Passive income through crypto is a great and easy way to earn and diversify one’s portfolio. Although there are quite a number of options, we’ll look at five best ways users can utilize cryptocurrency for gains.
Cryptocurrency trading takes advantage of market volatility, which causes the prices of assets to increase and decrease over the short term. When trading, you can either take a long position (buy) if you expect the price to rise or a short one (sell) if you believe the asset price will fall. You can profit in a bull or bear market, depending on your speculation. However, timing the market is challenging, alongside making decisions on what to buy or sell and when.
Profitable trading requires a great deal of research, good analytical and technical skills and performance monitoring of listed crypto assets on market charts.
Play-to-earn games are blockchain-based games that allow players to enjoy gaming and get rewarded for their wins. Gamers get paid in tokens sold for cryptocurrencies. Most of these games have also added non-fungible token (NFT) functionalities enabling gamers to trade online gaming collectibles. Gaming characters, outfits, weapons and other items could all be NFTs with both in-game and real-world utility. Decentraland, Axie Infinity, Sandbox metaverse, Gala Games and Wax are top gaming platforms to earn crypto.
The Ethereum network migrated to a proof-of-stake mechanism a few months ago, which means that investors can stake their ETH and earn passive income in the process. Ethereum staking is an excellent way to earn passive income, thanks to the fact that Ethereum is currently the second-largest cryptocurrency by market cap.
If you wish to stake your Ether coins, you must have at least 32 ETH staked to become a validator. This is tough to do unless you are a seasoned crypto enthusiast. There are other ways to stake your ETH coins without allocating such a huge amount.
Miners validate transactions by solving complex mathematical problems and get rewarded with coins. Mining requires investment in specialized hardware such as ASICs (as is the case for Bitcoin) and access to low-cost power.
To stand a better chance at winning competitive block validation, some miners join their computing power with other miners to form mining pools.
A bitcoin block gets added every 10 minutes, and miners earn 6.25 bitcoins per block. Rewards get halved after every 210,000 blocks added (the next halving is in 2024).
Monero mining is much easier as it only requires consumer-grade hardware such as CPUs and GPUs. A block is added every two minutes with a reward of around 4.99 XMR. Validators also get to earn a 0.06573 XMR transaction fee per block.
Other profitable and easy-to-mine coins are Ravencoin- with a block reward of 5,000 RVN and blocks created every minute, and Verticoin- a block added 2 minutes on average, with a reward of 12.5 Vertcoins.
Investing: Buy and Hold
Buy and hold is a widely known and proven way to earn passive income in the crypto market. Unlike trading, investing is a long-term strategy of buying and holding crypto assets. Although cryptocurrencies tend to be volatile in the short term, they have the potential for growth in the long term.
Investing involves identifying relatively stable cryptocurrency assets to buy at a low price, holding on to them regardless of market fluctuations and selling when the price reaches a lucrative value. Initial coin offerings (ICOs) offer the best opportunity to buy low-price crypto assets. Binance coin (BNB), as an example, has made a tremendous gain of 306,000% since its inception, from a price of just $0.10 in 2017 to $306 this February.
Crypto is only set to boom in the coming years, granting potential investors a promising avenue to earn passively. It is, however, essential to be careful and conduct in-depth research before venturing.