The world has seen many crypto millionaires and billionaires emerge from this thriving economy. Despite being in its infancy, the crypto market is ripe for investment, and thousands of investors have harvested profit from this game-changing industry.
The crypto market is growing rapidly and is here to stay as countries, businesses, and institutions begin to add Crypto to their portfolio. There are many ways to earn money in the crypto-verse without spending much time or resources. As new uses of blockchain technology emerge, new methods to earn in Crypto continue to grow. Right now is the perfect time to get started. Here are a few ways to make passive income with Crypto.
1. Liquidity Pools
Liquidity in cryptocurrency refers to the supply of a particular token available to facilitate transactions on a crypto exchange. Since crypto exchanges cannot bear the pressure of users’ demand alone, they outsource liquidity from third parties. A liquidity pool is one method crypto exchanges use to handle the demand for tokens in their marketplace.
Crypto exchanges allow users to lock tokens in smart contracts that automate the performance of transactions on their platform, called a liquidity pool. By contributing to a liquidity pool, you can earn a fraction of the transaction fees paid by users whenever they transfer a particular token through an exchange.
2. Yield Farming
Yield farming is the process of lending crypto tokens to a decentralized finance (DeFi) platform at an interest rate. It is similar to interest earned on savings accounts in traditional banks, except that DeFi platforms offer much higher returns.
Staking funds in a DeFi protocol through yield farming is the same as indirectly borrowing someone else’s tokens. DeFi platforms make profits by allowing users to take out loans and pay them back with interest after an agreed-upon period.
3. Crypto Affiliate Programs
Crypto affiliate programs are one of the easiest ways to produce passive income with Crypto. Crypto exchanges allow you to refer new customers to their platform using referral links. As a result, the crypto exchange gives you a cut of the commission fees generated whenever the user executes a transaction.
Maximizing the profitability of crypto affiliate programs requires skills in content and network marketing to help increase the exposure of your affiliate links to more people. Becoming a successful affiliate will need some initial work in the beginning. Still, if done right, affiliate programs can provide passive income for years to come.
A good example is YouTubers who promote their affiliate links in their videos to crypto exchanges like Crypto.com and CoinBase. These YouTubers receive a small commission when someone uses their affiliate link to signup for an account. Other examples of affiliate programs are Amazon and software companies like TradingView. The crypto space is full of affiliate programs! Just keep your eyes open.
4. Mining Cryptocurrency
Mining is another alternative that promises a steady cryptocurrency passive income. You can earn by joining a network of computers responsible for adding newly executed transactions to the blockchain. For every transaction you add to the distributed ledger, you are issued a particular amount of crypto tokens native to the host platforms as a reward.
Earnings generated through mining efforts are called block rewards. Although getting into the business of mining produces a stable source of income, it takes a fair amount of capital to set up. You must buy mining rigs to set up a crypto mining operation.
Another factor to consider is electricity cost. If your electric price for mining crypto is too high, you can be in the negatives. Away around this is by using sustainable energy like solar power or in Iceland where they use geothermal power.
Crypto mining is an article in itself. There are many ways to mine cryptocurrency, like providing proof-of-coverage using a Helium miner and providing data through IoT mining devices. Because of this, we wrote a whole page dedicated to the different types of crypto mining. You can view that article here.
5. Crypto Cloud Mining
Crypto cloud mining is the lazy man’s way to earn Crypto. You don’t need to buy expensive equipment or pay for electricity. You rent someone else’s hardware and use it to mine cryptocurrencies. The process is simple: You pick the Crypto you want to mine and then rent a piece of hardware from a cloud mining company to mine it. The company runs the hardware for you, and you pay for your use. The company takes a cut from your earnings, but as long as Crypto is in a bull market, you should be earning a profit.
Crypto cloud mining entails some severe risks. This market is full of scammers, and you could potentially lose all your profit if the market crashes.
