How to Make a Living from Cryptocurrency

Cryptocurrency is here to stay, but is it too late to get in on the ground floor? [UDEMY] – Stake Crypto and Earn Passive Income Every Day

16th of June, 2021
Editorial Staff
Learn how to earn a lot of money by staking cryptocurrency in your wallet.

You will discover:

What is crypto staking and how can it help you earn passive income?
The advantages and disadvantages of staking cryptocurrencies.
How to start staking cryptocurrency with no prior experience.
The most secure wallets for storing your cryptocurrency.
We’ve all heard the stories of those HODLers who got into crypto early and stuck with it. Many early investors made hundreds of thousands, if not millions, of dollars from small investments. However, at the outset, crypto was very uncertain and only a few people understood it. Most investors either missed the boat or only put a small amount of money into this opportunity.

 

Even if you missed out on the early rise, it is not too late to profit from cryptocurrency. Today, we’ll look at investments and strategies that even newcomers to cryptocurrency can use to earn passive income.

Tokens for Staking

Mining Bitcoins necessitates costly equipment and high electricity costs, making it unsustainable even for many larger mining groups. As a result, proof of stake has emerged as a popular method for confirming transactions and generating cryptocurrency. Staking is yet another method of generating passive income with cryptocurrency.

 

People who own cryptocurrencies that use proof-of-stake have the option of staking their coins. Individuals who stake their coins are essentially lending their coins to the network in order for it to validate transactions. The network rewards you with additional coins in exchange for lending your coins and assisting with validation, effectively allowing you to earn interest. Coins staked, similar to lending cash, are deposited into a special pool and thus available for everyday spending.

 

At any given time, a person can only validate as many tokens as they have staked. The more you stake, the more likely you are to validate transactions and earn more tokens. This is usually best accomplished in a pool, in which all users combine their coins to receive a larger portion of the transaction validating power.

 

Getting started with crypto staking frequently necessitates a small initial investment. For example, ethereum (ETH) requires 32 ETH (currently worth $40,000) to establish a staking pool, though as a smaller holder you can also participate in a group pool. A specific network requires you to own and stake a certain number of tokens. The most efficient way to earn passive income from staking is to maximize your stake while maintaining a constant connection to a crypto wallet. If you consider supply increases to be a form of inflation, you may see staking as a way to avoid inflation and keep your value current.

 

Cryptocurrency Lending

The basic principles of lending cryptocurrency are the same as they are for traditional cash loans: the borrower pays interest to the lender. In this case, the loan is secured by crypto assets worth more than the amount borrowed. For example, you can deposit bitcoin and borrow fiat currency (currencies issued by countries like a US Dollar, as opposed to cryptocurrencies backed by decentralized networks). Certain platforms, such as BlockFi, act as marketplaces, paying a fixed interest rate to crypto depositors, similar to a high-yield savings account, and then lending those assets to borrowers who can earn even higher returns.

 

The borrower provides cryptocurrency as collateral, ensuring that the investor is compensated in the event of a problem. They are loaned fiat in exchange.

 

Crypto lending is appealing because it provides passive income while avoiding the volatility of the cryptocurrency market and has a relatively high interest rate. For example, right now on BlockFi, you can earn nearly 8% just by depositing Bitcoin on their platform. BlockFi will then lend your Bitcoin to others while paying you interest.

 

To begin lending cryptocurrency, you must first create an account with a lending platform such as BlockFi, Gemini, or Celsius. This method of generating passive income is best suited for people who can leave their cryptocurrency illiquid for extended periods of time.

 

You can use a DeFi (decentralized finance) app like Compound or Aave, which is linked to a cryptocurrency wallet like Coinbase. These services allow you to compare rates, choose the best one (some offer interest rates as high as 8% APR, but rates vary widely), and invest your money. Then just sit back and watch the passive income pile up in your bank account.

 

It is always best to stick with well-known platforms. Newer or untested lending platforms may be more vulnerable to bugs or hacks, which can harm your investment. Also, keep in mind that, as is always the case, generating returns necessitates taking risks. While the rates are attractive and the performance has been strong, keep in mind that depositing your assets with a startup company in the expectation that they will use next-generation financial systems to earn outsized returns is risky in and of itself, so allocate accordingly and be sure to reinvest some profits in more ‘conservative’ holdings when the opportunity arises.

 

Investments

Purchasing cryptocurrency is an excellent alternative investment because it serves as a hedge and supplement to the mainstream financial system and the value of the USD. Finding the right time to buy and the right cryptos to buy is critical for growing a portfolio. This market has the potential to be extremely volatile. Sudden drops can allow anyone to get in at a reasonable price, while sharp rises can result in large payoffs at any time.

 

However, because of this volatility, as well as the inherent regulatory risks in what is essentially a parallel financial system beyond the control of governments and regulators, it is best to invest only in assets that you are comfortable treating as illiquid for an extended period of time. For example, depending on your time horizon and risk tolerance, an allocation of 1-5 percent of total invested dollars may suit you in your early crypto explorations. Since its inception, the value of cryptos has steadily increased, and there is a lot more potential upside as more investors join in, but occasional drops can mean big losses if you are forced to sell. You have a good chance of making a lot of money if you can wait these out.

 

For example, in early January 2021, Bitcoin prices fell by 26%. The two-day drop was substantial. With predictions of a 300 percent increase over the next year, this drop is barely a blip on the radar for long-term cryptocurrency investors and HODLers.

 

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