How to Make Passive Income from Crypto

Passive and semi-passive ways to earn income from crypto

When people think of making money from cryptocurrencies, they typically imagine someone manically day-trading or constantly buying into new ICOs. However, there are many other ways to earn income from cryptocurrencies that are not as active and do not require as much time. These methods range from semi-passive, which require a small amount of time, to fully passive, which require no time at all. Depending on your available capital and willingness to sign up for things, certain methods may be better suited to your current investment capability and/or personal preferences.

Passive methods:

Staking

Blockchains that use proof-of-stake (PoS) variants allow you to earn additional coins by staking your coins. In exchange for helping secure the network and locking up your capital, you receive a proportional amount of the coin’s inflation. There are many PoS coins that each differ in their implementation and rewards — this site provides a long list of all of them and links to their respective specifics. A specific type of PoS is delegated proof-of-stake (DPoS), in which people vote for delegates, rather than directly staking as individuals. Staking rewards tend to be a bit higher in DPoS coins such as Ark and Lisk.

The amount of initial setup ranges between coins; some require you to set up a consistently-online node, whereas others, such as Ark, require only a one-time setup through a wallet. Node staking is often more lucrative than simpler methods, at the expense of being more time-consuming and requiring a larger amount to stake. Assuming you want a more passive method, Ark’s staking can provide ~10% return with virtually no setup besides owning coins and choosing a delegate.

Exchange coins

Several exchanges such as Kucoin and COSS have tokens that allow you to receive a share of the fees collected by the exchange. Typically, a certain percent of the exchange’s collected fees are given back to token holders, and then within that portion, your received dividends are proportional to the amount of tokens you hold. This method is not necessarily very consistent, as it depends on exchange volume during a given period of time. However, if you are able to buy an exchange’s coin before it gains a lot of volume, you can end up earning a very high rate of return due to the token price initially being low. Note that this works in the opposite direction as well; if an exchange’s volume decreases, you may lose money in terms of both token price and dividends. Also note that these dividends may come in the form of coins on the exchange rather than in the exchange coin. This means that if you only hold a small amount of the exchange coin, you may receive amounts of each individual coin on the exchange that are too small to actually sell.

Dividend coins

Some coins offer dividends in the form of other coins simply for holding the original coin. For example, NEO generates Gas, and Vechain will generate THOR. Typically, each unit of the original coin will generate some predetermined amount of the new coin. These new coins are related to paying network fees, whereas the original coins can be thought of more as equity in the network. The rate of return on these methods is quite low (~3% for NEO’s Gas), but they require no work beyond owning the original coin, so it is a very passive, low-risk method of earning income.

Semi-passive methods:

Airdrops

Airdrops are the crypto analog to free samples in the mall. Projects that are just starting out will oftentimes give out a small amount of free tokens to verified people in order to spread the word about their project. Typically, new projects will provide free tokens upon community involvement or signing-up and providing some basic personal information. Usually the amount given out during airdrops is small in terms of fiat currency, but if you hold on to the tokens for an extended period of time and you picked a good project, these tokens can grow in value, making your airdropped amount worth a significant amount of money. Also, airdrops are usually very quick to qualify for, so it is easy to do multiple airdrops in a short amount of time. For more information, and an ongoing airdrop, check out an earlier article I wrote on this topic.

Earn.com

Earn’s platform is a very simple way to monetize your attention. After signing up to their platform (you will need a company or school email), you will have a profile on their website. You will then be paid to receive and respond to messages and other tasks sent to you by other people on the platform. Currently, payments are provided in the form of Bitcoin. The specific payment amount is up to you — but typically this should scale with how “important” of a person you are. Beyond this, Earn also has lists that you can register to, allowing you to receive messages from people targeting a specific demographic or group of people. For example, there are lists that aggregate people from certain universities or professions. There is also a well-known list for airdrop recipients, allowing users to be paid to receive free tokens from developing projects.

Referrals

Many websites, such as popular exchanges like Coinbase and Binance, offer referral programs that pay you to draw new customers to their exchanges. For your average person, this method is probably not going to net you much income. However, if you have a large audience through something like a popular blog or YouTube channel, referral links can be quite lucrative. These referral programs typically pay in coins listed on the exchange. Coinbase’s pays a static amount of Bitcoin, whereas Binance’s gives you a certain percent of the exchange fees collected from your referred people, in the form that it was collected in (either the coin itself, or BNB).

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