How to Generate Passive Income with Cryptocurrencies in 2024?
Ways to Generate Passive Income with Cryptocurrency: Investment
Investing in cryptocurrencies like Bitcoin, Ethereum, and others is still one of the most popular ways to earn.
It’s simple—buy when the prices are low, hold onto them as they increase in value, and sell when the market is up.
Think of it like buying stocks and waiting for their value to grow. However, it’s important to remember that the crypto market is known for its volatility.
Prices can skyrocket one day and drop the next. So, it’s wise to do your research and invest only what you’re comfortable with.
Therefore, when investing in crypto, you need to be careful.
NFTs and Play-to-Earn Games
NFTs (Non-Fungible Tokens) and play-to-earn games have exploded in popularity over the last couple of years, and they offer another fun way to earn.
You can create, buy, and sell NFTs or participate in blockchain-based games where players earn crypto as rewards.
While it may not be a traditional form of passive income, it’s an exciting emerging trend for those who are into gaming or digital art.
Crypto lending
Crypto lending is one of the most famous ways to earn passive income with crypto investments. It involves lender/investor and borrower.
A lender locks up his cryptos for a specific time in a lock-up to earn interest on it.
A borrower offers collateral to get funds. Both individuals agree on terms and conditions such as loan amount, period, interest rate, etc.
The interest rate may be fixed or variable, determined by the lending platform. You can earn up to 7% interest on lending Bitcoin, while interest on stable coins is as high as 17%.
Both CeFi and DeFi lending platforms typically pay dividends in the form of cryptos your deposit.
Examples of crypto lending platforms are Compound, Aave, Nexo, BlockFi, etc. Crypto lending also involves some risks.
You need to search for the most reliable and reputable platform to work with.
Provide Liquidity in Liquidity pools.
DeFi allows individuals to earn by depositing their cryptocurrencies into decentralized trading pools, called liquidity pools.
These pools are autonomous, and for providing liquidity to such pools, investors are rewarded with liquidity provider tokens (LP). You can redeem this token later on.
Price fluctuation may result in impermanent loss with a liquidity pool. The better option is to invest in stable coins in liquidity pools.
Examples of liquidity pools are Uniswap (UNI), PancakeSwap (CAKE), and SushiSwap (SUSHI).
Yield Farming
Another trend this year is yield farming and liquidity mining.
These methods allow you to lend or lock up your crypto in decentralized finance (DeFi) platforms, which then offer rewards in return.
Essentially, you’re helping provide liquidity to the market, and you get rewarded with tokens or interest.
With the rise of DeFi in recent years, this has become a popular choice for those looking for more creative ways to earn passive income with crypto.
Mining
Mining is the most common and oldest method of earning rewards in the crypto space.
Mining involves powerful computers to solve complex computational problems for transaction verification.
Each successful miner gets a reward in the form of cryptocurrency.
For example, the reward for mining one Bitcoin after 2020 is 6.25 BTC, halving after every four years.
In 2009, when Bitcoin was first mined, the reward for mining one Bitcoin was 50 BTC.
In the early days, CPUs (Central Processing Units) were used for mining.
Now, as the hash rate has grown, most miners have switched to GPUs (Graphics Processing Units) and ASICs (Application Specific Integrated Circuits).
Staking
Staking is another method of earning passive income with cryptocurrency.
In staking, an individual locks his funds in a particular blockchain platform for a specified time. He gains a percentage of interest on the same assets.
He also receives voting rights for the governance of the platform. The stake is then used as an incentive to run the blockchain network.
For example, if you stake your Polymesh tokens, you become a Polymesh crypto node operators capable of validating other transactions for which you receive rewards.
Affiliate Programs
An affiliate program is another option for earning passive income with cryptos. Some crypto-based companies may compensate you for bringing new people to their network with your referral, such as discounts.
If you have a significant social media audience, affiliate programs can be a good source of passive income.
But you must be careful while promoting any platform. First, do your research about the company.
The bottom line: What to Expect in 2024?
Looking ahead, we can expect continued innovation in the crypto space, especially in decentralized finance (DeFi) and staking options.
One of the big trends right now is the rise of real-world asset tokenization.
Big names like BlackRock and JPMorgan have started exploring tokenizing assets like real estate and stocks, turning them into digital assets on the blockchain.
This could open up a whole new way for investors to generate passive income through fractional ownership in high-value assets, which were previously reserved for wealthy individuals or institutions.
Another exciting trend is the growth of crypto savings accounts.
Platforms like BlockFi and Celsius Network (although facing challenges recently) allowed users to earn interest on their crypto holdings, similar to traditional savings accounts.
Although some platforms have encountered regulatory issues, others are improving their security and services, making it easier for everyday users to earn passive income just by holding crypto.
For a real-world example, many people are now making passive income through staking on the Ethereum 2.0 network, where users lock up their Ether and receive rewards over time.
With Coinbase and Binance offering staking services, even those who aren’t tech-savvy can get in on the action with just a few clicks.
Additionally, the rise of automated trading bots, like Pionex and 3Commas, is helping investors profit from crypto’s volatility by executing trades automatically based on preset conditions.
These bots are becoming more sophisticated, allowing even beginners to generate passive income without watching the market constantly.
In short, 2024 is shaping up to be a year where cryptocurrency becomes even more integrated into the everyday financial world, making it easier and safer for people to generate passive income.
Whether through tokenized assets, staking, or simply holding crypto in savings accounts, the opportunities are growing. The future is bright, and there’s something for everyone, no matter their experience level!
