Are you looking for genuine ways to grow Your cryptocurrency passively; without the risk of losing your entire capital or falling victim to outright crypto scams? then this post is for you.
One of the fastest ways to grow your money in cryptocurrency is trading, and it is certainly also the riskiest of all means of making money in this space.
More so, trading requires you to have developed the necessary skills of charting and an understanding of how the market works – skills and knowledge that can only be mastered with months and years of study and practice.
Except you are among the top 1% traders in the world or you are a whale –that is, you’re trading with a very large amount of money, $5m upward (in which case you can employ the help of professionals) we suggest you stay away from “day-trading” as 99% of all day traders lose money.
However, you can choose to try your hand on it for learning purposes using the capital you’ll be happy to lose.
That said; in the rest of this post, we want to see how you can make your cryptocurrencies work for you by earning passive interests and dividends just by HODLing them in addition to enjoying any profits gained from the rise in the price of such crypto-assets.
Some of these options are more profitable than others but if you are a good investor you will most likely want to limit your risks and diversify across two or more options and/or platforms and products.
This is good not just to have a balanced portfolio but to protect and hedge your capital against any loss arising from one or more of the streams.
More so, in cryptocurrency, it is usual to see one coin producing a 50x returns and another 1000X returns or even a -70% loss within the same period and you can’t foretell which one of your holdings will turn you into a millionaire or make you totally broke “overnight”.
It’s therefore wise to HODL more than one in other to stand a better chance of turning profits and avoiding negative overall performance in an unstable market.
So without much ado, let’s dive deep into the top 3 genuine ways to grow Your cryptocurrency passively; and systematically accumulate greater crypto wealth over time:
- Crypto Lending
- Crypto Staking
- Dividend Tokens
The advent and growth of decentralized financial applications (Defi) bring banking and banking services to blockchain and cryptocurrency, including lending and loan services.
Crypto lending works in the same way with a conventional lending system where you give a borrower your money (in this case your crypto) and the borrower pays you a certain percentage interest on a regular basis say daily, weekly, monthly or annually based on agreement.
Defi lending platforms enable anyone and everyone to earn interest from the crypto holdings by providing to the platform used as loans to businesses and individuals without intermediaries.
There are basically two types of crypto lending platforms in the cryptocurrency market, offering the same opportunities but using different methodologies.
- Peer-to-Peer Lending
- Margin Lending
The massive increase in the number of peer-to-peer crypto lending services in the past few years is partly because of the ease and safety of the practice.
Most lending platforms (if not practically all of them) require borrowers to put more than the amount they’re requesting to loan as collateral, thus eliminating to the barest minimum the possibilities of default.
Borrowers, on the other hand, are given away to easily make use of their crypto without spending it.
Say I have 10 bitcoin and I expect bitcoin price to rise in the next 2 weeks to 1 month; at the same time, I need to make some expenses with my bitcoin –I want my bitcoin value without actually losing (selling) it.
The solution is a lending platform –I use my bitcoin as collateral to get a loan to service my immediate need while I still keep my bitcoin in case the price appreciates within the stated period.
Regardless of which direction the cryptocurrency being lent goes, as a lender, you earn a fixed interest from as low as 2% Annual Percentage Rate (APR) to as high as 20% APR.
In margin trading, traders have the opportunity to open positions or trade with more funds than they have in their accounts using leverage.
This extra fund comes from lenders on the exchange that makes their funds available for margin trading for interest usually between 4% to 15 APR –rates vary among platforms and are adjustable based on the factors of demand and supply.
There also two main aspects of margin trading:
- Trading with Leverage
In trading with leverage, a trader borrows assets to increase the size of their trading accounts.
By doing so, they magnify the gains or losses of their trade. The borrowed assets are known as a margin loan.
To obtain the margin loan, the trader puts up assets that serve as collateral. The terms of the margin loan specify a collateral-to-loan ratio.
If the trade falls below the specified ratio, the trade is liquidated and the lender is paid off using the trader’s collateral.
In short on the other hand, a trader essentially sells assets they do not own. The short investor borrows an asset and sells it on the expectation that the assets will lose value.
Most people are only aware of and familiar with the peer-to-peer lending platforms.
The interesting thing is that many of the lending platforms provide both peer-to-peer and margin lending opportunities –for example Fulcrum; and almost all derivatives exchanges such as KuCoin’s Kumex, BitMex, Binance, etc. allow users to lend their cryptocurrencies though not in the same way as peer-to-peer lending platforms.
