Don’t call up your boss quit your jobs and think you can rely on this for a living. Though it may be possible, it’s still not a wise move to make. If you want to learn how you can earn a passive income from investing in cryptocurrencies to add to your current salary, then you’re in the right place.
How much you earn depends on how much you’re willing to work for it. Are you ready to put the extra time to make that passive income grow? Even though they say “passive income is money that works for you” It still requires some work.
Let me break it down for you.
From my experience and after reading hundreds of Reddit and Bitcointalk threads, here are the best ways to use crypto to earn a passive income:
Blockchain Mining for Cryptocurrencies
The first way that you can earn passive income is by using securing the blockchain network by mining for cryptocurrencies. This is one of the main reasons Satoshi Nakamoto designed bitcoin in the first place. You can use the spare CPU/GPU you have sitting around your house to earn a passive crypto income. Then, you can trade your earned coins for real cash on an exchange. It’s easy!
Did you know?
You don’t have to spend thousands of $’s on mining equipment that may be useless next year.
Fact: ASIC miners like the Antminer S9 can mine around 50x faster than the worlds top aftermarket GPU! The downside is, ASIC miners are only good for mining one algorithm. If the blockchain changes its algorithm, then your ASIC is a useless piece of crap metal!
You may be asking, “How else could I earn a passive income from mining cryptocurrency?”
The simple answer is Cloud Mining.
That’s right! Instead of using your own processing power, you can mine cryptocurrency using a cloud service. Now, I’m not a big advocate for cloud mining services. Why? (Because I have trust issues.) You never can be 100% sure that these companies won’t pack up all your crypto and close shop tomorrow. So, take heed if you decide to avail yourself of these services!
Cloud mining is definitely taking a risk, but it’s one of those things high-risk high-reward. With cloud mining services like (Hash Flair), you can earn a substantial ROI from passive income. Since they’re doing the work, you can set it and forget it. Your cryptocurrency portfolio will continue to grow as you go about your business. They’re paying for the power, at the end of the day you get to reap the rewards, free crypto!
Not entirely, some cloud mining services take a fee from your earnings. Plus, they ask for an initial payment, which can distort the return metrics.
Whether you want to mine cryptocurrency from home or the cloud, use this simple metrics tool to compare your options.
The second way to earn a passive income from crypto is by:
Lending out your cryptocurrency assets
P2P Lending
You can earn a passive income from interest by loaning out your cash. The amount of interest you receive depends on the lending agreement you create. Typical lending agreements earn between 10%-20% yearly interestrates.
If you have trust issues as I do, then it may be of consolation to know that you won‘t be duped entirely, at least by a borrower. The platform requires borrowers to put up crypto assets as collateral. Some services hold collateral using smart contracts, others use central or third-party storage. For example:
Smart Contract platforms:
Not so Smart contract platforms:
Don’t get me wrong, even with the collateral, there are some risks involved.
Hackers see lending platforms as lucrative targets for their attacks.
January 2017 — Despite xCoins platform using 2-factor authentication model (generally thought to be secure), hackers managed to break through, raising significant security concerns within the crypto community.
Another risk comes from the persistent volatile nature of the crypto markets. The SALT platform cuts that risk by holding part of the collateral in a secure “hot wallet.” This freezes the corresponding asset value at the time of the agreement.
So, the “hot wallet” freezes the assets’ value. Makes perfect sense… Let’s move on…
Asset Exchange Lending
So, you’ve been earning a passive income from P2P lending, and your trust issues fade away. You may feel comfortable enough to start lending to borrowers without collateral backup.
“Whoa! That’s too risky!“, you say?
No worries! By using a crypto exchange lending service, you don’t have to worry that the borrower runs off with your funds. The exchange holds all the funds and does not allow the borrower to cash out without paying their loans.
BitFinex (No U.S. traders) and Poloniex are two such cryptocurrency exchange platforms that allows you earn a passive income by lending to people for margin trading purposes.
Although, there have been some issues with security on both platforms in the past.
2014 — Poloniex came under fire after a major security breach wiped out more than 12% of its bitcoin.
2016 — Hackers stole $72 million worth of bitcoin from the Bitfinex platform.
Since the hacks, both Platforms continue to rebuild trust in their platform security.
Poloniex now runs 24/7 automated and manual auditing programs. They monitor, report, and block any suspicious activity.
Apr 4, 2017 — Bitfinex bought back all the tokens used to reimburse investors who suffered from the 2016 hack.
Investing in smart contract dividends
One of the best ways to earn a passive income from crypto is by investing capital in token-based dividends.
Dividends are a win-win proposition because they produce passive incomewithout having to touch the underlying asset. Organizations’ that offer practical value earn profits, these profits are then shared by distributing dividends among token holders.
Similar to stocks, tokens with dividend features may or may not carry voting rights. Unlike stocks, holding dividend tokens entitle the holder to passive income without necessarily constituting ownership in the organization.
Dividend payouts may be regular, for example, weekly or monthly, may be dependent on a certain level of token ownership — e.g., large holders receive payments before smaller ones — and may depend on the issuer reaching certain performance milestones.
Dividend-paying cryptocurrencies are interesting because they offer a hint of sustainability and real value. Tokens that provide dividends from profits on physical asset investments, such a real estate, are proving to be low-risk profitable business models.
Conclusion
These are only the top 3 ways that I’ve discovered for you to earn a passive income from investing in cryptocurrencies. There are more out there. I’d love to hear how you make side income from cryptocurrencies passively. Please share your thoughts and experiences in the comments below.
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