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Long Term Crypto Investing

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Cryptocurrencies have established themselves as one of the most profitable but, at the same time, risky financial instruments. Moreover, most users believe that it is possible to make money on crypto-only through trading, which requires specific skills and knowledge. But what if there are other ways to earn income using cryptocurrency? This article will go through several popular crypto passive income methods.

What Is Passive Income?

Passive income on cryptocurrencies is the process of generating income with a minimum number of actions performed. Of course, in order to start earning income, you will first have to Do Your Own Research (DYOR), familiarize yourself with the subtleties of the chosen strategy, analyze the risks, and only then set up. If you draw an analogy with real-life — you first earned money to buy an apartment and only then began to rent it out and receive passive income. To date, there are many passive income streams that can bring substantial profits.

What Passive Income Streams Are There?

  • HODL 

Crypto investments are by far the most popular way of passive income on cryptocurrency. Interest in it has not faded for many years, especially since there is more and more confidence every year that cryptocurrency is not just “Monopoly money”. There are several golden rules that should be followed when investing in cryptocurrency:

  • Invest only spare money. The crypto market is very volatile. At any moment, the price of an asset can drop significantly, and it may increase three times after some time. It will be woefully if you urgently need your funds back when the market fall.
  • Carefully examine the coin before investing in it. Study the history of the project’s development, purpose, roadmap, see how the developers adhere to the set plans, and choose the best moment to invest.
  • Diversify your crypto portfolio. The standard scheme is to invest 50% in Bitcoin and distribute another 50% among promising altcoins.

  • Mining

Mining means the “extraction” of cryptocurrencies or the provision of computing power to confirm blocks in cryptocurrency networks for an appropriate reward ― at one time caused a real boom in the electronic equipment market. Video cards have become the most popular product, and queues for purchasing new models of ASIC miners stood long before the start of sales.

But the constant complication of cryptocurrency mining algorithms and the rise in electricity prices have reduced the income from this type of earnings and actually forced single miners out of the market. Today, large capacities from high-tech computers, processors, video cards, deep technical knowledge, and experience are required to make a real profit. By and large, mining has become available only to specialists and large companies working in this field.

But there is still a way by which you can try to set up a passive income on mining ― Cloud Mining. To participate in cloud mining, you do not need to buy and configure equipment; it is enough to sign a contract and invest a certain amount. For this, you will receive a share, and a company will handle the organization of the mining process. It’s easy enough to find a reliable company ― the list includes Shamining, ECOS, and IQ Mining.

  • Staking

Proof-of-Stake is an energy-efficient alternative to Proof-of-Work. To make a profit from staking, the user simply needs to purchase coins that function based on the Proof-of-Stake consensus algorithm. The users who own PoS crypto can stake a specific amount within the network, storing the crypto and not spending it anywhere. The main task of staking is to support the operation of the network. For this, coin holders are entitled to receive a reward. Most major crypto exchanges support the staking function. For example, Binance just navigates to the “Binance Staking” section, selects an available coin, specifies the duration, and enters the amount you want to stake. To find a suitable coin, you need to look at profitability (ROI). A high ROI is usually possessed by those projects that have already achieved success or are confidently moving towards it. In addition, there is a minimum staking amount for various coins. For example, in ETH 2.0, the minimum staling amount is 32 coins. If you do not have the required amount, you can join the staking pool.

  • Lending

Lending is a simple way to earn passive income on cryptocurrencies that you do not plan to use or sell in the near future. This method of generating income resembles a bank deposit, but in the field of decentralized finance. Its essence is to lend a part of the available coins to a special service to earn interest. Lending takes place on centralized or decentralized cryptocurrency exchanges, as well as specialized platforms lending platforms. Centralized exchanges pay more — up to 45% APY. Plus, the platform guarantees a refund. 

Another option of crypto lending is lending to crypto exchanges for margin trading. Return insurance is the deposit of a trader who uses leverage. Therefore, the person who provides crypto also does not risk losing it.

In addition to lending on the exchange, there are various specialized lending platforms, for example, Nexo, BlockFi, Crypto.com, or Celsius.network.

  • Airdrops

New cryptocurrency projects from time to time initiate the free distribution of coins to ordinary users for promotional purposes. If you hold specific assets on the exchange account and control the keys yourself, you will definitely receive the bonus. In order to get free coins, you need to: follow the announcements and social networks of your crypto exchange and hold a featured cryptocurrency on your account. The earlier you deposit the crypto, the greater the reward you will receive.

  • Referral programs

You can earn various bonuses, discounts, and rewards for referring new users to your trading platform. For example, if you have a large base of subscribers in social networks and are confident in the reputation of the platform, then you can invite your friends to join it and experience a new way of earning crypto.

  • Masternodes

The masternode is a server of the blockchain network responsible for processing transactions or performing any particular tasks. The owner of the masternode receives passive income for performing operations. However, to run the masternode at home, you will need significant financial investments, a dedicated IP, and considerable technical expertise.

Final Thoughts 

The selection of passive income streams on crypto is vast and diverse, but they all imply some efforts to set up. Therefore, study and test various methods for yourself and find platforms with the most favorable and convenient conditions. As a result, you will definitely find the path you should follow to receive a stable additional income with a minimum amount of effort.

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