Cryptocurrency trading is one of the most competitive industries in the world—the technology is relatively new and the majority of people who want to trade are competing for the same opportunities. As the crypto industry is in a prolonged bear market, traders and investors are looking for ways to maintain their income and grow their capital. Earning passive cryptocurrency income has never been easier or more important.
There are many ways to earn passive cryptocurrency income, and they can be divided into two categories: fixed-income methods and revenue-sharing methods. Revenue sharing methods on the other hand allow an investor to share in revenue generated by a single source, such as a business venture or an ICO project.
Here are some cryptocurrency investment opportunities that will pay you dividends over time.
What is Staking in Crypto?
People who are new to cryptocurrency sometimes confuse the terms mining and staking. Mining is a process that confirms transactions on a blockchain network and creates new digital coins in the process, which is then rewarded to miners with newly minted cryptocurrency. Staking, on the other hand, is a process that validates transactions for proof of stake (PoS) blockchains and earns stakeholders a percentage of the transaction fees within the blockchain.
While crypto mining is typically done with specialized hardware or software, staking can be accomplished by leaving cryptocurrency in a digital wallet and keeping it there without spending it. As long as the wallet contains an amount of cryptocurrency that meets the staking requirements, it will participate in transaction validation—the more cryptocurrency it contains, the more frequently it will validate transactions. While some PoS blockchains require their participants to leave their funds on staking wallets for 24 hours or even weeks at a time, others allow users to spend their earnings whenever they want.
Crypto mining is usually conducted via proof of work (PoW) systems, while PoS blockchains are powered by proof of stake (PoS) algorithms—both mechanisms are designed to prevent third parties from double spending coins within a blockchain network.
Risks of Crypto Staking
While crypto staking is a great way to earn a passive income, you should be mindful of several risks.
- The price of crypto assets is subject to considerable volatility, making them potentially risky investments for people who don’t want to risk losing money on something that could go down in value.z
- Crypto prices are not tied to any fiat currency (such as the US dollar), and they’re also relatively illiquid compared to other investment options, making their price fluctuation more pronounced than a stock or bond whose value can change by less than 1% in a day.
- Market interest rates on your crypto holdings are generally low compared to what you might expect with an FDIC-insured savings account or CD at your local bank.
Best Coins For Staking
Here are the best tokens to stake that you can purchase to earn staking rewards.
Binance—the world’s leading cryptocurrency exchange—is currently the largest staking platform in the market. BNB is a top-staking coin because of the way it’s delegated. There’s no minimum stake for delegating BNB, and unstacking takes just seven days. BNB price is US$1.00, with a 24-hour trading volume of $5.91 B. BUSD is -0.12% in the last 24 hours.
Tether, in its simplest form, is a stablecoin. Stablecoins are cryptocurrencies whose value is pegged to that of another asset, such as gold or fiat currency like the US dollar. A well-known example of a stablecoin is the widely used Tether (USDT).
When using Tether (USDT), you’ll be able to gain exposure to the price movements of Bitcoin without worrying about the volatility associated with other cryptocurrencies. By using Tether (USDT) instead of BTC, you can avoid slippage and enjoy greater convenience when you need access to your money.
Ethereum 2.0 (ETH)
Ethereum 2.0 (ETH) is a cryptocurrency designed for smart contracts and decentralized apps. ETH2 is one of the best staking coins available, with more than $12 billion worth of ETH. To bet ETH using a staking pool, you’ll need at least 32 ETH.
BIT is an exchange token with big-name backers like Peter Thiel and Pantera Capital. As one of the world’s largest decentralized autonomous organizations (DAOs), it seeks to nurture the Defi space by achieving its vision of open finance and a decentralized, tokenized economy.
Its token holders can shape the future of BitDAO by voting on proposals such as updates to core protocols and token swaps.
USD Coin (USDC)
USDC was created by the crypto exchange Coinbase and is fully supported by them. This makes it a cryptocurrency that’s unique in that it’s not just used for transactions but has also been adopted by institutional investors due to its stability. It’s also a stablecoin that makes use of the Ethereum blockchain and works in a similar way to Tether, except it hasn’t been affected by the negative press surrounding the latter.
Terra is a highly recommended crypto-staking coin because it’s easy to invest in luna token. Terra is a blockchain platform that allows users to create stablecoins backed by cryptocurrency. You can buy Terra’s LUNA token with one UST worth one dollar’s equivalent in LUNA.
Algorand (ALGO) is a powerful platform that provides effective scalability through validator nodes and instant transactions. ALGO’s staking model gives anyone who holds a single ALGO coin the opportunity to become a validator, a particular type of person who ensures the network works correctly. The Algo price has fallen by 10.46% in the past seven days.
Investing in a proof-of-stake blockchain network is a great way to generate passive income and earn high returns. These investments come with minimal risk and can pay dividends if you withdraw your rewards at the right time. With this guide, you should have everything you need to begin staking your coins.