Ways to Earn Passive Crypto Income in 2022
03 Jun, 2022
Earn Passive Crypto Income
Cryptocurrency has been in the spotlight as of late, thanks to its meteoric rise in popularity and value over the past several years.
However, it’s important to remember that while crypto can provide you with some pretty impressive returns on your investment, there are still some pitfalls that you’ll want to be aware of before diving in headfirst.
Whether you’re thinking about using your cryptocurrency to build up passive income or you’re simply looking for something more stable than stock investments, here are some ways to earn passive income with crypto this year and into the future:
There are many different types of staking. Some popular proof-of-stake systems include PIVX, NXT, and PoS/Bitquence. I have been invested in POS systems for a while now, and my income has steadily increased as I am able to stake more and more coins.
Note that staking can take a very long time – my passive income is derived from NXT, and it took over a year before I was able to reap any real rewards.
The key here is patience! If you don’t want to wait months or years for your returns, you may want to consider other options.
Proof of Stake (POS)
Proof of stake is a method by which cryptocurrency investors generate passive income. Under proof of stake, investors must stake their currency for a certain period of time in order to make money off it.
Your investment has a sort of punishment if you don’t stake it or if you try to move your funds out early. The more coins you have staked and locked up, as they say, the more you can earn passive income with crypto over time.
And while proof of stake isn’t necessarily better than other methods of earning cryptocurrency passively—for example, through mining—it does have its advantages.
For one thing, there are far fewer barriers to entry with proof of stake than with mining: all that’s required is some cryptocurrency (and not much at that) and an internet connection.
In addition, proof of stake doesn’t require any special equipment. If you have a crypto wallet, you can start earning passive income right away.
If you’re wondering how to earn passive income with cryptocurrency, another way you can do it is by validating transactions on the blockchain. Staking is a type of transaction validation that’s supported by many blockchains, and it rewards users with a small amount of cryptocurrency for verifying network transactions.
But only certain blockchains support staking, so you must do your research before investing time and energy into something that may not be worthwhile.
For example, Ethereum currently supports staking for its cryptocurrency Ether, but newer projects like NEO don’t yet have a working implementation.
There are other ways to earn passive cryptocurrency income as well—you just need to learn which cryptocurrencies are best suited for each method. Sticking with a Proof-of-Work (PoW) currency allows you to mine or purchase those coins using a crypto exchange (if it’s available).
You can then hold onto those coins in hopes of seeing their value increase over time, though these types of cryptocurrencies generally take longer than others to appreciate in value.
One of cryptocurrency’s great strengths is its ability to reward owners for being hodlers—that is, holding onto their coins. Several coins offer staking and master node rewards, which means that hodlers can earn a profit just by holding their currency of choice.
Staking and master nodes are often associated with high levels of risk, but recent developments have decreased those risks for many coins.
For example, PIVX has developed an innovative proof-of-stake algorithm called zPoS that allows users to stake from low-power devices such as smartphones or laptops. This makes it easier than ever before to earn cryptocurrency passive income.
It also helps ensure that even if you’re not able to contribute much processing power, you can still earn rewards on your holdings.
Other projects like Groestlcoin and ZenCash offer master node systems where users who own 1,000 coins receive an annual reward of around 10% annually. These types of systems make earning cryptocurrency as a passive income more accessible than ever before.
Crypto Savings Accounts and Crypto Lending
There are two major passive-income crypto projects: savings accounts (also called staking, master nodes, and proof of stake) and lending platforms.
Many experts believe that both types of tokens will continue to appreciate throughout 2022; it’s hard to predict which one will perform best. As for deciding between them, here are some quick thoughts:
Savings accounts earn more interest than other methods of earning passive income with cryptocurrency but require users to hold their money for longer periods—in some cases, as long as a year or more.
With crypto lending platforms, investors typically earn between 6% and 20% interest on their money each month by simply investing funds into loans issued by other people or businesses. The downside is that borrowers can default on these loans, so there’s an element of risk involved. For example, you might invest $100 into a loan issued by someone who promises to pay back $110 in 60 days—but what happens if they don’t? You lose your initial investment plus any additional gains.
That said, most crypto lending platforms offer automatic payments so that borrowers repay their debts automatically once they receive new capital from another investor. And while many platforms charge high fees, some charge low ones or even no fees at all.
So even though crypto lending isn’t guaranteed to be profitable, it can still be worth checking out—especially since there are no minimum investments required.
If you do decide to give it a shot, make sure you understand exactly how much interest you’ll be paid before committing any funds.
Liquidity Pools and Yield Farming
One of the most powerful methods for earning passive income in cryptocurrency is staking. This method uses liquidity pools, i.e., groups of coin holders who combine their funds and stake them with a staking pool operator (SPO).
The SPO keeps track of all users’ holdings and distributes payouts every few days. Yield farmers, as they’re known, earn income by providing capital to join SPOs and by participating in payouts whenever they reach certain thresholds.
When you combine two tokens into a pool, liquidity tokens are created, which can be farmed to obtain more rewards. The platform's utility token is frequently used to payout rewards.
Certain crypto accounts, particularly new ones, may offer payouts of above 100% APY. That rate may seem appealing, but it comes with a number of risks. The best way to minimize these risks is to invest in selected cryptos that are doing well.
In essence, yield farming involves using one token to generate another—with little effort on your part. If you have extra tokens sitting around, consider joining an SPO. This could be a good way to increase your passive income stream without much work.
And best of all, many SPOs even allow you to participate if you don’t own a lot of crypto. For example, here are some good options:
As always, do your research before choosing an SPO! There are lots out there that seem trustworthy but turn out not to be so great after all. Some of these platforms also offer services like staking via master nodes.
Masternodes require a significant investment upfront—usually 100,000 coins or more—but they’re worth considering if you want to maximize your passive income potential while minimizing your time commitment.
Here are some good masternode options:
Again, research is key; make sure any master node platform offers enough incentives for its investors. For example, Particl pays 45% of its block rewards to stakers and 10% to masternode owners.
The best passive income cryptocurrency is Bitcoin (BTC), followed by NEO and ARK. These networks all have unique strengths but share a common theme—in order to earn passive income on these networks, one must simply hold tokens.
With BTC and ARK, there’s a secondary benefit—as more nodes pop up on their respective networks, throughput increases, and transaction fees decrease. This is true with any network that uses Delegated Proof-of-Stake (DPoS) or Delegated Byzantine Fault Tolerance (dBFT).
For example, if you stake your tokens on TRON, you can expect an increase in transactions per second as more people stake their coins. This translates into higher network utility and thus better price appreciation over time.
While it’s too early to tell which token will be most successful from a passive income perspective, it seems clear that only holding is required.
And while staking may be best suited for investors who want guaranteed returns, it does require some technical knowledge and understanding of how blockchains work.
If you don’t know what DPoS/dBFT is yet, we recommend learning about it first before attempting to earn crypto passive income through staking.