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How to earn passive income with cryptocurrency

In this article, we will explore some of these avenues, so without any further ado, let’s get straight into the heart of the matter.

With cryptocurrencies fast gaining traction across the global financial landscape, an increasing number of people are beginning to realize the immense potential that these assets truly hold. Furthermore, with central banks all over the world continue to print money at a furious pace a lot of people are beginning to see the cracks that currently exist within the fractional banking system that is in place all over the globe today.

To put things into perspective, over the course of 2020, the Federal Reserve printed nearly 50% of all dollars that have ever come into existence, a striking figure to say the least. A similar trend was also witnessed across Europe and Asia where governments issued large stimulus packages amidst the coronavirus pandemic, thereby diluting their local fiat currencies in a big way.

This aforementioned money printing coupled with the explosive growth of the crypto market over the course of the last few months has resulted in an increasing number of people seeking out ways through which they can use their crypto holdings to draw income streams. In this article, we will explore some of these avenues, so without any further ado, let’s get straight into the heart of the matter.

Mining

The term ‘crypto mining’ has become quite popular in recent times, especially with people now going as far as using their smartphones to mine certain digital assets (such as Pi token). However, what does the term actually mean? 

In its most basic sense, mining refers to the act of using one’s digital computing power in order to secure a blockchain network. As a reward for one’s effort, the individual is presented with tokens associated with the particular ecosystem.

Even though mining is one of the oldest ways through which a person can draw a passive income stream it is still one of the most lucrative. Not only that, to become a miner it is not necessary for the person to own any cryptocurrencies. 

Though mining premier cryptocurrencies like Bitcoin, Ethereum has become increasingly more difficult over the years, with users required to possess extremely expensive gear, there are still a number of low hash rate Proof-of-Work coins that can be mined using everyday computers and laptops. Lastly, mining does require a certain level of technical expertise, especially since users have to learn how to set-up, operate and maintain their equipment.

Staking

One can consider staking to be a less-resource intensive version of ‘mining’. The process is fairly straightforward and can be facilitated by storing one’s funds in a wallet and performing certain network functions — i.e. transaction validation transactions — in order to receive rewards. The ‘stake’ one has within a network is directly proportional to the incentives one can receive at any given time. 

To further expound on the process, in order to stake one’s coins, users are required to set up a staking wallet and hold their coins there. Additionally, users can also choose to delegate their funds to a ‘staking pool’, thus allowing them to gain access to even more incentives.

Simply put, staking is one of the easiest and most risk-free means of increasing one’s holdings. That being said, there are some projects that do employ certain shady tactics — such as artificially inflating their return rates — and thus it is of utmost importance that users do their research before indulging in such activities.

Lending

Much like in traditional finance, there are now a number of crypto platforms that allow users to earn interest on their crypto holdings by simply locking their assets in a ‘lending pool’. 

In this regard, it bears mentioning while traditional savings accounts provide users with interest rates ranging anywhere between 0.2% to 0.6% at max, most crypto lending platforms offer rates ranging from anywhere between 5% to as high as 15%.

One small catch worth considering is that since most crypto assets are subject to a lot of volatility, the annual percentage yield (APY) on these assets can swing quite wildly (on a weekly basis) from platform to platform. 

In short, lending is ideal for long-term holders, especially those individuals looking to maximize their holdings with the least amount of effort involved. That said, there is a very small risk that the smart contract facilitating one’s lending operations might be buggy, thus opening up one’s funds to some external, third-party threats.

Airdrops

In its most basic sense, an airdrop is a promotional activity that is quite commonly employed by blockchain startups to help generate hype around their project. As part of an airdrop, companies distribute cryptocurrency tokens for free to individuals interested in obtaining them.

In order to take advantage of such an opportunity, all one has to do is simply possess a wallet address associated with the token being airdropped at the time of the event. That’s literally it.

However, it best to do one’s research before participating in any such event, especially if the project’s operators ask you to send them your private keys or promises to give you more crypto back at a later date in exchange for your assets.

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