Is passive income the best way to earn from crypto right now?

Whether passive income is the best way to earn from crypto is something that depends on the individual. Your investment goals are what decide that, along with your risk tolerance and personal preferences. Within the crypto industry you can earn passive income in a variety of ways, including running crypto nodes and other methods mentioned above. All of them have the potential to provide steady returns over time. Furthermore, all of them require less involvement than trading or investing.

Passive income can be particularly rewarding for long-term investors, who plan to hold crypto for a long time either way. Any of the methods described above can help them earn additional cash while they wait for the prices to surge. However, all of these strategies also come with risks. Market volatility, regulatory changes, impermanent loss, are only some examples. This is why every crypto user needs to be familiar with what they are doing and what the risks are. Cryptocurrencies have become increasingly popular over the past decade. Well also discuss some methods you can use to start earning passive income within the crypto space.

1. Decentralized crypto lending

Crypto lending is one of the most popular ways of earning passive income in the entire industry. Similar to liquidity mining, with this method, all you have to do is deposit your crypto into a lending pool. Once again, users must conduct thorough research when it comes to selecting the best crypto lending service.

The interest comes from borrowers who borrow the coins that you deposited. They are expected to return the funds in the agreed amount of time and pay interest rates. The entire process is all facilitated but the use of smart contracts. Lenders must also provide some sort of collateral, this safeguards the lender.

2. Cloud mining

Coins such as Bitcoin are highly popular and very difficult to mine. However, mining Bitcoin is still very rewarding, which is why people are so interested in the process. One option that they have is to turn to cloud mining. Cloud mining is a service offered by cloud mining companies that let you borrow their computational power. All they need is for you to make a small investment.

Essentially, you purchase a mining plan in order to rent their computational power. In exchange, they allow you to use their mining gear, and you receive a portion of the gains. That way, you can mine coins that are difficult to mine individually without buying mining gear yourself.

3. Crypto games

Halfway down the list, we have one of the most enjoyable ways to earn passive income in crypto. That is to play crypto games. Most crypto games today adopt the Play-To-Earn (P2E) model, meaning you can earn while playing. Different games offer different deals. Some of PvP games reward you for winning matches against other players. Other games let you mine or collect valuable resources and earn them by selling them.

Some games allow you to win NFTs and then sell them for profit on a third-party marketplace. The terms of earning in P2E games differ from game to game. But, the fact that you can earn while playing games is quite a revolutionary change in gaming as a whole.

4. Airdrops

Another popular way of earning cryptocurrencies passively is participating in airdrops. Airdrops are performed by crypto projects or sometimes crypto exchanges. What this means is that theyll send free cryptocurrencies to users who fulfill certain requirements. Airdrops are often performed by new crypto projects that seek to distribute their assets. Often, such projects may be supported by exchanges or other larger projects.

5. Crypto savings accounts

An additional method of earning passive income within the crypto space is by using crypto savings accounts. These are similar accounts to the ones offered by traditional banks. However, these ones are available on crypto exchanges — centralized exchanges, to be precise. Apart from exchanges, there may also be other specialized platforms that offer such services.

Crypto savings accounts are simply interest-bearing accounts for cryptocurrencies. The platforms allow you to deposit your money into an account, and in return youll earn interest based on the amount you deposited. Meanwhile, they use your money for various purposes. The platform might act as a liquidity pool, a lending platform, or something similar. For investors, it is important that their funds are safe and that they will grow in time.

6. Dividend-earning tokens

In tenth spot, we have dividend-earning tokens. As the name suggests, these are crypto tokens that have some regular dividend rewards for their holders. Although this isn‘t common, certain tokens have this mechanism built into their code. One example is VeChain (VET); you earn Thor (VTHO) by holding it. Alternatively, you can get KuCoin Shares (KCS), which will grant you a share of KuCoin’s transaction fees.

This does not differ much from earning dividends from stocks, the only difference here is that youre dealing with cryptocurrencies.

7. Master nodes

We spoke earlier about operating crypto nodes when we mentioned the Lightning network and its nodes. However, you can also find a blockchain network like DASH that has something called a Master Node. These master nodes are crypto nodes that can receive rather large payouts. They dont earn transaction fees but a portion of blockchain rewards.

The likelihood of an average person running a master node is somewhat low, due to their scarcity. However, if you ever get a chance to run a master node, this can be a very profitable way of interacting with crypto.

8. Mining

Of course, traditional crypto mining is also a very common way of earning passive income. You only need to select a blockchain network that runs a Proof-of-Work consensus mechanism. Bitcoin is a prime example but is also a difficult and expensive coin to mine. Other options include Dogecoin, Litecoin, and many other cryptos with similar blockchain technology.

During the mining process, you provide your computational power and electricity to the project‘s algorithm. The algorithm uses these resources to verify transactions and pack them into blocks. Once the blocks have been created, you receive a reward in the form of the network’s native cryptocurrency. Remember that mining can be expensive, so it matters which coin you mine.

9. Affiliate programs

Lastly, we have participation in affiliate programs. A lot of projects and exchanges like to use their community members to gain new members. This is a common practice in the retail industry, so by no means is it unique to crypto.

Similar to the retail industry, you get your own affiliate link which you can share anywhere.

If people come to the platform and register via your link, you get paid. You can use this method if you have your own website or if you write a blog. This has also been very popular among social media influencers. They even offer discounts to those who use their specific link or code.