If you own cryptocurrency, you can easily get passive income in 3 popular ways that will be shared in the article below.
When it comes to how to make money in the cryptocurrency market, most people will think of trading, long-term holding or buying projects from the ICO stage. However, there are actually many other ways for people to earn income, especially those that are passive income. So how to earn passive income in this market? Let’s explore the article below!
What is passive income?
Legendary billionaire in the investment world Warren Buffett once said:
“If you can’t find a way to make money while you’re sleeping, chances are you’ll have to work for the rest of your life.”
Passive income is a key element of financial freedom and wealth. So what is passive income? Those are incomes that you don’t need to put in effort and time to earn, they can be automatically generated even when you’re sleeping, going out, traveling… For example, interest comes from giving loans, royalties, real estate rentals.
The cryptocurrency market has really exploded with a total capitalization of up to trillion USD. This market not only breaks the structure of the current financial system but also creates many new trends for investors. The participants of this trillion USD market not only see cryptocurrencies as a potential investment but are also really impressed with the utility and technology that they bring.
Besides, the cryptocurrency market also offers many opportunities for investors to earn income based on the coins / tokens they own or spend some time on. Let’s find out the popular methods to earn passive income in this market in the sections below.
Staking is a great way for users to get passive income with just a little effort.
What is Staking?
To put it simply, Staking is a process similar to opening a savings account at a bank and earning interest based on the amount deposited. Users make a “send” of the cryptocurrency they own to a digital wallet within a certain period of time. The purpose of this is to help validate transactions that create new blocks in the blockchain network. After that, you will receive Reward – Staking reward in cryptocurrencies based on PoS consensus protocol.
Users are selected at random and then elevated to validators. Staking this cryptocurrency and participating in user transaction validation both helps maintain the stability of the network as well as has more opportunities to earn more passive income from this staking activity.
How to do Staking?
Users can participate in validation via decentralized exchanges (DEX), centralized exchanges (CEX), staking service providers or directly at the crypto wallets of the providers. . Here are the specific steps to become a validator by staking the cryptocurrency you own.
- Step 1: The user must first create a staking wallet or use the supporting Staking service in order for the coin/token in possession to be “staking”.
- Step 2: Choose a deposit period. Some projects allow users to freely withdraw coins/tokens at any time.
- Step 3: After the end of the crypto-lock period or when the user is satisfied with the reward for the indefinite case, the coin/token will be released.
- Step 4: User can start withdrawing rewards and original coin/token or continue to participate in Stake to earn more passive income.
Note: Only cryptocurrencies using PoS consensus protocol – proof of stake, users can Staking.
What is Lending?
Lending is a form of coin/token lending on the cryptocurrency market. Investors who own idle coins/tokens can make loans for a fixed period of time with a pre-agreed interest rate. At the end of the loan period, investors can receive both the original coin/token and the committed interest.
Types of Cryptocurrency Loans
Currently, there are 4 ways for investors to earn passive income from idle cryptocurrencies: peer-to-peer lending, decentralized, centralized or escrow, Lending platforms.
- Peer-to-peer lending is direct lending by a user to another individual, normally users should use validators to make sure everything goes smoothly.
- Decentralized lending or DeFi, users can directly lend their cryptocurrency usually on decentralized exchanges.
- Margin lending and centralized lending are forms of user cryptocurrencies that are lent through intermediaries. In these cases, centralized exchanges or lending platforms act as intermediaries between lenders and borrowers. Users lend the cryptocurrency they own to exchanges. Then, the exchange will distribute this cryptocurrency to those who want to borrow for trading or investment. This method can be preferred for investments if the user wants to keep their money for the long term.
- Lending platforms are considered a fairly simple and optimal form of lending. Users must first register for an account on these platforms. The user then selects the cryptocurrency and deposits the amount of crypto and the desired lending period available on the Lending platforms. Finally, just wait until the agreed deadline and you will receive both the original coin/token and the pre-agreed interest rate.
