We shouldn’t be the one to tell you that having passive income is the best source of income. Not only do you not have to do much once you get it going but if done right, it can be a long-lasting income. Not all investments are passive and not all passive investments are guaranteed. It can vary from how your money grows but having a high-risk investment platform can definitely make you worry. On the long bull run we have been having, many people in the stock market are starting to think the same thing. That is why some people are switching over to cryptocurrencies even though it is having a better rate on investment than anything else. Many people are speculating in cryptocurrencies but playing for the long term might be a good idea. Knowing that the blockchain and digital currencies are the future, they’re here to stay. Many people are going straight to trading Bitcoin to be more active in the crypto space while others like to sit back and make passive money.
Earning passive income through cryptocurrencies can be a good possibility. No doubt you will be taking a risk but it’s always a risk to invest. We are not financial advisors so invest with great diligence and be cautious.
How to Make Passive Income with Cryptocurrencies
Many developers of certain coins or tokens will distribute more of the coin or token for free or a small task. They usually do this to ensure early distribution. Sometimes it’s done as a thank you for the holders of the specific crypto.
Forks in cryptocurrencies are when a group of people don’t like how a specific coin has become or the route it’s going so they choose to make a new derivative of it. When this happens, you usually get the same amount of coins on the new crypto as you did on the old one. For example, Bitcoin just forked and created Bitcoin Cash. You get a 1:1 Bitcoin Cash as you had Bitcoin.
This seems like an obvious one but people often overlooked this when taking into account passive investing. As you probably know, the crypto bull market is really strong. It’s not expected to always to go up and there can be a bubble like it’s being talked about. However, with digital currencies being apart of a payment method, picking the right ones you have faith in can do well during the long term. Buying back into coins that have dipped can be a good idea but it is risky.
Mining for cryptocurrencies is not exactly how it sounds. Instead of taking shovels and going digging, you use specific hardware like graphics cards or CPU’s. For specific cryptos, you use ASIC’s (Application Specific Integrated Circuit) which are expensive hardware created to mine Litecoin, Bitcoin, etc. GPU and ASIC mining can be very profitable if you get your equipment for a good price along with low cost in electricity.
Staking is not the same as dividends but some people can look at it like that. Staking (Proof of Stake) is the process where you leave your wallet open and get a percentage of the coins or tokens you hold. For example, Neblio is a token which stakes and gives you 10% of the amount of coins you already hold per year. So throughout the month, you have the tokens be added to your wallet.
Running a Masternode
In order to be a part of the infrastructure of any particular crypto coin, you should have to help to secure the network and in return, you will get some coins. The main advantage of running a masternode are:
- Nice and passive, as you can leave your server or raspberry pi running and accumulate coins.
- You are able to work out that how much income you are generated every month, but the values of coins vary in each month compared to fiat currency.
With fiat money, banks are making money off interest through lending but with cryptocurrencies, you are your own bank. Now you can invest your coins back into services and make some interest off your principle capital. Since it is a new industry, be very wary of where you park your money. One of those services which have been considered a scam is BitConnect. Nothing has come out of it yet but it has had some shady tactics. There is also SALT lending which is a bit newer.
A Little Work is Required
Although we encourage passive income investing, a little bit of work would be required to make sure you are getting the most out of your money. Listening to a few people without doing due diligence can be a nightmare in hindsight. Always make sure you do your own research and check out everything you put your money into. Just because the whole market is going up today, it doesn’t mean it will be the same tomorrow. Getting in early is key but not everyone has had the opportunity for that. Be risk averse by knowing what you’re getting into. Money is not all that counts, your time does too.