Dreaming of a future of financial independence? What if cryptocurrency can help you get there? As a means of generating passive income, the potential of the digital source of revenue is growing all the time. Cryptocurrency can work for you while you sleep. All it takes are the right tools and know-how.
By understanding the burgeoning future of cryptocurrency and its place in investment portfolios, you can make educated investment decisions that will have you building a substantial passive income in next-to-no time.
With these simple steps, you can make cryptocurrency your new source of passive income and set yourself up for a financially independent future.
Table of Contents
1: Understand your Investment
Accumulating wealth through cryptocurrency is a viable option, one possible even in the form of passive income. This requires a thorough understanding of your investment options, however, from the different brands of cryptocurrency to the different methods of investing it.
You might be overwhelmed by the sheer scale of the cryptocurrency market. With over 5,000 different cryptocurrencies and more joining the market every day, this burgeoning field for investors comes in a wide variety of forms and with plenty of caveats.
These variances can come in the form of speed or liquidity of transactions, of paper versus coded transactions, and much more. It is essential for cryptocurrency investors to understand how their target currency differs from the competition to know what will work best for their passive income goals.
Each brand comes with its own set of unique advantages and disadvantages, so it is essential to read, study, and understand the white paper provided by the currency you are considering.
Whitepapers give you detailed insight into how the currency functions and its guiding philosophy. This will be valuable in determining which currency to invest in and knowing when and how to buy.
There is a wide variety of cryptocurrencies to choose from. Here are just a few of the more popular and links to their whitepapers or wiki.
2: Educate yourself on Crypto Laws
With any investment, investors and entrepreneurs must understand business laws surrounding the investment. As a newer portfolio option, cryptocurrency comes with regulations that differ from traditional bonds and stock options. Any business owner or investor who has accumulated his or her portfolio as a limited liability corporation (LLC) will need to understand how specific laws and regulations affect cryptocurrency investment.
Blockchain and cryptocurrency laws and regulations differ by region. Some countries like China and Russia have outlawed the investment and use of cryptocurrencies altogether. Acceptance of these currencies varies across the world, but in the US they are regulated and taxed much like traditional assets. Here, there is widely a culture of acceptance towards cryptocurrency, but again, certain policies vary by state.
Understand your state’s specific cryptocurrency laws and tax regulations before investing if you want to make the most from your investment and build passive income.
3: Make Educated Investments
Cryptocurrencies like Bitcoin aren’t known for their predictability in terms of value. They are a complex commodity that changes with perception and consensus on its longevity. However, few commodities have risen in value with the speed of cryptocurrency. In fact, cryptocurrency has often been referred to as ‘digital gold’ and the comparisons to gold don’t stop with the amount of money investors can make by building their inventory of either.
You can make substantial amounts trading with cryptocurrencies, but generating passive income that does the work for you takes education.
There are a few different ways in which you can invest in passive income. Here’s what you should know about each of them:
- Interest-Earning Lending Accounts
The epitome of blockchain and AI technology, automated lending platforms allow you to sit back and enjoy the passive income generated by the process. While lenders can typically set various parameters or enter into smart contracts, they have less control in the liquidity of their investments, typically locked into a set period of time, with yields depending on how much and the type of cryptocurrency invested. If you’re okay with having less control over the minutia of your cryptocurrency investment and want a good return on investment (ROI), lending is a great option.
- Proof-of-Stake Coins
Staking is another simple way of generating passive income. By placing your cryptocurrency in a pool or designated wallet, you will receive a return on your investment. You will essentially be paid to help build blocks and resources for the maintenance of the marketplace in an easy, low-stress, low-risk investment. This typically comes with a holding period, so your coins will be locked in for a time as you generate passive income.
- Peer-to-peer lending
Other lending options that are less automated and more direct give investors more control over their revenues. Choose your own lock-up period and negotiate your ROI. These are often shorter-term agreements, but they can be a great way to generate passive income with near-full control over your investment. Decide when and how you would like to loan your cryptocurrency and watch your revenue trickle in.
Blockchain, cryptocurrency, and artificial intelligence have combined to make earning income through a digital marketplace not just possible but relatively easy. The future of finance exists in this technology, or fintech, which powers these secure virtual marketplaces. However unpredictably cryptocurrencies have behaved on the market in the past, the future looks bright for investors in crypto.
4: Look for Earning Opportunities
Bolstering your passive income and continuously growing your ROI comes down to looking out for and jumping on worthwhile investment opportunities. There are plenty of methods for earning crypto as your passive investments generate wealth, and each one is worth looking into.
Here are a few of the methods you can use for earning cryptocurrency:
Mining is the process of using a computer to solve equations validating transaction blocks. In doing so, the miner is rewarded a portion of the validation token. This method doesn’t work for all forms of crypto and takes time and computing power. If you don’t want to acquire the equipment for yourself, you can pay a fee to join a mining network and reap a portion of the rewards that way.
- Joining airdrop campaigns
Airdrop campaigns are used in a variety of projects to build community and notoriety. These campaigns enlist the aid of crypto enthusiasts to complete tasks in exchange for tokens. Sometimes, these tasks are as simple as following a social media page. Keeping an eye out for these opportunities is a great way for any crypto investor to build their wealth and further invest in passive income-generating methods.
- Completing microtasks
Very similar to airdrops, some tech companies and startups use microtasks as a way of getting a community of crypto enthusiasts involved in a project. For completing a task—often promotional—investors can earn bounties that net them crypto. This can then be turned around and used for further investing in passive income markets that will generate wealth for less work.
Passive income strategies are often the end goal of investing. While you build enough wealth to grow your ROI, it is wise to keep an eye out for mining, airdrop, and microtrack opportunities that will build your crypto value with little work involved.
To maintain an awareness of airdrops and bounties, you can subscribe to a variety of sites or even Reddit threads to keep you up-to-date on community activity for netting your crypto.
5: Let Crypto Serve as Passive Income
Effective investors will take every opportunity to build their resources for growing the ROI of passive income. Whether this takes the form of enlisting in crypto-earning opportunities like airdrops and mining or even secondary jobs, investors who grow their resources can continue to turn their accumulated wealth into passive income generation, carving a path towards financial liberation.
Whether the method you choose for crypto investment is lending, staking, interest-earning, or a combination of all three, by consistently building invested resources you grow your ROI. Then, through automated trading and lending platforms, you can let your wealth and AI work for you, earning you money while you sleep.
With these simple strategies, anyone can begin generating a system of passive income through cryptocurrency. This digital marketplace is the future, so why not invest today?