The crypto market had its fair share of ups and downs over the last few years, but it has shown us one important thing—cryptocurrencies are here to stay. The road to today’s situation was quite a rocky one, but it has been established as one of the most credible methods of payment. Think about it, the transactions are conducted almost instantly, which is more efficient than any other traditional payment method, like bank transactions.
At the same time, we can see that this is also a method to make both short-term and long-term investments. It is all based on what your preferences and needs are. We’ve already seen how crypto trading has changed countless lives, with some investors becoming overnight millionaires by purchasing specific tokens early. Of course, you cannot expect to get massive profits out of every investment you make. Things do not work that way.
However, crypto trading is just one of the many ways you can make money through these digital assets. Nowadays, people seem to be much more interested in making passive income through cryptocurrencies, rather than active income. They are prepared to invest a certain amount of money, and then reap the benefits after the value of a currency has risen in the future. Of course, this is not something that happens every week, except on some rare occasions.
But, how exactly is it possible to achieve this level of income through investing in crypto? Let’s check out the three best methods that crypto experts suggest.
Crypto Staking
We want to start this list of ours with Crypto Staking. We are talking about one of the most efficient and widespread methods for gaining passive royalties due to its simplicity, safety, and solid returns. So, nobody should be surprised why so many investors have become interested in this approach.
We are talking about the procedure of locking up your assets to support a certain blockchain network, in return for earning interest or acquiring rewards. As you can see, this method doesn’t require you to monitor the movements of the market every single day, even though doing so will certainly hurt.
You can only stake cryptocurrencies if they incorporate the PoS model for processing transactions. It is exactly the opposite of the PoW model that requires powerful computing devices to solve mathematical equations (aka mining). Understanding the differences between these two terms is an absolute must if you want to have the best possible results.
The amount of passive royalties investors will get depends massively on the specific crypto you’re staking since some offer higher interest rates than others. For instance, Wizardia’s staking program is currently popular among investors due to the generous token rewards and unique NFT prizes. NFT are now quite a popular topic, but it needs to be said that understanding its true potential is still several years away. We are talking about a relatively new concept, after all.
Wizardia offers three staking programs:
- APY 31%: 4 months of staking
- APY 53%: 8 months of staking
- APY 114%: 12 months of staking
Lending
Over the last few years, lending has established itself as both an efficient and popular approach to gaining some passive profits here and there when we are talking both about decentralized and centralized crypto domains. Both of these are equally useful when it comes to this approach. So, there’s no reason for you not to conduct both of these methods.
Basically, traders can lend a certain amount of their assets to borrowers in exchange for interest. Over a certain period, the lender will receive both payments and some crypto on top. It is the same as the method banks are utilizing. The only difference being is that an individual does so using digital currencies.
The most popular lending approaches are:
- Peer-to-peer lending—Lending platforms allow investors to establish their loan terms. Investors specify how much they want to lend and determine the interest on the loan. Then, the platform works on finding a suitable borrower (the same principle used in P2P trading platforms). This type of lending is great if you want more control over your assets.
- Centralized lending—Different from P2P lending platforms, centralized lending platforms don’t allow you to set your interest rates. Instead, they are fixed, and so is the lock-up period. Here, you have to rely on the third-party framework to make all the things function as they should. That way, it becomes possible for you to earn certain percentages without investing too much of your time and resources.
- DeFi lending—This strategy refers to the direct use of a network to execute lending services. There aren’t any intermediaries or third parties involved like in P2P platforms. Instead, both investors and borrowers use self-executing contracts that determine interest rates independently.
- Margin lending—Last but not least, you can lend your digital assets to crypto traders. Traders often borrow crypto assets so they can add more liquidity to their market position and then return them with interest. Margin lending typically takes place on exchanges that focus on digital currencies.
Cloud Mining
Without any doubt, cloud technology is one of the hot topics in this day and age. No wonder, this technology has managed to infiltrate the world of digital currencies. This method of earning passive income might be a bit more technical than the previous two we’ve mentioned, but it’s still very effective.
Cloud mining is also a great alternative to traditional mining, which requires huge resource consumption and hefty initial investments. Instead, it doesn’t require you to invest as much in them as some other methods. Still, the benefits you receive from this method are almost the same as the ones you can expect from those approaches that are widely regarded as outdated to today’s standards.
With this approach, you can employ foreign parties to complete crypto mining tasks for you. In other words, you are renting computing power from those with mining facilities. They will use your resources, which are significantly smaller than in other approaches, and receive proper compensation for what you have invested into someone’s mining procedure.
Even though this method requires some form of initial investment, it’s still one of the most lucrative ways to earn passive income in the long run. But, you should also know that this method is one of the riskier methods due to its remote nature. Numerous things can go wrong, especially when you lend your resources to a party that cannot be regarded as credible and reliable.
The Verdict
As you can see, we are talking about a diverse market that offers you numerous opportunities to earn money. Also, there are a couple of layers that help you choose and determine what sort of income you’re striving for. Therefore, you can access different ways you can earn passive income through cryptocurrencies, even if you’re completely new to the industry. We’ve covered three methods that are currently the most widespread and require the least amount of knowledge and effort.
