amount of a new token. These tokens are often used to pay transaction costs on the network, whereas the original token can be considered as an action of the network in question.
What return can we expect with this method? This is rather low since we are around 3% for NEO and its dividend Gas for example. Nevertheless, this method is 100% passive and very low risk. So why deprive yourself of it?
To fully understand what an Airdrop for cryptocurrencies is, we can make an analogy with the distribution of free samples in stores and then encourage you to buy the product. At the beginning, many cryptocurrency projects will offer a small amount of free tokens to safe people in order to benefit from a strong marketing effect with the enthusiastic crypto community.
Generally, the distribution of these free tokens is carried out on condition of a small commitment within the community via a registration on the platform of the cryptocurrency being launched. The amount offered is low compared to fiat currencies but by keeping these tokens in the medium term, you can have very good surprises if you have selected solid and promising Blockchain projects.
The good news is also that beginners can enjoy Airdrops since they are usually easy to access. This makes it easy to increase participation in Airdrops. Since it requires some monitoring and research work on promising projects being created and launched, this method is considered semi-passive to generate income.
5. The Earn.com platform
The Earn.com platform offers a very simple solution to monetize your attention time. Once you have registered on the platform, you will have a profile on earn.com. From that moment on, you will be paid to receive and reply to messages but also to perform other tasks sent by users of the platform.
Currently, payments on the platform are made in Bitcoin. The amount received through this semi-passive income generation method will depend on your commitment to the community and the reputation you will acquire over time. In addition, Earn also offers lists to which you can subscribe to receive messages sent by users targeting specific people.
Among the lists proposed by Earn, we can find some listing former students of a university or workers in the same field of activity. There is also a list, worth knowing, of people wishing to participate in Airdrops of new cryptocurrency projects. This is an opportunity to make method 4 even more passive.
Many popular exchange platforms, such as Coinbase or Binance, offer affiliate programs that reward you for helping them attract new users. For most people, participation in these affiliate programs will represent a small amount of income, but if you already have a large audience on social media or YouTube, it can be very profitable.
These affiliate programs will usually pay in tokens listed on the platform. Thus, Coinbase pays with a fixed amount in Bitcoin while Binance will give the recruiter a percentage of the fees collected on the new user. This will therefore correspond to a specific token or the NBB token of the Binance platform.
This overview of 6 methods for generating passive income in cryptocurrencies is now complete. As you have seen, some methods are more semi-passive than passive. Nevertheless, the effort to be made remains measured. If you have other good sources to generate passive income in cryptocurrencies, do not hesitate to share them with us in comments.
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