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Earning Passive Income With Crypto: The Ultimate Guide For Beginners!

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Earning Passive Income With Crypto: The Ultimate Guide For Beginners!

There are dozens of ways to make money with crypto. You don’t necessarily have to sell crypto if you want to make money. It is also possible to earn money with crypto by storing it. However, many people do not know that this is possible, and certainly do not know how it works exactly.
After reading this article, you no longer belong to that group. We are going to tell you everything about earning a passive income with cryptocurrencies. This is the complete beginner’s guide, and you’ll learn about staking, lending, DeFi , dividend tokens, tokenized mortgages, and play-to-earn games.

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Strike

Staking has long been extremely popular among crypto owners. It is one of the first ways people earn passive income from crypto. That is why it should certainly not be missing from this list.

What is strike and how does it work?

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Staking refers to a method used in the crypto world by token holders to get compensation in exchange for the tokens they put into the platform. The owner of a cryptocurrency may decide to commit a certain amount of cryptocurrency to help secure the network, thereby allowing them to receive tokens as a reward.

This is a process increasingly used by cryptocurrencies holders who want to hold their funds over the medium to long term, as it allows them to get a guaranteed income that can be equated with dividends or interest, rather than doing nothing with the money they have in their wallet .

What can you earn with a strike?

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How much money you can earn with staking depends on the project you use for this. Each project offers a different reward to strikers. In general, the percentage you get back on the crypto you stake is between 4% and 14%.

What are the best strike projects?

When you want to stake, you will have to use a layer 1 blockchain project that uses the Proof of Stake consensus mechanism.

Ethereum

Ethereum is the largest layer 1 blockchain that will use Proof of Stake. Therefore, it is without a doubt a blockchain project that we cannot miss in this list. You can decide to set up a validator node yourself, although it is also possible to outsource your stake to another node.

It is not yet clear how much money you can make by staking ETH. It is clear that you will not be able to access your ETH again until the migration to Ethereum 2.0 is complete, which can take another 1 to 2 years.

Solana

Solana is a competitor to Ethereum, and is used by many crypto holders to strike. Solana’s platform allows anyone to stake SOL coins. The amount of interest you can receive depends on when you decide to stop. You only get access to your tokens again at the end of a so-called epoch. This can be from a few minutes to a few days.

Cardano

Cardano is also very popular to strike. Cardano is a blockchain that, like Ethereum and Solana, offers the possibility for the development of dApps through smart contracts . However, this project is still in development and it is not yet clear when it will be completed. You can set up a validator node yourself, although it is of course easier to outsource this to another node.

Lending

Chances are you’ve lent money to someone at some point. If this is a friend, you may not receive interest in return. But of course that could be a way to make money. This is also possible with crypto.

What is lending and how does it work?

There are dedicated lending platforms that act as intermediaries between lenders and borrowers. The general idea is that lenders can use these platforms to generate interest with their unused cryptocurrencies, and borrowers can, as the name suggests, take out a loan.

Whether a user has Bitcoin , Ethereum, Ripple or any other cryptocurrency, he can now generate interest on these coins by lending them to other users. The best lending platforms offer significant potential return on investment.

With the rise of decentralized finance (DeFi), it is possible to lend cryptocurrency to another person, even if you don’t know them at all.

What can you earn with lending?

Here too, the interest you can earn depends on the platform you decide to use. There is also a big difference between the type of cryptocurrency you decide to lend to others. In fact, with a cryptocurrency that is ‘rarer’, it will receive a higher interest when it is lent.

What are the best lending projects?

There are various platforms where you can lend money to other users. Below we list the three most important lending platforms in our opinion.

BlockFi

BlockFi is one of the first platforms on which people can borrow and lend crypto. It has a partnership with Visa, through which they also decided to issue a BlockFi/Visa credit card that provides a 1.5% cashback in Bitcoin. The money you can earn depends on the cryptocurrency you lend, and the amount of it.

Celsius

You could also lend money to other users on the Celsius platform. Here it also applies that the interest you earn is completely dependent on the cryptocurrency and its amount. The more crypto you lend, the higher the percentage interest you receive for the lent cryptocurrencies.

YouHodler

A lesser known platform is YouHodler, although this platform is becoming increasingly popular among crypto owners. It offers interesting interest rates to people who lend their crypto via the YouHodler platform. This interest is based on the type of cryptocurrency and the amount of it that users lend.

DeFi platforms

Decentralized finance (DeFi) is becoming increasingly popular. We want to bring all kinds of financial services and products to the blockchain en masse. And users and owners of cryptocurrencies can earn a lot of money with that, as you will read below.

What is DeFi and how does it work?

