Source: Kaboompics.com
If you have been following the cryptocurrency space, you may have heard people mentioning the phrase “passive income” alongside crypto and blockchain. What do they mean by that? Basically, there are a number of options for people to earn passive income with crypto. Before we jump into the projects, let’s define the term "passive income".
“Passive income is earnings derived from rental property, limited partnership or other enterprise in which person is not actively involved” - Investopedia
So does Steemit fall into this category? Well, kind of… let me explain. Posting and up-voting on the social platform require you to be active. You need to create content and post it; you would also need to curate other peoples’ content by reading it (I know…Stemians mostly upvote content without reading it - this is bad!). This requires you to stay active. Therefore Steemit rather counts as an active income. But there are other tricks where you are not required to take action. Steem Power holders actually earn an annual interest on their holdings. The downside of this is that this requires you to invest a considerable amount of money into the platform. The other way of earning passive income with Steemit is holding SBD. Unfortunately, currently, SBD does not make you any extra money because the USD exchange rate is too high. When the price settles down people will start earning interest on their SBD. So now after we covered Steemit what are our other options?
Mining
Mining was the first way to earn passive income in the crypto space. After the inception of BTC people started mining it on their PCs. At the beginning, it didn’t have any value, but people believed in its long-term value proposition. Currently, mining BTC requires you to have a very powerful hardware (ASICS) which is also kind of expensive. Luckily, there are many other Proof-of-Work cryptocurrencies which you could mine with a couple of GPUs like for example Monero, Ethereum Classic or Zcash. There are also online mining calculators showing you which are the most profitable currencies for mining. Example:
Staking
Some cryptocurrencies encourage people to hold their coins and not sell them by rewarding them with new ones. On example is SmartCash where if you hold at least 1000 SMART tokens in your account you will get monthly rewards. Sure, it is not much but it is at least something. Bear in mind that exchange wallets don't get rewards. You will need to use your own wallet.
Masternodes
Have you heard of DASH? Dash is the most popular masternode currency at the moment. Masternodes are servers which synchronise with the blockchain but don’t mine any blocks. Nevertheless, these servers also get block rewards for offering services to the network. Such services could be instant send transactions and coin mixing. There are requirements for becoming a masternode. Dash, for example, requires participants to deposit exactly 1000 DASH tokens into their accounts so they could run a node. This deposit serves as a collateral. If a node misbehaves, it gets punished by losing its deposit. Let’s do a quick calculation: You need 1000 DASH for a masternode. The current price of DASH is around $480. You would need $480 000 dollars to run a masternode. How much passive income do you earn per year? With a price around 480 dollars, you earn around $33 000 dollars a year. Our only problem is the initial investment. It is too expensive for most people. Luckily Dash is not the only cryptocurrency having masternodes. Here are a few: PIVX, Diamond, Zcoin, ALQO, SmartCash. There is a website called Masternodes.online listing all the masternode cryptocurrencies. Choose yours wisely, and you might end up in a few years with as much as a Dash masternode.
Governance or Voting
Currently, I am aware of one cryptocurrency which rewards its token holders if they participate in the governance model - LISK. Lisk is a Delegated Proof-of-Stake currency with 101 miners. These miners get elected by the token holders. It is a very similar system like Steemit. The difference is that Lisk miners share their rewards with the people who voted for them. So if you hold some Lisk, you could just vote and earn interest. From what I read on the forums it doesn't make sense to vote if you own less than 500 LSK tokens since the rewards you would get are negligible. (500 LSK x $12 = $6000 required)
Universal Basic Income (UBI)
Universal Basic Income (UBI) is not a new concept, but we already see projects trying to implement it on the blockchain. Maybe the most widely known one is Mannabase. They basically distribute coins to their community on a weekly basis. There are no strings attached. The only thing they require is to register with a phone number so they could avoid a system abuse by the creation of fake accounts. Some other UBI projects are (some a yet to be implemented on a blockchain): Circles, SwiftDemand, Enumivo, Trustlines Network, Greshm, Democracy Earth, Big - Basic Income Guarantee, Circular UBI, Dubi, Altrui Basic Income, Duniter, Solidar, UBU Project. They all have different approaches to distributing basic income to their communities. Since UBI does not require you to invest any money you should not expect any considerable returns. UBI is still being tested and debated but this does not stop you from checking out how it works.
Conclusion
Earning passive income requires most people to invest their money into something. It could be a property or limited partnership. Cryptocurrencies offer new ways for investors to make money by being not actively involved. There are many options, and possibly many new ones will come in the future. Please bear in mind that passive income could be taxable by your local government.
Please note Mannabase and SwiftDemand contain referral links