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How To Make Passive Income With Cryptos

Cryptocurrencies have been a hot topic for over a decade, but it wasn't until recently that they became validated as a form of passive income. They're a great way to build diversified, consistent streams of wealth, and the opportunities in cryptos are only growing with time.

For people unaware, cryptocurrencies are digital currencies that use encryption techniques to regulate the generation of currency units and verify the transfer of funds. Their architecture means they operate independently from a central bank, giving you significantly more freedom over transactions, taxes, and usage. You can earn passive income with cryptocurrency through direct trading or mining them using your computer's processing power.

In this article, we'll discuss how you can make passive income with cryptos in-depth.

You can buy and trade cryptocurrencies primarily on online exchanges. To be clear, active trading of cryptocurrency is technically not considered a passive income stream (because you have to spend a significant amount of time monitoring the market closely). Still, significant buy-and-hold opportunities have helped many people earn upwards of $10,000 monthly for years.

During 2011, bitcoin (BTC) had a sudden price increase of over 3000% in just a few months. Imagine the passive income you could have made if you bought BTC at $1 and sold it at its peak. Moreover, BTC prices have had many explosive bubbles that gave people massive opportunities to build wealth over the past years.

Since 2020, Bitcoin's growth rate has slowed considerably, but it is still one of the last decade's fastest (and most consistently growing) investment opportunities. From January 2020 to December 2020, BTC had a 224% increase in value. In March 2021, Bitcoin hit nearly $60,000USD. Multiple well-known individuals have made predictions that BTC could be worth $200,000 by 2025 while 1 to 10 million USD by the end of 2040, which would be a tremendous passive income opportunity if capitalized on now.

Another crypto growth example is Ethereum. Right after creation, ETH had a cost of just under 67 cents per coin. However, with its steady rise over the last few years, ETH now routinely peaks at over $3500. Experts have predicted that it may reach over $100,000 per coin by 2023.

Other cryptos such as Litecoin have also seen dramatic price rises since their releases. In particular, Litecoin went from just a few cents in 2011 to more than $200 in 2017. It has certainly had its ups and downs over the years - now sitting in the neighborhood of $168 - but despite its current situation, many cryptos enthusiasts predict that it may eventually reach upwards of $1000 per coin by 2030.

Crypto staking refers to the idea of locking up crypto holdings in a wallet for a fixed amount of time and receiving dividends in return. This is one of the methods you can contribute to a blockchain network, and contributors always get rewarded. Currently, there are two main ways in which you can contribute: proof-of-work (PoW) and proof-of-stake (PoS).

The PoW model is used by cryptos such as Bitcoin. Proof-of-work requires that you have a powerful processor capable of fast hashing during the mining process, which can be costly if you want passive income in BTC or other cryptocurrencies that require large numbers of calculations.

On the other hand, the PoS model is used by coins like Ethereum, PIVX, NEO, Stratis, and Phore Coin, and scales your contributions based on the amount of asset you own in your respective currency. This method is seen as an improvement to PoW by many people in the cryptocurrency space, and can yield significant dividends if you own a fair number of pre-existing coins.

A person can earn with this method by buying a certain number of tokens and locking them in their wallet for a predetermined period in which to 'stake' your calculations. They earn income for several reasons: one, because the token value increases over time, and two, because of the validated and newly mined coin you receive. The more coins you are staking, the more passive income crypto you get.

Another method is cloud mining. Cloud mining works by purchasing a certain amount of hashing power from an organization that then mines cryptocurrencies for you and pays your passive profits on a daily or weekly basis directly into your wallet.

Several organizations now offer this service, including Genesis Mining, Hashflare, Hashing24, and others. They charge different prices depending on the level of processing power purchased and transfer fees deducted from earnings before paying users' wallets on their platform.

An individual can earn money in this method by purchasing a certain amount of hashing power and then letting the platform mine cryptocurrencies for them.

Cloud mining can be beneficial if done right because it has lower costs than other passive income types, especially the costly hardware needed in classic crypto staking methods. Such hardware can cost more than $100,000 to purchase up-front with traditional PoW and PoS methods - however, with cloud mining, one only needs to pay the hourly, daily, or weekly costs associated with renting the processors mentioned above.

Cryptocurrency is a fantastic way to earn money passively. That said, investing in it successfully requires research, planning, and an understanding of the current cryptos landscape. With the right tools, knowledge, and a long-term vision, you can earn substantial passive income with cryptocurrency that helps improve your life and diversify your income streams. Still, investing in cryptocurrencies isn't without risks.

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