When cryptocurrency derivatives traders open a trade on margin, the additional funds used to open the position typically come from lenders (“funding providers”) on the exchange.
In exchange for temporarily borrowing these funds, traders pay a regular fee known as the ‘funding rate’ to funding providers.
The parameters of the loans on margin trades have been chosen with the express purpose of minimizing the likelihood of a default using an automatic liquidation policy and other safeguards in place to ensure borrowers maintain sufficient collateral to prevent losses to the lender.
In fact, it is impossible for a borrower to default as the system is configured to automatically prevent that from happening.
Below are some of the handpicked platforms you can profitably and safely lend out your crypto and earn interest starting from right now. Check them out and choose one or two to begin your trials with.
Happy lending and earning and invest wisely.
Staking as an investment alternative simply refers to locking up your cryptocurrency for a period of time for a staking reward while contributing to the development, maintenance, security, and decision-making process on the blockchain network and it is one of the genuine ways to grow Your cryptocurrency passively in the space.
The discussion of what is staking will not be complete without an understanding of the Proof of Stake (PoS) mechanism which gave birth to it.
If this is your first time hearing about PoS then you’re advised to first study our previous post on the topic PoW vs PoS.
You may also just watch this video presentation below by the Binance Academy on what is PoS before continuing with reading the rest of this topic.
The longer you keep the coin or token locked up in a staking wallet, the more and higher the reward that accrues to you; and the more of the coin you hold, the greater your voting power in the decision making process within the blockchain network.
There are basically two reasons for staking in crypto:
- Staking for Reward (Profit)
- Staking for Participation in Governance (Power)
Most of us are only concerned about staking simply for the purpose of enjoying the accompanying rewards.
In as much as that’s not bad in itself, that’s not all staking was designed for.
In fact, the primary purpose of staking is to promote and enhance decentralized governance.
It’s for community members to be able to vote and approve or disapprove decisions regarding the project, coin, or token.
More so, staking gives almost everyone members of the community to participate in securing the blockchain network, thus making the network.
Staking gives you the power not just to earn more of the staked coin or token but also to contribute to the decisions making process as it affects the project and contributes to shaping the future direction of the chosen project.
Several staking pools and exchanges have emerged to help simplify staking for the ordinary investor who doesn’t want to get involved in the technical aspect mining, participation, and transaction verification aspects of the network.
Now KuCoin provides one of the best and most innovative staking programs out there and is worth checking out if you are considering investing in crypto via staking.
Crypto Dividends Tokens
This is another lucrative, simple, convenient, and genuine way to grow your cryptocurrency passively.
Similar to dividend-paying stocks, there are a number of crypto platforms and exchanges that offer to pay (HODLers) holders of their native coins or tokens regular (usually daily) dividends.
This is somewhat similar to staking, however, both are very different.
Whereas in staking rewards are distributed based on users’ level of commitment and participation in verifying transactions and keeping the network secure; dividends tokens are issued by the native company or organization and the dividends or reward for holding the coins or tokens are paid out of the profits of the issuing company.
To earn dividends all you’re required to do is buy the particular cryptocurrency, keep it and hold in the designated wallets and enjoy your daily dividends –simple as that.
There are several tokens in the market that pays daily dividends for holding their coins. A perfect example and our overall best recommendation for a dividend-yielding token are KuCoin Shares (KCS) which pay as much as 10% APR for holding their tokens on their platform.
The KCS is the native cryptocurrency of the KuCoin Exchange.
The dividends are not fixed because as stated above, dividends are paid from the daily profits of the issuing company and profits vary so also is the daily dividends.
The more successful the platform gets the more profits it makes and the more dividends it will be able to pay out to holders of its tokens.
Sign Up on the KuCoin Exchange, get some KCS and start enjoying some great daily dividends with peace of mind!
There we have it -the top 3 genuine ways to grow Your cryptocurrency passively. These are solid, tested, and trusted ways to make your crypto work for you: crypto staking, crypto lending, and holding dividend tokens for daily rewards.
We know that there are so-called “fund managers” and trading experts out there claiming to be able to double your money using some alien and magical trading strategies that were invented just recently -run! very far from such. The majority of them are pure scam or at best over-hyped strategy.
You’re better off making relatively small but stable and realistic profits daily than risk losing your entire capital chasing quick money. Invest wisely.