6. Stake Crypto on Centralized Exchange
Instead of hodling your Crypto, digital asset owners can stake their tokens in cryptocurrency exchanges offering staking programs. These exchanges encourage the contribution of tokens to improve market liquidity. You can receive annual percentage yields (APY) by staking Crypto on these platforms. The APY on these exchanges is usually low, anywhere from 1-10%. However, it’s still better than a bank’s savings account, which is less than 1%.
Usually, the longer you leave your tokens locked in a platform, the higher the interest rate on your initial investment. Read this article to find out the top 3 best Crypto Exchanges in the United States for staking your tokens with generous yields.
Both CoinBase and Crypto.com offer Crypto staking on specific coins with various APY. Staking your Crypto comes with risk and requires that you have a specific crypto to stake. However, this is the easiest way to earn passive income with the Crypto you already have.
7. Run a Validator Node
Cryptocurrencies are applications without a central server. The blockchain is built up using thousands of nodes that manage the flow of digital assets. These nodes keep copies of the blockchain’s transaction history, adding a set of transactions (blocks) to the main chain and confirming the integrity of these additions.
You can play the role of verifying the integrity of data on the blockchain and earn staking rewards for your efforts. To become a validator, you must set up your computer as a network node and stake a predetermined amount of the dedicated blockchain protocol’s native token.
8. Run a Masternode
You can actively participate in the creation of blocks and validation of blocks added by other nodes on a blockchain network to earn passive income through block rewards.
Most blockchains use a proof-of-stake protocol to facilitate data movement. In such a network, you’ll have to collateralize crypto tokens to run a MasterNode on your personal computer. The blockchain randomly selects any available node on the grid to validate transactions and rewards them in native tokens for doing so successfully.
9. Nodes as a Service
Running a masternode can be pretty challenging for the less tech-savvy. In addition, it requires a substantial amount of startup capital to buy mining equipment for running a profitable mining business.
Suppose you have all the resources for running a masternode at your disposal. In that case, you can grant access to the average crypto user who wishes to get paid for validating blocks. As a service provider, you profit by charging them for a percentage of their block rewards.
10. Lending Crypto
Many of the lending activities in traditional finance are used in the crypto world. The process of lending money to a borrower to receive the amount at stake plus an additional percentage after an agreed period is also relevant in Crypto.
You can turn a profit by depositing digital funds in crypto lending pools provided by DeFis. As the lender, these platforms allow you to define your preferred conditions for the loan deal, such as the interest rate, duration of the loan, etc.
11. Crypto Dividends
The blockchain has made decentralized organizations (DAO) possible. These are digitally-based organizations partially owned by users without a central authority. In this setup, the protocol is king, and the members define its paradigms.
Crypto Dividend is similar to owning stock in a company and receiving a dividend yield. As co-owners of the platform, users share in generated profits. You become eligible to share profits and vote on how the platform works by owning native governance tokens.
12. Make Money with Airdrops
Airdrops are one way to earn passive crypto income without making a financial commitment. Usually, startup blockchain projects reward early supporters by giving away a fraction of their total token supply.
Although qualifying for an airdrop doesn’t require funds, you’ll have to invest your time and effort by staying active in the dedicated project’s online community.
13. Day/Swing Crypto Trading
Trading crypto requires resources and time, but it’s better than flipping burgers at the local fast-food chain. Day trading or swing trading is a common strategy for earning passive income in the crypto space. In this case, you buy a cryptocurrency with the potential to increase in price in the future. How long you hold on to a position determines whether you are day trading or swing trading. Unlike day traders, who enter and exit trades on the same day, swing traders maintain positions for much longer.
Trading crypto is very risky, and the price movement is subject to many factors. Becoming an expert at crypto trading will require years of experience and knowledge to understand the market and make the right decisions to be profitable.
14. Create and Sell NFTs
NFTs are Non-Fungible Tokens that differ from cryptocurrency because each NFT is unique. NFTs can be any form of art, including digital art, photography, music, and video, to name a few. Besides their non-fungibility, they are similar to traditional cryptocurrencies – such as BTC, ETH, and DAI – because they can be seamlessly traded across the blockchain.
