Passive income is the holy grail of income generation. For smart cryptocurrency investors, this is the best way to keep making a lot of money without even lifting a finger.
Some cryptocurrency investors have mastered the art of passive income generation from their cryptocurrency portfolios. If you would like to too, here’s a few proven strategies that will help you do just that.
Top 11 Ways To Earn Passive Crypto Income 2018
Buy And HODL
Pretty basic right? This is what most people do when they buy cryptocurrencies. They just buy the quantity they want and hold on for dear life (HODL) until the price appreciates to a satisfactory level.
This is the most common source of passive income in the sense that you can easily sell off parts of your portfolio if the market is bullish. This will work if you have an excellent portfolio and got in when the coin was just beginning to take off.
This particular strategy requires skill and timing. In fact, timing is everything with this strategy. Using it, you can get in when the coin is still dirt cheap –we’re talking between 1 and 10 cents- and ride it all the way to the pinnacle, generating 5-200x of your investment in the process.
The second most popular passive income generating strategy, crypto mining involves the purchase of and use of a mining hardware to mine those coins and get paid in the process. The most popular cryptocurrency mined is bitcoin.
Miners are typically pricey to buy –often costing anywhere from $1,000 to $3000- and may not yield as much as it once did. This in part, is due to the increased complexity of problem solving as well as the reduced reward per block.
Before 2016, bitcoin rewarded miners with 25 BTC per block mined. That has dropped now to 12.5 BTC per block, and will continue to be halved for every 200,000 blocks mined until the maximum supply of bitcoins is attained.
So, smart miners are beginning to switch to mining alternative coins like ethereum and Litecoin using designated application specific integrated circuits (ASICs) that are dedicated to mining just those types of coins.
If buying and owning your own rig doesn’t sound appealing –many avoid this because of the steep electricity costs- there’s always the alternative option of using cloud mining services like Genesis and Hashflare.
To use these services, all you have to do is pay them to mine on your behalf. So, they will just pick one from their mining pool and allocate it to you.
This is actually a smarter way to go seeing mining pools tend to be more profitable that mining solo. Mining typically happens on cryptocurrencies running on the Proof of Work (PoW) consensus.
Specific to the yet to be proven Proof of Stake (PoS) consensus, this is for altcoins like LISK, NAV, ARK and Tokenpay that utilize the consensus for transaction execution and processing. It’s one of the easiest ways to earn passively, but it’s also very risky.
Users would have to put a specific amount into their wallets and keep those wallets open all day every day. As long as the wallet is open, they’ll earn some crypto.
Participants with bigger crypto amounts stored in the wallets typically get rewarded more than those with smaller quantities. This makes sense as they are taking a huge risk by leaving their wallets open for that long.
Investing In Coins That Dividends
Some cryptocurrencies provide a way to earn certain dividends from holding their tokens in a designated wallet. To do this, you would have to invest in those tokens and hold them for as long as necessary.
Dividends are often different and depends on the cryptocurrency itself. For instance, Kucoin Shares is the popular exchange’s own token. The company rewards users who hold these tokens in their wallets from the proceeds earned on the platform.
More specifically, Kucoin splits its revenue in two and pays its investors from the 50 percent of its fees. Another cryptocurrency that rewards users for holding its tokens is NEO, which pays you in GAS.
This is done to encourage people to hold on to their cryptocurrency as against trading like many do.
Investing In Cryptoasset Companies
There are some venture capitalist firms with cryptoasset portfolios. These VCs provide investors with an opportunity to profit from their portfolio by offering them tokens.
For some, the business model is the value of their tokens go up as their portfolios increase in value, making it easy for investors to trade them in for returns.
Another model involves investing in companies that are making a lot of cryptocurrency mining equipment. The more prominent of these are AMD and NVIDIA –both publicly traded and listed on NASDAQ.
These companies have experienced significant growth in share price in the last few years. This is courtesy of the adoption of their technologies in crypto mining hardware. You can buy their shares, and hold them until their prices go up and then sell when you’re comfortable.
While it’s not a passive income stream in the literal sense of the word, you’ll at least get to see your money work for you, as against seeing payments come in on a daily or monthly basis.
Masternodes are similar to staking, but are more of the next level. You see, in staking, there’s no specific amount needed. All you have to do is just keep as much as you’re comfortable in your wallet and leave it open.
