How to use cryptocurrency for passive income?

The cryptocurrency market is usually seen as a straightforward one where a trader earns profit from the wild price swings. But trading is an ongoing task, a tedious one, and requires the trader to be highly active.

 

But what if you knew another way around trading? What if you could simply buy and hodl your digital assets and yet earn more from them, without trading that is precisely what you’ll learn from this article. Apart from the below-mentioned points, you can also find the best crypto signals provider who will help you trade to earn. You can either learn to trade with them or let them handle your account.

 

Stake Your Coins

 

It goes like this; you buy crypto coins and hodl them in your online wallet and, in return, receive payouts. The tokens you hodl will be used in critical network security operations like validating the transactions.

 

Although not all the cryptocurrencies can be staked, only those allow running a PoS algorithm. The coins, when held, act as a value to secure a network similar to mining gears in BTC mining to obtain the coins.

 

Different staking platforms have different setup processes, and some could be complicated. There might be an incurring cost to stay active on the platform. A few platforms require a user to hold the coins for a fixed time, aka maturity period before they start sending you your earned rewards.

 

One important thing that should be kept in mind while staking is the type of reward you’re receiving. Sometimes a platform issues a token other than what’s been staked. The other tokens could be less valuable hence reducing your proportionate income. The longer a user stakes and the more is staked, the more the rewards will be.

 

Become a Masternode

It’s like running a server but more like on a decentralized network. Though running a master node demands both time and money. A master node runs on a Proof of Work consensus algorithm that runs a few services miners can’t perform. In other words, think of the master node as a manager while staking is an executive. Reasons why setting up for master node is a tad bit costly but is highly lucrative.

 

If compared, master nodes reel in more profits/earning than staking. Some cryptocurrency has very high-paying master nodes along with stakes. That said, getting started with the master node is difficult as it may require an investment sometimes worth thousands. There’s one setback. Unlike staking, master nodes are only meant for more experienced and technical users, who know their way around software and codes. Furthermore, you can just set and forget your master node; it’ll require your constant attention and contribution.

 

Lending your asset

Well, it’s probably the easiest way to earn from crypto. It’s like putting all your savings into a bank account. Bank pays interest in exchange for using your money. Similarly, a crypto platform that allows lending will pay you interest.

 

Such platforms take the help of an integrated AI mechanism on top of a blockchain network to handle and manage lending operations. The amount of earned interest depends on how much you lend. It’s pretty easy math, the more you buy and loan, the more benefit you’ll have in your account.

 

Usually, a platform has a lending and rewarding process automated for every user. A user, however, can take manual control of the parameters, tweaking settings to suit their needs best.

 

Margin Trade

 

Alright, it may not exactly be passive income, but there’s away. You may not get frequent rewards but you’ll make it up for once and for all.

 

Basically, margin trading allows an investor to trade at a higher amount than the investor deposited. For example, if you have an account at Binance exchange and you deposit $200, you can trade with $400. The exchange lets you open a position with leverage to multiply your gains. Say, you opened a $400 trade position with 4x times leverage advantage. If your assets grow by 10 percent, the open position will earn you 40%.

 

So if you opened a long-term trade with XYZ leverage, you’re bound to earn decent returns. And it wouldn’t require you to stay online or keep checking prices or the market sentiments.

 

Conclusion

Cryptocurrencies are great modern ways to earn not only mainstream income but passive income. It only needs some research, comparison, and a bit of resources on your hand.

Lee Douglas
Lee Douglas
I have over 10 years of experience in the cryptocurrency industry and my work has been featured in major publications such as Bitcoin Magazine and CoinDesk. I’m also the author of two best-selling books on cryptocurrencies, "The Art of Bitcoin" and "Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond". In addition to my writing, I’m an active investor and advisor in the space and a sought-after speaker at major industry events.

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