Cryptocurrency mining is an integral part of the blockchain for the blockchain to work properly and to help validate new blocks.
What is Cryptocurrency Mining?
Cryptocurrency mining is the process of using mining power or specialized tools to solve complex algorithms of a coin/token.
During this process, miners simultaneously confirm transaction information on the blockchain. After the confirmation is completed, the transaction information will be included in a block and when the block is full, a new block will be created to be added to the blockchain. The reward for miners for completing this process is a cryptocurrency called a block reward.
Types of Cryptocurrency Mining
Currently, there are four popular forms of mining: hardware mining, cloud mining, phone mining, and web mining.
The concept of mining makes you think that it is a rather complicated operation process and not easy to generate passive income. However, the reality is not so, all this work is done by specialized mining tools or software. Your job is just to install or invest in the mining rig.
Hardware mining is a way to mine coins using a dedicated excavator or take advantage of a highly configurable PC with a VGA device (discrete video card) connected to the motherboard. Then choose the coin/token you want to mine, operate the miner or the mining rig and you can completely start making money in a completely passive way.
Note: This way of mining requires a rather large initial cost, the electricity cost is not small, and the hardware must be regularly maintained because the machine runs 24/24. The market has a lot of machines for you to choose from a few million to several hundred million, but they are only used for mining and cannot use other features like calculators.
If the hardware mining method consumes hardware and requires specialized equipment, then cloud mining is a way of mining to overcome these disadvantages. Miners do not need to install or prepare equipment, all are mined on the cloud platform – cloud mining from service providers. The third party will be responsible for providing and maintaining the mining equipment.
This is probably the best way for you to start making money from mining. However, you also have to pay a relative fee to the third party, so profits are also significantly reduced.
Phone mining is a completely free method of mining coins, all you need is a phone connected to the internet. Currently on the market, there are quite a few apps that support mining on phones such as: MinerGate Mobile Miner, Bitcoin Miner…
Phone mining will be suitable for beginners and inexperienced because this way of mining is very simple and completely free. However, the disadvantage of phone mining is that it is easy to cause overheating and damage the battery, the cost in the long run is quite large. In addition, the efficiency achieved by this is not really too high and only supports phones using the Android operating system.
Like phone mining, this form of mining has only appeared in the last few years. Specifically, websites will actively take the resources of people who are accessing their web and then run programs to handle mining algorithms on users’ computers themselves. Of course, you are completely free to accept or refuse this. This exploit also has the potential to contain malicious software when running on your computer.
Mining can be quite a profitable activity, but that depends on the cryptocurrency, the equipment, the performance of the coins/tokens. Moreover, users also need to keep in mind the cost of necessary equipment and software.
Steps to mine coins
To conduct mining, investors need to perform the following steps:
Step 1: Create an e-wallet
Before you start mining, you need to own or create an e-wallet if you don’t have one. Because you need an electronic wallet to store the mined coins. There are two main types of wallets on the market, hot wallets or cold wallets for you to choose from.
Step 2: Choose a mining method
There are 4 ways we have shared above which are hardware mining, phone mining, cloud mining and web mining. Each way has its own advantages and disadvantages, you need to consider and choose the form that suits your conditions.
Step 3: Install the coin mining software
These mining software help you monitor parameters during mining such as: mining speed, hash rate (Hashrate), fan speed and temperature. This is especially suitable for hardware mining – mining with specialized equipment.
Step 4: Choose an exchange
Once you have successfully mined, you need an exchange to conduct the sale of cryptocurrencies to pay the costs of the mining process and make a profit.
In this article we have shared the 3 most popular methods that make it easy for you to earn passive income from your cryptocurrency. It can be seen that instead of depositing money in banks, owning cryptocurrency will give you more ways to earn passive income. This is a highly volatile market, with a lot of risk but also huge profit potential. We easily see this when the number of individual investors, institutions or corporations who want to invest in the cryptocurrency market is increasing.