DeFi is the name for a group of financial products and services that run on the blockchain. Think, for example, of a decentralized exchange (DEX), a lending platform or a platform on which people can gamble with money. These types of platforms obviously need money to operate. There is no centralized organization behind it that can provide this capital. The community itself will have to ensure that this capital is moved to the DeFi platform.

It is quite easy to make money by lending it to a DeFi platform. This is because such platforms are completely decentralized, so there is no need to go through a KYC process in order to participate successfully.

There is, of course, a risk to such platforms. For example, there is no helpdesk that can help if something goes wrong. Everything is done through smart contracts. You also have no insurance for the money you put in such a platform. If it’s gone, you’re really lost for good. You are therefore subject to the automation of the platform and its technology.

What can you earn with DeFi?

The money you can earn on a DeFi platform is a bit lower than many other ways we explain in this article. In general, the interest is between 2% and 3%, although there are also platforms where you can earn up to 10% interest on the money you bet.

What are the best DeFi projects?
There are so many different types of platforms within the DeFi space, so it can sometimes be difficult to make the right choice. Below are the projects that we believe are the most important and popular.

Maker

Maker is one of the most dominant players in the DeFi lending market. It has a share of around 17% of the entire market. That’s why it’s an interesting project to look at when you want to make money with DeFi. The idea is to put crypto into the platform, for which you get DAI coins in return. This is a stablecoin that allows you to make money on other platforms. Many platforms want you to lend stablecoins , because these are stable coins. In this way you earn passive income with Maker as well as with lending DAI.

AAVE

With AAVE it is possible to lend crypto to a liquidity pool . In this way, other projects can make use of the liquidity that AAVE has to offer. For example, consider a DEX. This uses an AMM (Automated Market Maker) and therefore needs a liquidity pool for swapping tokens. You can receive nice interest on the cryptocurrencies that you put in the AAVE platform.

Compound

Compound should also not be missing from this list. It is one of the first projects in the DeFi space, allowing users to generate passive income by putting ERC20 tokens into the platform. These are tokens that run on the Ethereum blockchain and use the ERC20 token protocol. Compound will then be able to lend these tokens to various other platforms that need these tokens to ensure the best operation. And you can earn a nice penny with that.

Dividend Tokens

If you think that staking is not for you, you can also opt for tokens that pay dividends to their owners.

What are dividend tokens and how does it work?

Different platforms that run on the blockchain have their own token. You can buy this token and keep it, after which you will receive a dividend as a thank you for owning the token. There is little risk in buying dividend tokens. The only risk is that the value of this token may fall in the future.

What can you earn with dividend tokens?

It depends on the platform you use, but often users receive an interest between 5% and 15% for the tokens they have purchased. Of course, this depends on the platform you decide to use.

What are the best dividend tokens?

Below are a number of tokens that we believe are the best ways to earn a dividend.

KuCoin Shares

The platform KuCoin, which you probably know, has its own token, called KCS. You can keep this token in your wallet, and then receive a dividend as a thank you for purchasing and owning the token. Also, KuCoin will give several other benefits to owners of the KCS token.

VeChain

VeChain is a well-known blockchain project that has been active for a long time. You can buy various tokens running on VeChain to receive a dividend with it. Many large companies and governments work with VeChain. Think Louis Vuitton, BMW, China and Cyprus. It is therefore a large project that offers many possibilities. By holding VET tokens, you will receive an interest.

Tokenized mortgages

Perhaps you would not expect this in this article. Yet it is really true. It is possible to earn passive income with tokenized mortgages.

What are mortgage tokens and how does it work?

As you may know, it is possible to store everything as a token on the blockchain. A token is therefore not necessarily a simple cryptocurrency. It can also represent real estate, a work of art, or even a mortgage. This way of earning passive income is not yet large and usable for European mortgages. It is possible to use American mortgages. There is much less strict legislation and regulations for mortgages there.

You don’t necessarily have to lend money to someone as a mortgage to make money with it. You need a very large amount of money for that. An amount that not everyone has in their bank account. Think of tons of euros you will need. Fortunately, by means of tokens it is possible to earn money on a mortgage without having to own a very large amount of money.

There are several projects that have tokenized mortgages. This means that these projects have converted mortgages into tokens, which are then divisible. This makes it possible to put a low amount in a mortgage, after which you can still earn a nice interest.

What can you earn with mortgage tokens?

It is not entirely clear how much money you can make with this method. It is estimated that the interest is between 20% and 50%, which is very high. Of course, there are also various risks associated with this. It is important to properly research these risks before you decide to get started with this method.

What are the best mortgage token projects?

