Like many cryptocurrency investors and traders, you must have noticed the extreme profitability of this venture.
However, it can also be stressful and time-consuming since you must keep updating your portfolio, take advantage of incoming opportunities and uphold your position.
Despite the perks, you’ll always feel the urge to maintain your passive income venture without engaging in cryptocurrency market issues 24/7.
Fortunately, multiple methods have been crafted to generate returns on your cryptocurrency investments by leveraging them without your hands-on engagement. This approach is preferable if you want to free up time and attend to more vital issues.
This article presents you with five methods you can use to generate income from your cryptocurrencies without full-time supervision or input.
Passive Ways To Make Money With Crypto
1. Cloud Mining
When dealing with cryptocurrencies, such as bitcoin, you will have to adopt a computer-intensive approach to keep up with the competition against other users.
This approach involves finding solutions for mathematical puzzles which are highly complex, used to prove how eligible the users are in their bid to be validators.
These activities are part of the crypto mining process. Since it’s incredibly competitive, the miners compete by investing in advanced computers while settling the high electricity bills accumulating over time.
Additionally, the activity is highly technical and time-consuming. Instead of dealing with so many complexities, most cryptocurrency holders prefer an alternative process known as cloud mining. It involves hiring professional third parties to handle the technicalities for you.
To get crypto mining services, you need to approach an agency with mining machines, and you can buy or rent them from such facilities.
After paying the first fees, you’ll be required to deposit a certain amount to cater to daily maintenance services. Henceforth, you start getting cloud mining services from your provider, who manages and maintains your crypto mines for you.
2. Hold Dividend-Paying Currencies
Many cryptocurrency investors buy tokens, hold them, and earn dividends.
While this is an easy and fuss-free method of generating returns, you should be aware that some digital currencies don’t pay dividends. It’s essential to research the subject before you purchase any tokens.
Currently, you can trade on exchanges to acquire digital currencies offering dividends. Cosmos and NEO are among the cryptocurrencies paying dividends as return on investments.
You can also look out for tokens that package discounted trading fees and allocate investors part of the profits made on the platform.
Examples of such currencies are Bibox Tokens (BIX) and KuCoin Tokens (KCS). They pay back about 50 per cent of fees used to secure them on the trading platform. The returns are issued as dividends.
3. Be a Liquidity Provider
Before decentralised exchanges, traders faced challenges accessing market opportunities and capitalising on them. Decentralisation provides cryptocurrency liquidity without requiring you to seek permission from the platforms.
An automated market maker is a form of DEX designed to help cryptocurrency holders gain returns against their assets as liquidity providers.
With this platform, users can trade more than two assets simultaneously, taking advantage of the decentralised pools of liquidity. They can also weigh multiple tokens against each other and get their values within the pool.
Before traders can gain the pool's liquidity, they are required to deposit trading charges ranging from 0.2% to 0.3% of the total trade. The accumulated amount is later divided amongst liquidity providers.
4. Get into Lending
Lending is a lucrative investment approach, explaining its popularity in decentralised and centralised cryptocurrency ventures.
It gives you a chance to lend different tokens to interested borrowers who assume temporary ownership and earn interest. You can achieve this in four ways:
- Peer-to-peer lending: On this platform, you can set your terms regarding the value of the digital currency you're lending and the interest they should attract after a given time.
- Centralised Lending: This approach solely depends on third parties' lending terms. The platform offers fixed lock-up duration and interest rates. Like P2P lending, your crypto must move from the trading platform to the lending platform before yielding interest.
- DeFi or Decentralized lending: Using this strategy, lenders can directly transfer the cryptocurrency they are offering to the borrowers.
- Margin Lending: You can issue your crypto tokens to borrowers who want to trade on borrowed currencies on this platform.
They later grow their investments and use the proceeds to pay you back with interest. This allows your crypto to gain returns without much effort on your end.
5. Stake Your Cryptocurrencies
Proof-of-Stake (POS) allows you to efficiently uphold your consensus in a decentralised venture and gain returns through staking.
Staking your cryptocurrency requires that you first understand the kind of stake attached to it, whether it’s an ordinary stake, Delegated Proof-of-Stake (DPoS), Nominated Proof-of-Stake (NPoS) or other variants.
You must also create a validator node before putting in a minimum amount of cryptocurrency. These activities are needed for network powering and delegation of tokens to a chosen validator or nominator.
Stakers gain returns from the proceeds accumulated after the staked crypto undergoes inflation. They also earn when the network distributes the currencies it gains from transaction charges.
Many cryptos such as Polkadot, Terra, Avalanche, Cardano, Solana and Ethereum offer staking rewards. However, some require setting up a stake with a fixed minimum amount and a specific lock-up time.
If they prove unfavourable, these requirements may bar some users from investing.
Start Earning Money With Crypto
Your crypto investments can earn you returns without your actual involvement.
The five approaches covered in this article will help you grow your passive yields and save you lots of time in the venture.
If you are at the beginner level, it's advisable to put your cryptocurrencies in an account that earns interest after a set period.
You aren't required to have any previous knowledge of these operations, but you can gather more information by researching the network or platform you prefer to trade.
