It's important to diversify your investments. Adding crypto to your portfolio will introduce a new market and sector and comes with many different ways of earning passive income. Crypto is very volatile, which translates to higher income potential offered compared to other investments. The drawback is just like how it can rise a ton, it can also fall a ton, very quickly. Invest cautiously and take advantage of the income sources it provides.
*Disclosure: Tasci Finance only recommends products and services I would use myself or are currently using. This post may contain affiliate links that at no additional cost to you, I may earn a small commission.
1) Proof-of-Staking (PoS) Staking
You can earn money by holding certain cryptocurrencies. Think of it as interest for storing your money, but you get to store your money in investments and earn a flat yield in addition to possible capital gains. If you choose to stake your crypto then you will have to lock up your investment for a period of time where you can't withdraw or sell your holdings to earn your rewards.
This requires no work by you and you get to earn money passively, perfect for long-term investors.
The best exchange for staking and crypto, in general, is Coinbase.
Staking Cryptos Offered on Coinbase
Ethereum: 3.675% APR
Algorand: 0.45% APY
Cosmos: 5.00% APY
Tezos: 4.63% APY
Dai: 0.15% APY
USD Coin: 0.15% APY
APR - the annual rate of interest is simple interest and does not include compound interest.
APY - the annual rate of interest which also considers the effects of compounding.
Example to show the difference
Let's assume that a BTC savings account offers an interest rate of 5% per month.
APR
5% x 12 months = 60%
$1,000 will earn $600
APY
5% x 12 months = 60%
1000 * (1 + 0.60 / 12) ^ 12 = $1,795.86
$1,000 will earn $795.86
You might want to take this into consideration because Ethereum offers APR while all the other cryptos that listen on Coinbase offer APY.
Create a Coinbase Account and receive $10 in Bitcoin when you buy/sell $100 on Coinbase: https://coinbase.com/join/tasci_6aj
2) Crypto Savings accounts and crypto lending
Crypto saving accounts pay much higher interest than traditional savings accounts. They carry the main risk of not being FDIC insured which means you could lose your money! It's important to consider this as an investment rather than savings.
You as the account holder lend your crypto and earn interest. You can lend stable coins or normal cryptocurrencies.
AQRU was voted as the overall best crypto savings account for 2022.
AQRU offers high yields of 7% per year on Bitcoin and Ethereum deposits, which is one of the best rates in the market. Moreover, if you’re for more stability, stablecoins yield 12% per year.
You can choose to be paid in Tether, DAI, USD coin, or earn traditional fiat money. You can withdraw your money at any time and there is no lock-up period.
APR Offered on Cryptocurrencies | Stablecoins (USDT, USDC, DAI) –12% Non-Stablecoins (BTC, ETH) – 7% |
Min & Max Deposit Limits | €100 (£110.80) minimum; no maximum stated. |
Lock-In Period | No lock-in period; flexible withdrawals offered |
Security & Regulation Features | Regulated by the Republic of Lithuania VASP under Lithuanian law |
Additional Rewards Offered | N/A |
Interest Payout Frequency | Daily |
Sign up to AQRU to start earning money: https://aqru.io/
3) Liquidity Pools and Yield Farming
Yield farming is best suitable for experienced investors. These types of cryptocurrency offerings are common options in decentralized exchanges, and essentially involve contributing your tokens to a trading pool. You as the investor lend on the Defi platform and earn cryptocurrency in return for your service. You'll need an external wallet to participate, and beware of gas fees.
PancakeSwap is a decentralized exchange launched in 2020 and is based on the Binance Smart Chain. They also offer several cryptos to farm and are constantly updated with new cryptocurrencies and new rates. You earn cake tokens as a reward for farming.
Your eyes will blossom when you see APRs of more than 100%, stay away from those. These are brand new cryptocurrencies that don't even have enough liquidity to be traded. The chances of the crypto being 0 is relatively high.
You want to look for the cryptocurrencies with the highest liquidity and one that is relatively large-cap and has a good long-term forecast. They do pay less apr but overall are less risky.
It's a complicated process to start yielding on Pancake Swap. Watch this video to help you: https://www.youtube.com/watch?v=iG0O6GLxwrk
4) Cloud Mining
Cloud computing has recently become very popular. Back then major companies would maintain basements full of computers to compute numbers 24/7. Instead of each company managing its own computing machines, they now have warehouses full of powerful machines where they can rent computing power.
Cloud mining is the same principle as you outsource mining for coins like Bitcoin, Litecoin, and Dogecoin. Instead of buying expensive computing devices you can just rent them and earn passive income.
Mining is very profitable and as the cryptocurrency's price goes up so do your earnings.
The best cloud mining platform is Ecos. They make it very easy to mine crypto. All you have to do is purchase the crypto and buy a contract and hold your investment! No equipment or work is needed... this is truly passive income!
Ecos offers a 24-50 month range for cloud mining crypto. You get paid daily in Bitcoin and pay them a small fee in Bitcoin, and you'll be net positive in your investment. Withdrawal is possible from 0.001 BTC and can be transferred to other wallets, then to your bank account.
Ecos also has great customer service and they will direct message you for very quick service and solve issues quickly!
Use this link to sign up and receive a free trial contract for 1 month: https://ecos.finance/en/cloud-mining?ref=2zTC0M4k
5) Dividend Earning-Tokens
Just like dividend-paying stocks, there are dividend-paying cryptocurrencies. You get paid for holding the cryptocurrency. Dividends were meant to generate passive income so this is perfect for investors looking to earn money by doing nothing. Every dividend token usually has a different requirement so make sure you know that before proceeding.
Most people mistake staking for dividends. While they are similar, they're not the same.
Staking is paid to users for maintaining the network while dividends are paid out from the project's profit.
Kucoin for example has introduced paying crypto dividends to those who buy and hold the exchange tokens.
Their exchange shares 50% of transaction fees with the token holders. The higher the exchange turnover, the higher the crypto dividends are.
This is a fairly simple strategy, you buy and hold and earn dividends! Make sure to research the cryptocurrency and buy for the long term rather than the dividend yield.
Conclusion
There are a lot of different ways to earn passive income with cryptocurrencies. Crypto does impose risk, but it won't hurt to experiment and use a small portion of your money to diversify and earn different forms of passive income.
If you want to start investing in crypto Coinbase is your best option.
Create a Coinbase Account and receive $10 in Bitcoin when you buy/sell $100 on Coinbase: https://coinbase.com/join/tasci_6aj
If you want to start cloud mining, Ecos is your best option.
Use this link to sign up and receive a free trial contract for 1 month: https://ecos.finance/en/cloud-mining?ref=2zTC0M4k