NFTs are another way to earn passively through Crypto. By creating your own NFT art, you can sell them on https://opensea.io and earn royalties from your NFT if they get sold to other people. For example, if you created an NFT, you can sell it for 1$ with a 10% royalty on a future sale. So if someone bought your NFT and sold it in the future for $100, you will receive $10 from the sale as the NFT royalty.
15. Day/Swing Trading NFTs
NFTs have the underlying infrastructure to be traded like their fungible counterpart (regular cryptocurrencies like BTC, ETH, and XRP). However, the trade of non-fungible tokens is limited by their illiquidity – finding someone willing to buy a specific token at a particular time is quite tricky.
Identifying NFTs worth buying is a necessary skill for flipping NFTs for profit. This required skill involves identifying a hot NFT that has the potential to become more valuable in the future. Sometimes these can be spotted quickly, and at other times it takes more time and effort to figure out which NFTs can be profitable. So be prepared for these challenges if you decide to day/swing trade NFTs.
16. Renting Out NFTs
Instead of leaving your digital collectibles in your blockchain wallet collecting dust, you can lend your NFT and get paid. Many NFT marketplaces have integrated this function into their ecosystem. Learning how to rent out your NFTs to make money on supported marketplaces helps you generate passive income by leasing NFTs.
Why would someone rent an NFT? There are NFTs with utility that gives access to benefits like Discord servers and whitelist giveaways for NFT holders. These benefits are available to NFT holders, including those who rent the NFT for the perks.
17. Crypto Bounty Hunting (Blockchain Bounties)
For those with the technical know-how of blockchain technology works – the blockchain developers – you can participate in bounty programs set up by blockchain protocols to check if their codes are bug-proof. Suppose you discover flaws in a native blockchain’s code and report it to their development team. In that case, you could earn a reward in millions of dollars on a crypto bounty program depending on the severity of the flaw you detected.
A good example is Ethereum’s bounty program. This program encourages the entire Ethereum community to work together to find bugs and report them to receive a reward. The Ethereum bounty program has been responsible for millions of dollars in bounties.
18. Play-to-Earn Blockchain/ Crypto Games
Play-to-Earn (P2E) games allow gamers to earn in Crypto while playing a video game. These games are usually powered by NFTs and have tokenized in-game assets tradable within and outside the game. You can earn money by selling tokenized in-game assets and stacking up rewards for game time. We have a guide for how to earn money with NFT games, check it out to get started with your play-to-earn career.
19. Crypto Arbitrage Trading
Buying cryptocurrencies cheaply in one crypto exchange and reselling them in a second crypto exchange where they are sold at a higher price for profit is known as crypto arbitrage trading. Crypto Arbitrage is usually only profitable in higher volumes because prices between exchanges are minimal. That’s how Sam Bankman-Fried, the CEO of the FTX Crypto exchange, got started.
20. Crypto Options/ Futures
Crypto options/futures provide the option of leverage trading cryptocurrency pairs through perpetual contracts. Instead of only benefiting from a token’s price movement in one direction, crypto service providers like the FTX US Crypto Exchange and Derivates give traders a chance to take profits whenever a token’s price increases or decreases. Futures are considered one of the riskiest ways to invest in Crypto and require an in-depth understanding of its market behavior and price action. If you’re good with technical analysis and happy to take risks, this might be the cryptocurrency passive income you are looking for.
Cryptodeconstructed.com is currently working on an ebook titled “Passive Income Crypto” dedicated to exploring more ways to make money in the crypto space. Sign up now to get notified when we publish the book.
With the myriad of passive income alternatives in the crypto industry, almost anyone can find a suitable option by navigating through how much risk they are comfortable with, their technical understanding of the crypto space, and the amount of capital available for investments. I advise you to consider all your options with an open mind before choosing the one that works best for you. From there, you can decide on which project to invest your time and money into.