The Big Deal about Earning Passive Income in the Cryptocurrency Space
Written by konex on 06 October 2021
What’s a trending topic that we hear a lot about these days? If you’re in the cryptocurrency space, it’s “passive income”… but what exactly is it?
Passive income is a form of income that you can receive by doing very little. Another way to think about it is that you can earn money while you are sleeping. There are various ways to earn passive income, but in the cryptocurrency space there are three main methods; mining, staking, or depositing your assets on an interest-earning platform.
Mining is the process of generating cryptocurrencies by using computing power, and for the longest time it was the only way you could generate passive income. Preparing a mining rig for Proof of Work cryptocurrencies such as Bitcoin (BTC) and Litecoin (LTC) requires some level of technical expertise and a physical mining setup, but cloud mining does not. However, the return on investment these days isn’t nearly as profitable as it once was. If you have a way to get cheap electricity, it could be worth some research.
As for staking, this is done with Proof of Stake tokens such as Polka Dot (DOT), Tezos (XTZ), in the very near future Ethereum (ETH), and exchange tokens such as Binance Coin (BNB). All of these tokens offer rewards of greater than 5% APY, and getting returns of above 10% APY is not unheard of either. One of the biggest positives with staking is that the rewards are very consistent, so you know you’ll be earning rewards on a regular basis without having to actively do anything. Another advantage is that you can stake your crypto from your hardware wallet, which means that you are in possession of your private keys at all times. This is a more secure method than trusting your private keys with a third-party exchange or platform.
Finally, there are platforms such as Nexo, FTX, and BlockFi that also offer interest rates on Proof of Work projects like Bitcoin (BTC) and Litecoin (LTC) … although the interest rates tend to be lower.
These platforms are very easy to manage. All you need to do is deposit your funds and then you can start earning passive income. Many of the platforms that offer interest rates also tend to have a preferred interest payout option. This means you have the choice of having interest paid out in the token you are investing in, the platform’s native token, or Bitcoin.
Additionally, there is often a token swap feature, which allows you to switch from one token to the other. For example, if you choose to receive the platform’s native token as an interest payment, the rate tends to be higher, so you can receive the native token and then convert it into an alternative cryptocurrency e.g. Bitcoin.
It’s also important to note that both staking and interest earning accounts offer you compound interest. What this means is that you can earn interest on both your initial investment and the interest that you earn, which accelerates your overall earnings. Also, if the cryptocurrency increases in price, you can also enjoy the gains there as well.
You might be curious to know why a referral network platform such as konex is educating its users about passive income, especially when users within the konex community only receive rewards if their referral successfully gets hired. If you are thinking this, then you might be unaware of the fact that rewards on konex can also be paid out in Bitcoin. If you choose to receive Bitcoin as payment, then knowledge of the above options to earn passive income could come in handy.
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