Are you looking for a reliable and easy-to-use method of making some passive income? One of the methods that you can count on today is using crypto coins. But, before you start looking up “how to buy dogecoin” and other currencies, it’s important to do your research.
Unlike about 13 years ago when blockchain and crypto coins first hit the market and little was known about them, they are now defining the modern world, and you should not be left behind. Keep reading as we dig deeper into cryptocurrencies to determine how they work and methods of making passive income with them.
What is a Crypto Coin?
Before you can start thinking of making passive income with cryptocurrencies, it is important to start by answering two primary questions, “What are they?” and “How are they stored?”
For example, you can only pay for transactions on the Bitcoin network with its native coins, BTC. If you have a specific coin, such as BTC, and want to run a transaction in a different blockchain like Binance, the first step is converting BTC to supported coins.
Because crypto coins only reside in the native blockchains, what users get are strings of private and public codes that indicate ownership. The private keys should always be kept private because it reflects the coins you have on a blockchain network. When people want to pay you with crypto coins, what you provide is the public keys.
How to Make Passive Income with Cryptos
Now that you know how crypto coins work, here are the main ways that you can use them to make passive income.
1. Crypto Staking
Crypto staking is the process of committing and locking your cryptocurrencies to their respective networks for a reward. When you lock them for some time, they are used to help confirm transactions and the security of the network. Note that this is only possible if you have proof of stakes (POS) crypto coins, such as ADA and ETH.
The best method to stake your cryptos for passive income is to use decentralized finance (Defi) platforms because they are run by professionals with knowledge on the best setup, keeping your coins safe, and optimizing returns.
Make sure to review the average returns of the selected Defi platform before making the decision to use it. Most platforms pay between 5% and 20% returns of the staked coins per annum.
The good thing about staking is that you are not selling your coins. So, once the period you had selected to stake is over, you get back the coins plus the rewards. If you are lucky and find that the coin’s price is higher than when you staked, the returns will be even more.
Make sure to review the selected platform’s transparency and commitment to stakes. You can learn this by looking at the feedback from clients after staking with the platform.
2. Buy Crypto Coins and Hold Them Till the Price Goes Up
When Satoshi Nakamoto released Bitcoin in 2009, the price was less than a dollar and it remained there for a few years. Although the perception about cryptos was very negative at this time, people who thought about the cryptos in the long term and bought them are now enjoying huge returns.
If you bought Bitcoin in 2010 when the price was about US$1 and held it to the start of 2022, the value would have grown to US$47,000. If you are new to cryptocurrency and looking at how to buy bitcoin in canada, whilst you may have missed out on that huge initial growth, it’s still not too late to buy bitcoin now. It’s never too late to get involved!
You can also rake in outstanding returns on investment by selecting high-potential coins. You can identify these high-potential coins by working with experts in top platforms like hi.com. For example, they can help you to identify new coins with the potential for fast growth.
One of the coins that you should consider right now is ETH because its’ native blockchain is shifting from the proof of work (POW) protocol to proof of stake (POS). The coin’s value is expected to grow rapidly in the coming years and could even surpass Bitcoin.
3. Yield Farming
Yield farming is a strategy of earning passive income from your coins through lending to earn some interest. The process works like crypto staking but differs in that you earn interest.
It is like putting money in a bank to earn interest, but you deal with a Defi platform in yield farming. Make sure to work with platforms that use smart contracts to get assurance of pre-defined interest.
As you can see, there are many ways that you can use to get passive income from your coins. Remember to select the preferred coin based on the targeted method of generating income.
For example, staking only works with POS coins, but you can use any when targeting to buy and hold. Remember that no matter the method you select, it is important to work with professionals. Visit hi.com now to learn more about making crypto passive income.
Arnab Dey is a passionate blogger who loves to write on different niches like technologies, dating, finance, fashion, travel, and much more.