The projects below focus on the issuance of tokens representing a US mortgage. Lofy AI and Vairt are the most important projects within this playing field. We recommend that you do your own research on these projects, as there are many risks associated with buying tokens attached to a mortgage.

Mining

Mining is the use of computing power to secure a blockchain. Bitcoin for example, but not only this cryptocurrency you could mine .

What is mining and how does it work?

For mining you will have to put your computers to work. This work allows you to receive a reward. We are talking about the validation of transactions through the consensus mechanism called Proof of Work .

In the early years, Bitcoin could be mined on a simple PC. But those days are over. Now you need a lot more power, and to do that you have processors (ASICs) made especially for this purpose. It sometimes costs a lot of money to get this hardware. In addition, you also spend a lot of money on the energy that is needed.

Many different large companies and mining pools are active within the network of a blockchain. However, an individual can participate in this activity, as we will explain to you. Not only Bitcoin, but also many other cryptocurrencies operate on a PoW basis, and because they are much smaller than the leader, an individual can mine them. This requires a lot of technical knowledge.

You will also need a computer with a strong and expensive graphics card (GPU) or processor (CPU). Then you install the right software, and you let it run 24 hours a day. Don’t forget to include electricity costs to measure real profitability.

What can you earn with mining?

It just depends on the blockchain you want to use to know how much money you can earn with mining. Some blockchains pay out more new coins than others. The amounts are often very high, because there are also many costs involved in mining new cryptocurrencies.

What are the best mining projects?

There are so many different PoW blockchains, and the list of games is growing every day. Below you can see two of the most important mining projects in our opinion.

Bitcoin

Of course, Bitcoin is the most famous blockchain and cryptocurrency that you could mine. However, it is very difficult to do this alone, due to the high competition. Therefore, it may be smarter to participate in a mining pool.

Litecoin

Litecoin is a hard fork of Bitcoin, and is easier to mine than Bitcoin. As a result, the fees are also ultimately a lot better than people can earn with Bitcoin. That is why there are many people who decide to start mining Litecoin, instead of Bitcoin.

Play to Earn games

What are P2E games and how do they work?

Play-to-Earn, also known as P2E for short, is a game where blockchain and NFTs interact in a gaming system. To make the game more interesting, gamers have the option to trade items, avatars and other items with each other. Thus, thanks to the blockchain, the owner of an object can be easily identified and it is properly authenticated and verified. Thanks to blockchain games, users can now play crypto games and win money even if they don’t own the rare NFT.

The business model of P2E games is that players take ownership of a game’s items. This allows them to actively participate in the game and in turn increase the value of the items entrusted to them. In this way, gamers contribute to the prosperity of the game economy in question by creating value for other players and developers.

As a reward, they receive digital assets that exist in the game. These assets can be cryptocurrencies, popular game characters, items , etc. are. Once in possession of their possessions, players can in turn resell them for money or to acquire other valuable items. For example, players in Decentraland can sell pieces of land to each other.

What can you earn with P2E?

It is unclear what you can earn with P2E games. This is entirely dependent on the assets you have. An NFT could gain a lot of value when classified as rare. There are people who have sold their P2E gaming NFTs for millions of dollars. Of course there is also a risk with these types of games, and there is also money to lose.

What are the best P2E games?
There are so many different P2E games, and the list of games is growing every day. Below are two of the most important P2E games in our opinion.

Decentralland

Decentraland is developed on the Ethereum blockchain and the gaming economy is powered by the MANA cryptocurrency. Players will need this currency to purchase virtual items in the game. In the game, players can invest in virtual real estate plots defined by the LAND token. The blockchain is used by Decentraland to verify and legitimize ownership of the digital land available in the game.

An interesting aspect of Decentraland is that the platform allows developers to develop their own characters, animations, real estate, etc. You can then earn money with this.

The Sandbox

The Sandbox is a Metaverse, a virtual universe, in which everyone can come and play games, but also participate in the creation and expansion of this virtual universe. Virtual creations and the purchase of land are all opportunities to earn money. It is also possible to earn money by simply attending. You will receive SAND tokens for this.

Conclusion

After reading this article you will know exactly how to earn passive income with cryptocurrencies. So you don’t necessarily have to sell crypto to make money with it. Instead, it is possible to put it into a particular platform, earning interest on the crypto that would otherwise sit idle in your wallet.

You now know exactly what staking, lending, DeFi, dividend tokens, tokenized mortgages and play-to-earn games are, and how you can make money with them. We also told you which projects you could use.

After reading this article, it is of course still the intention that you choose one of these options with which you will earn a passive income. After all, you cannot sit still to earn money with crypto. Therefore, we wish you the best of luck in further exploring the projects we have mentioned and setting up passive income with one or more of these projects.

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