What is Passive Income in Crypto?

If anything, there is nothing restive about Bitcoin and crypto. The industry is volatile, fast-moving, with dizzying price twirls. Luckily, traders and crypto participants are used to the fast-paced nature of crypto from inception. 

Yet, amid the boom and high volatility, cryptocurrencies can be used to earn passive income. A crypto holder can make digital assets work for them and make extra coins. It has been done in the heavily regulated traditional markets. The same is being replicated in the emerging yet potent crypto space.

Passive income is money generated from activities in which one is not actively involved. And this is different from what most crypto users do: purchase a digital asset and hold in expectation of earning a decent profit if prices appreciate.

To earn a passive income in crypto, one must be guaranteed stability in returns. That is, earnings must be fixed and predictable. While purchasing and holding an asset in hopes of capital gains is a popular way, there is no guarantee of earning percentage. This is because prices can be impacted by factors beyond the control of the project or market.

However, a user can earn passive income in crypto by staking. Here, a crypto holder can lock their asset for some time, contributing to network decentralization and security for block validation and thus block rewards. You can stake crypto in proof-of-stake networks like Cardano, Tezos, EOS, Polkadot, and more. Besides, users can participate in DeFi and lend their assets in lending protocols like MakerDAO and earn interest for their contribution. Furthermore, users can make passive income from yield farming by providing liquidity in a decentralized pool, investing in dividend-earning shares offered by crypto companies like KuCoin, or depositing in interest-earning digital asset accounts offered by providers like NEXO, Celsius Network, and others.

Are you interested in learning how to make passive income in crypto? Tune in to our free podcasts!

Dalmas Ngetich

Dalmas is a very active cryptocurrency content creator and highly regarded technical analyst. He’s passionate about blockchain technology and the futuristic potential of cryptocurrencies.