How to Add Passive Income to Your Cryptocurrency Portfolio

If the down market has you a little bummed out, then you may be interested to know that there are other ways to boost the value of your portfolio without your coin going to the moon. There’s several ways that investors can add much-needed income to their portfolios, and in some cases, it could be a significant amount.

Some of these options pay quite well, and if you can get a good deal on the required assets, then you’ll be able to collect “interest” while you wait for your bag to appreciate in value.

How do you get started with cryptocurrency passive income?

The secret to earning cryptocurrency with passive income is that you actually have to do some work initially to start earning it. There are several ways to achieve this using crypto, and we’ll go over some of them below. You can use one or all of these methods to create your income streams. In fact, it’s usually much more beneficial to diversify yourself across several areas.

Proof of Stake coins

Proof of Stake is an alternative algorithm to Proof of Work, and instead of using your PC resources to mint coins, you’ll use the value of your investment. Typically all you must do to earn via staking is to hold a number of coins in your wallet and then leave that wallet software running.

You will then routinely receive stakes based on how much you’ve invested versus how much others have invested. Generally, this can be a pretty affordable way to begin generating a solid monthly income from cryptocurrencies, and it’s a lot easier than day trading.

However, the expense needed to get started with this will vary greatly from project to project, and so will how much you can earn. There are some assets that offer staggering returns, but investors should keep in mind that typically these are very low-value projects, and while you may be getting a ton of coins, it could be very hard for you to sell these stakes if you are planning to use your newly found income for your day to day expenses.

These are also mostly unproven currencies, and there’s no telling where they may go in the future. They could even end up completely abandoned. For this reason, it’s usually best to try to find a balance. When seeking a Proof of Stake coin to put some money into you’ll need to look for a few key factors.

How many of these coins do I need to stake regularly?

Sometimes it can be difficult to find this information, but there are a couple reliable ways to find these metrics. The first is by asking in community forums what kind of stakes other people are receiving. Most of the time they will be more than happy to inform you, and in some cases, the answer will already be there if you’re searching.

If you’ve had no such luck here, then there is another sneaky way to do this. If you go to the coin’s explorer, then you can thumb through various transactions. Often these will say “minted”, and that’s how you know that this is a payment that was received through staking. By checking the balance of that wallet you can make an estimate of what kind of regular monthly or daily income you can expect to make. You’ll also be able to see how often they are minting as well.

What kind of future does this project have?

When choosing a project you really should approach it as a long-term investment. You are after all going to be holding this asset for a good while if you plan to earn any money. Familiarize yourself with the project, and find out what kind of updates they have in the works. Do they have a dedicated team? How does the community feel about the coin?

What is the average price of this asset?

When purchasing a staking asset you really want a rather stable price. If you plan to use this to begin creating alternative income streams, then it’s best to have something that you will be able to fairly accurately predict the price of, and not one that will jump up to $1 today, but be worth 10 cents tomorrow. However, some of these assets do experience regular dips, and with good timing, you can sell on the highs and accumulate on the lows fairly easily.

Can I afford enough coins to make stakes?

After you’ve determined exactly how many coins you’ll need to purchase to stake regularly, it’s time to do the math. Can you afford this asset? If the answer is no, then it would likely be better for you to find something that you can more easily afford. There are plenty of Proof of Stake options out there, and there’s likely one that will be appropriate for your needs. This approach is likely better than buying something very expensive that you will never have the network weight to stake.

What kind of return does this asset have?

Every asset offers a different percentage return. This percentage is usually publically available, but if it’s not you can use the figures that you gathered earlier to find out. Cryptocurrency returns are generally very generous, and if you’re looking for alternative income then you shouldn’t waste your time with low return assets. There are some tools available that will help you find staking coins that offer a high return.

Masternodes

Masternodes are like staking coins on steroids, and in many cases, POS coins will also have a masternode option available. These tend to pay better than staking, because you need more coins to do it, and you’ll also need a VPS.

This method is not quite as easy as staking, and it will require a monthly output on your part because server hosting is not free. However, it can be very worthwhile if you’re willing to take a few minutes to learn. Here’s what you need to run a masternode.

VPS with at least 1024MB RAM

You can purchase a suitable VPS for about $5 per month, and as long as the return of your coin exceeds this then you’re good to go. Keep in mind that for every masternode that you wish to run you’ll need a dedicated IP address. Pretty much every provider will allow you to purchase more than one for an upcharge, and it’s possible to run more than one node on your VPS. It’s not recommended to have less RAM than 1024MB, because your nodes could eat it up quickly.

The specified number of coins

This will vary between projects, and you’ll need to consult the coin’s website or the community for guidance on how many you’ll need. Ignition, for example, requires 3,000 coins, but if you want a Diamond masternode, then you’ll need 10,000 to get started. There’s several online resources you can use to figure out which ones will give you the best return for the investment. It would do no good to list any specific ones here as the price of these assets changes every day.

Some technical knowledge to set it up

Setting up a VPS is not quite the same as using shared hosting. Most providers use Linux operating systems because it’s free. If you have some experience using Linux then you’ll be in a good position, but if you’re mostly a Windows or Mac user then you’ll need to spend some time reading up on how it works before you put down any money for your nodes.

Airdrop/reward coins

These function a little differently, as you’re not really being paid to contribute to the network like you are with masternodes or staking. Instead, these assets simply offer their investors an airdrop style payment for holding their coins or tokens. The good news is that this means that you don’t need to spend time learning how to set up a VPS, and in many cases, you won’t even need to run your wallet to collect rewards like you would with Proof of Stake.

The bad news is that it can be a little more difficult to find assets that offer these kinds of perks. You may need to do some detective work in order to find these types of rewards, but social media sites such as Reddit or BitcoinTalk are a good place to start.

Unfortunately, these setups also don’t pay out nearly as much as the other two options, so if you’re looking to make serious passive income then it might be better to pursue staking or masternodes. Conversely, if you don’t have the capabilities to stake or run a node, then airdrops might work out well for you as an alternative.

In closing, there’s plenty of excellent ways to make money from cryptocurrency that don’t involve constantly watching the market or worrying about day trading. They can also provide passive income to you, either to grow your portfolio without additional contributions from your day job or even provide enough for you to supplement your monthly income. As always, you should make sure to do your own research, and never invest more funds than you can afford to spare.