Are you looking for a passive way to earn income from crypto? Then this article is just the best for you. In recent years, crypto trading has become one of the fastest ways to make money online, and it is owed to the venture of trading popular crypto assets like Bitcoin and Ethereum. However, the narrative is changing as there are lazy crypto investment strategies you can leverage to cash out from the thriving market without doing too much. Therefore, let’s dive deep into ways to generate a passive income by allowing your crypto to work for you.
What Is Lazy Crypto Investment?
Lazy crypto investment is a simple long-term strategy for investing in cryptocurrencies with minimal management. This is based on the understanding that holding onto investments for a long time can lead to significant gains, irrespective of the bullish and bearish runs in the crypto market.
This strategy is ideal for investors with little time or the know-how for frequent trading. Lazy crypto investment involves investing in different cryptocurrencies and not reacting to market changes quickly.
Lazy Crypto Investment Strategies To Earn Passive Income
1. Crypto Staking
Crypto staking is a popular method for generating passive income because it is low-risk compared to other methods. Staking involves holding and locking up a certain crypto asset in a wallet to support a blockchain’s operations and other features, like security.
Participation in a proof-of-stake (PoS) network like Ethereum usually earns regular and predictable rewards, making staking attractive to lazy investors seeking stability.
Staking may require a significant initial investment, depending on the blockchain. Some staking platforms can even lock funds for a fixed period – limiting liquidity. There are different staking platforms on which you can also stake your crypto to earn rewards.
2. Crypto Lending
Crypto lending involves earning stable interest income without selling your digital assets. You can generate passive income by lending your cryptocurrency to businesses and traders through platforms such as BlockFi or Nexo. Here, you can retain ownership of your assets while earning returns from your lending.
Some factors that influence returns include the stability and reputation of lending platforms, the type and amount of collateral required by the platform, and fees charged by the lending platform. Others are high-demand borrowing-specific cryptocurrencies.
Meanwhile, this method comes with counterparty risk—where the borrower may default on the loan—and platform risk—where the lending platform could face liquidity issues affecting your returns.
3. Dividend-Paying Tokens
Dividend-paying tokens are a type of crypto that offers the benefit of regular dividends in the form of additional tokens, allowing you to participate in a project’s success. This contrasts traditional stocks with dividends paid out in fiat currency.
Dividend-paying tokens provide investors with a steady income as long as the project performs well. However, the dividend amount can be a function of the project’s performance, introducing some uncertainty.
Moreover, there is the risk of project failure or token devaluation, which can impact the value of the dividends or the initial investment. It should be noted that you do not need a lot of technical knowledge to start with this strategy.
4. Crypto Savings Account
You can earn passive income from a crypto savings account, as it offers a simple and effective way to grow digital assets—similar to your traditional savings account.
Savings accounts provide consistent and reliable returns, making them an attractive investment option if you want the simplest way to generate passive income.
One key advantage of this strategy is the predictability of interest earnings, which enables better financial planning. However, crypto savings accounts offer interest rates often lower than those of other crypto investment strategies.
Notably, there is a risk of platform hacking or insolvency that could result in the loss of your invested assets. So bear in mind that crypto savings accounts are not entirely insured compared to your bank account.
5. Liquidity Pools
Liquidity pools are a method to provide liquidity to decentralized exchanges (DEXs) and decentralized finance (DeFi) platforms. When you contribute to liquidity pools, you can earn passive income from trading fees and potential rewards.
The performance and trading volume of liquidity pools determines the efficiency of this method. However, this strategy is associated with the risk of impermanent loss, where changes in the prices of pooled crypto assets can result in lower returns compared to just holding the assets.
How To Choose A Platform For Crypto Passive Income
1. Reputation
The crypto ecosystem has become a beehive of scammers, with various crypto scams perpetrated to steal unsuspecting users’ funds. Therefore, to earn passive income, you must choose a platform with a strong reputation for security and other features.
2. Centralized Or Decentralized
You must decide whether to use a centralized or decentralized platform to earn a passive income. Centralized platforms are easy to use, but you may lose access to your crypto during bankruptcy. On the other hand, using decentralized applications is difficult and not recommendable for beginners.
3. Understand Decentralized Protocols
You must take time to understand how to navigate decentralized protocols if you want to make money using the applications.
Frequently Asked Questions (FAQs) About Lazy Crypto Investment Strategies To Earn Passive Income
Can I Generate Passive Income With Crypto?
Yes, you can generate a passive income stream with crypto through methods like lending, staking, and crypto savings accounts.
Can I Make A Monthly Income From Cryptocurrency?
While you can earn income from cryptocurrency, it may be unreliable. This is because of the volatile nature of the crypto market, as a market downturn can result in a huge loss of income.
Is Passive Income The Best Way To Earn From Crypto?
The best way to earn from crypto depends on your personal preference and circumstances. Passive crypto income is probably for you if you prefer a hands-off approach and are satisfied with steady and secure returns.
Is Passive Crypto Income Taxable?
Yes, the passive income that you get from crypto is taxable as it is for crypto tax in Australia, Canada, and the United States. When you sell your crypto for profit, you will realize short- or long-term capital gains that are taxable.
Conclusion
We can not overemphasize how possible for lazy crypto investment strategies to earn you passive income with some of the methods highlighted in this article. However, due to the volatile nature of the crypto market, you need to understand the risks associated with each of these strategies to make informed decisions when navigating them.
