In today’s technology-driven world, cryptocurrency and bitcoin open numerous opportunities for passive income generation. Cryptocurrency is a digital form of currency in which all the transactions are done are then verified and recorded by a decentralized system. Bitcoin is one of the best-known cryptocurrencies for which blockchain technology was invented. By learning about cryptocurrency you can make passive money 24/7. Instead of spending your precious time and efforts on menial tasks or getting involved in unnecessary trading risks, why not put your coins to work for you? All you need to do is invest some time to set it up and once in place, they will generate income for you without you being actually involved in the process.
To get you started, this article will guide you on how to passively earn from cryptocurrency and the software you should use.
Methods to earn passive income with cryptocurrency
Here are the top four methods through which you could generate passive income in no time using crypto:
1. Cloud Mining
Without the need to install or execute any software or hardware, one can easily rent cloud computing power to mine a cryptocurrency, like bitcoin. It permits people to open an account and remotely take part in mining cryptocurrency for a standard price. Due to this, cloud mining is highly accessible and easy for a wide range of people around the world. The advantage of mining via the cloud is that it reduces problems like equipment maintenance or energy costs hence there are no maintenance or deposit fees.
5 Cloud Mining Websites
The setup for cloud mining is easy, the money required to initiate the process is low, and the time commitment is short, making it a good and easy method to passively generate money. However, it does have some drawbacks. For instance, the cloud mining models promote the centralization of cryptocurrency and decrease the lifespan of graphics cards.
Crypto lending is a type of decentralized finance that one can use to lend their cryptocurrencies to various borrowers. In this method, a third party connects the lenders and the borrowers, where the lenders are the first party that is involved in the lending. They could be crypto aficionados who want to grow their assets or are people who are holding onto their cryptocurrencies in the hope of a value boost. The second party is the lending platform, where the process of lending and borrowing crypto occurs. Lastly, the third party in this process, are the borrowers who will receive the funds. These borrowers could be businesses that require investment or people who require funding.
The setup for crypto lending is hard, the funding required is high, and the time commitment for the same is long-term. Every platform or second party in crypto lending has its own methods and conditions for lending crypto. Hence, the amount of return you get on your investment will automatically depend on the platform you choose. However, there could be specific ROI and risks depending on the crypto platform you consider using. This gives you some diversity for your investments.
3. Liquidity Pools
Another passive method to generate income is by supplying liquidity to a pool. Liquidity pools generate money by letting traders use their liquidity to make transactions. Because there is a digital pile of cryptocurrency locked up in an innovative, smart, and effective contract, transactions are faster. Liquidity providers earn money per transaction on the DeFi platform when they offer liquidity. The fee involved in the transactions is proportionally divided among all the liquidity providers in the pool. Hence, the more crypto assets you invest in, the more money you get in return.
In a liquidity pool, you do not make trades but make exchanges, so you do not need to worry whether you will find a partner. Users basically borrow assets from the pre-funded liquidity pool. Hence, the process is cyclic. Furthermore, the transactions involved have low market impact and are smoother. However, there are some disadvantages to using liquidity pools. For example, the AMM (Automated Market Maker) might reduce the values of your assets to a particular extent, leading to an impermanent loss.
Lastly, we have staking, which offers crypto holders the opportunity to use their digital assets to generate passive income without selling them. Staking is only possible through the proof-of-stake consensus mechanism, meaning a particular way utilized by specific blockchains to choose appropriate participants and verify their new blocks of data that are added to the network. The stack does not consist of only one person’s coins; the majority of the time, validators run a staking pool to raise funds from a group of token holders via delegations.
Staking is only possible with cryptocurrencies that are linked to blockchains and utilize the proof-of-stake consensus mechanism, like Polkadot, Solana, Ethereum, Luna, Avalanche, and so on. Currently, Ethereum is in a peculiar position where it can be used for mining and staking. Just like the other methods, even staking has a certain number of risks involved. For instance, cryptocurrencies are volatile and hence are not good for long-term investments. Also, staking pools can be hacked, resulting in a total loss that can not be compensated for.
Startups for Crypto Investments
If you want to start investing via crypto, then you need the assistance of someone who is technology-driven and is willing to take the potential risks involved in experimenting in this field. Learning and investing by yourself is tedious and could take a lot of time, hence why not opt for startups who are experienced in crypto? Startups like
- Flint Money
- Matrix Post
- Pillow fund
These are some of the good businesses you can rely on. These startups deliver a comprehensive range of innovative and easy-to-use crypto investment products as well as services that can help you passively generate income with no to low effort. The services they provide are customized to empower people to take control of their financial growth.
To summarize our discussion, investing in cryptocurrencies is a good way to passively generate income. However, it comes with numerous risks since crypto is highly volatile. In this article, you learned the four most common ways to use crypto to make money without actively participating or selling your crypto. These methods are: cloud mining, liquidity pools, lending, and staking. We also provided some of the startups that can assist you in setting up your crypto.