One of the reasons why cryptocurrency has been so popular over the years is that it can be such a good source of income. In fact, Bitcoin did so well in the 2010s that it was declared the highest-performing asset of that decade and in 2023.
When many of us think of making an income from cryptocurrency, we tend to think of becoming a day trader and spending hours in front of a computer screen. In reality, cryptocurrency offers many ways to make a passive income for investors. Here are some of the top ways to create this passive income:
- Staking
One of the most common ways to earn an income with crypto is through staking, which essentially means committing your tokens for a certain amount of time and earning interest on them. This only works with tokens that are based on a proof-of-stake blockchain consensus and the amount you earn is based on a few factors.
First, there is the token you choose to stake, as some are known to offer higher interest than others. Then you have to consider how much you stake as the more tokens you commit, the more money you can earn. The amount you earn is also determined by how long you stake your tokens.
Most of the best crypto staking platforms have pre-set staking periods like 30 days, 60 days, 90 days, and so on. The longer the staking period, the more money you earn. And that’s it. Staking doesn’t require you to do anything besides deposit the tokens you already own and get interest on them.
For anyone who wants a passive income or is currently HODLing, it is a great option that carries less risk than crypto day trading.
- Lending
These days, many people want to borrow cryptocurrency for all sorts of reasons, and platforms have popped up that allow people to lend and borrow crypto. This represents a unique opportunity for anyone who wants to earn passive income, as crypto lending can offer a healthy return.
This works by signing up to a centralised or decentralized platform and offering the crypto you have for lending. Some platforms have a pre-determined interest rate and some let you set your own, in the case of P2P arrangements. Other details of the transaction, like how long the loan will last and collateral also need to be worked out but once they are, the loan can commence.
Many platforms, especially decentralized ones, work with smart contracts that automatically deposit the loaned amount into the borrower’s wallet, collect interest when due, or seize the collateral if the loan is defaulted on. These smart contracts help to make sure that no one runs off with your money and that all the terms of the agreement are honoured.
So, if you’re looking for a passive source of income, you might want to consider offering crypto loans to make an interest. However, you must also be cautious to avoid getting scammed.
- Crypto Lotteries
Even in the offline world, lotteries are seen as a way to possibly get free money, with you only needing to spend money on a lottery ticket. No-loss crypto lotteries also exist but unlike traditional ones, don’t even require you to give up any of your money.
These lotteries work by users depositing some of their crypto into a pool. This pool of funds is then staked for interest, loaned out, and so on. Then, a winner is randomly selected and they receive the interest that has been earned on the initial deposit. This would be great in itself, but crypto lotteries take things a step further by giving everyone who participates their initial deposit back.
This, in many ways, makes crypto lotteries one of the best ways to earn a passive income from digital assets. Best case scenario, you win a decent amount of money and worst case scenario, you have just as much money as you started with. Many crypto lotteries are held daily so there are endless chances to get lucky and win. However, make sure that the lottery you sign up for is reputable and does not have a history of scamming customers.
Conclusion
Earning money from cryptocurrency doesn’t have to be a very complicated and intense process. From staking tokens for interest to playing in a lottery, the industry has many reputable ways that you can earn a return on your initial investment without much effort on your part.
If you are averse to the volatility of day trading or have a stash of crypto you have been HODLing, this would be a good idea to not only grow your portfolio holdings but engage with the wider crypto community as well.