With masternodes however, you’ll need a specific amount of coins per wallet. So, if you had 2000 ARK tokens in your wallet as part of your crypto staking project, and a masternode requires you to have 500 ARK coins, you can easily split that into four wallets, making four masternodes.
While this is just gaining ground and becoming popular, most people don’t even know about it. Masternodes typically tend to generate a little more income than crypto staking, seeing as it’s primarily used to enhance network features and operations like the execution of instant or private transactions on the network.
The major problem with masternodes is their setup, which is quite difficult –you’ll need a virtual private server (VPS) so your PC doesn’t end up staying on for too long and crashing in the process.
The nodes have to be up and for 24 hours a day, 365 days a year. This is why it hasn’t permeated the society’s collective consciousness. Once it becomes easy to setup, you can be sure that many will jump on board, primarily because of its significantly higher rewards.
If you want to see a fully functioning masternode, so you can have an idea of what it is and how it works, check out Vultr.
Certain cryptocurrency platforms like dTube and Steemit reward content creators with their coins for their hard work. While this is not as passive and hands free, it can be made to work.
For instance, you could easily look for virtual assistants, hire them and have them create excellent content under your account/moniker. Once these are added to the blockchain, and get a lot of engagement, you get paid in the process.
Of course, this means you would still have to pay your writers, but it works. Because content is a huge part of the landscape, there are a few other cryptocurrencies springing up to help make the sector more competition –a little competition is always nice, you know.
So, you can always explore those and see if they offer even better rewards for content creators.
Hard Disk Space Rental
We all have some extra space on hard drives that we’re not using. So, instead of wasting that space, why not lease it out to folks who need some space in exchange for payment in tokens or fiat? This is what cryptocurrencies like Storj and Siacoin are doing.
They offer to rent the free space on your hard disk and reward you with token. When these grow in value, you can then trade them in or exchange them for whatever cryptocurrency you want or fiat currency.
Scam Cryptocurrency Passive Income Opportunities
Wherever you have legitimate opportunities, you’ll also have scams disguised as real opportunities.
Most of these offer outrageous returns on investment when you opt for them. You need to be wary of these opportunities as they are designed to fleece you of your money and enrich the architects.
Cryptocurrency Doubling Schemes
Also known as cryptocurrency cycler schemes, these scams are particularly centered around the most popular cryptocurrencies –bitcoin and ethereum.
Victims are often asked to send them their cryptos to partake in the doubling opportunity. The makers of these schemes promise 100 percent returns made possible by their “magic algorithms” that automatically doubles their investments.
Promises of returns can be as high as 1000 percent in some cases. The common theme among these scams is the absence of a concrete or tangible product and the possible depiction of a pyramid scheme.
These programs tend to have convincing spokespersons who will give fake testimonials and “show” you how their lives have changed after joining the program. Most of the time, these are actors paid to shill the program.
Most of their claims are unverifiable, and they, unreachable. If a scheme looks too salesy, has no proven working or tangible products, and primarily touts its rewards from referrals or a cycling system, walk away.
Auto Trading Bots
There are so many of these nowadays, which makes it hard to believe anything. While there may be a few legitimate cryptocurrency auto trading platforms, the reality is most of them are not worth a cent.
Auto trading platforms have become incredibly popular these days because of the hands free nature, low entry barrier and promise of returns. With these auto traders, you don’t have to lift a finger to make money.
You’ll just fund the account, set up your buy and sell walls, and deploy the bots to do the trading. If most of these worked, it would be amazing as it would create a unique passive income opportunity for participants.
Unfortunately, most don’t. The few that do, don’t promise huge returns on investment. In fact, it is not unusual for them to offer conservative guarantees like 1-5 percent ROI monthly.
Of course, your profit margins can be significantly higher, but they don’t necessarily guarantee that. The reality is no algorithm is perfect. And even if you hire traders to execute traders on your behalf, they can also lose money.
We recommend that you always do your due diligence if you’ll be going with the auto trading platforms. This way, you don’t get to lose your money.
Top 11 Ways To Earn Crypto Income Conclusion
Passive income from cryptocurrencies is very possible if you take your time to verify them. The ones we listed here are great opportunities. They may not make you rich, but they will be enough to supplement your income.
Just make sure that you have the right expectations. Cryptos have incredible growth potential, but that takes time. Understand this, and you will soon have nice multiple streams of passive income monthly, quarterly or annually.