The blockchain industry experiences constant growth despite the global economic crisis. Passive income has become a reliable source for making money. Here is how people use the cryptocurrency they hold to increase their profit.
What is Passive Income?
Today, one of the most popular ways of making money is investment and trade. Both have their drawbacks. They require thorough research, investment of time and effort yet don’t guarantee income. As a result, while several investors make good money, others may experience a significant loss of resources.
It is when the concept of “passive income” comes to save you. It has advantages over investment since the income is guaranteed. It requires minimal time and effort – typically an Internet connection and a laptop, yet brings constant profit.
In the blockchain industry, here are the options of getting passive income:
- Mining – the miner who solves the mathematical problem quicker than competitors and confirms the crypto transaction receives coins as a reward. It’s a rather complicated process that requires advanced computer literacy.
- Crypto loans – cryptocurrency holders lend their funds, and borrowers pay an interest rate. It’s a profitable business since the income doesn’t depend on the state of the crypto market.
- Investment – it’s quite risky. The market is extremely volatile. One can suffer significant financial losses while others become millionaires overnight.
- Dividends are rare in the crypto industry. Dividends aren’t popular since the payout compared to other options of passive income is small.
- Staking crypto
What is Cryptocurrency Staking?
The next way of generating passive income is crypto staking – the foundation of many digital currency exchanges. It’s the activity when a user holding a certain amount of cryptocurrency adds his coins to a crypto wallet. By doing this, he lends his funds to the blockchain network. It’s mutually beneficial cooperation. The network, usually a digital currency exchange, operates properly, while users receive rewards by confirming crypto transactions on the platform.
How to Stake Crypto
To stake your funds, you should, first of all, choose a suitable platform. This step requires detailed research since each platform offers different rewards and interest rates. You have several choices:
- Exchanges such as Binance or LetsExchange making TFUEL to ETH convert and other transactions.
- Crypto wallets – Trust Wallet, Trezor, Ledger.
- SaaS – Staking-as-a-Service platforms such as MyCointainer.
Before staking any amount, always read the terms and conditions of the platform. They check how many coins you should add to the wallet. Please note that staked funds cannot be used because they are locked. After depositing the required amount, the system will randomly choose transactions that you should validate. If the validation is successful, you receive a reward.
How Will You Receive Income?
Do you want to know how staking works crypto rewards? They are provided for each validated transaction. Rewards are calculated differently on different platforms and depend on the inflation rate, the amount of staked funds, and age. Rewards usually make a certain percentage of the executed transaction. Since the amount of rewards depends on the number of crypto coins, some users create staking pools by putting together their coins and share the income among the pool members.