In the cryptocurrency industry, you can make money by trading or investing in projects. However, this usually requires studying a large amount of information and spending a lot of time, and this still does not guarantee a steady income. It is an “active” way to make money, because the amount received will depend on the real effort made. However, there is another way to earn — it’s called passive income.
What is Passive Income?
Passive income is a way of earning money in which the investor receives a certain amount for the actions of other people. This happens in different ways: in the traditional fiat system, the bank gives a small percentage of the money that you block in your savings account; some network companies pay a commission for every trade one of your partners participates in. In both examples, you do nothing, but you still get paid, even if the bank (or sales representative) does all the work. Why? Because they can use your money or your reputation.
Mining
The process of conducting a transaction and receiving rewards from new coins. Mining is not for everyone; it requires expensive special equipment, technical knowledge and a huge amount of energy. As a result, the industry has become very competitive, dominated by large corporations. Mining is no longer as profitable as it used to be, and is not very effective as a source of passive income for most people. While some of them can make good profit by mining PoW coins with lower hash rates and higher potential rewards. However, a higher reward comes with a higher risk as little-known coins have low liquidity and may be worthless.
Masternodes
Masternodes are servers that support the blockchain network; they have advanced features that other nodes on the network do not have. Running a master node usually requires a significant initial investment, as well as a high level of technical literacy.
Staking
Staking allows you to generate passive income regardless of the volatility of the cryptocurrency market.
The stake first appeared in 2012 and was used as a reward system for Peercoin (PPC), a coin based on the Proof of Stake algorithm. The likelihood of becoming a validator for the next block is proportional to the number of coins you keep in your wallet.
DeFi
There are three ways to make money with DeFi: leverage, P2P lending, and liquidity provision.
Leverage usually means buying and selling assets based on the predicted price dynamics. “Long position” means that a trader buys an asset with the expectation of selling it at a higher price. A “short position” is a sale with the expectation of buying back an asset when it becomes cheaper.
P2P platforms allow you to freeze assets and earn interest; they are set by the platform or by you based on the market rate. Interest rates may vary depending on the platform. You can capitalize on the price difference by borrowing at a low-interest rate in one market and lending at a higher interest rate in another.
To provide liquidity, you deposit a pair of assets, for example, a certain amount of ETH and the equivalent in DAI at the current exchange rate. People can exchange their DAI for your ETH or their ETH for your DAI and pay the exchange fees set by the contract you profit from.
Conclusions
The growing interest in making money effortlessly leads to the emergence of various ways to make money in the cryptocurrency market. As the safety of the offered products grows, they become a worthy and reliable source of income.
FAQ
Through investing after you have done your due diligence and proper research on each individual cryptocurrency and the project behind it, you will be able to make money online even in 2022. While for many people, cryptocurrencies might seem like the most volatile type of investment option out there, they are still a widely discussed, appreciated, and utilized form of investment on a global scale.
Every cryptocurrency, from the biggest coins to even the newest tokens out there, has the potential for growth, especially if its product, or service, solves an issue within real-world use-cases which can lead to a global adoption rate for that specific token on the project.
What this means is that you have to look for lucrative projects that have a solid, well-established team of developers behind them and are respected within the crypto space, as these are the most likely to succeed in the long term. In any case, despite the volatility, cryptocurrencies were profitable in 2021, and they will carry on this trend in 2022 as well.
When it comes to the predictions of the crypto space in 2022, this will be an answer that will differ depending on the price prediction or analytical platform that you visit. Each system, every person, and every algorithm that is used as a means of calculating this operates a bit differently.
However, what ultimately does indeed shape the crypto space are some of the largest cryptocurrencies, such as Bitcoin (BTC), for example, and it is looking really likely that it will climb in value in 2022, with other cryptocurrencies and projects following this trend.
When we look at some predictions made by experts within the crypto space, skeptics say that Bitcoin could drop to $10,000, while others are claiming that it still has the potential to climb to $100,000 in value. Looking at its performance throughout the previous few years, it is clear that, in any case, Bitcoin and other cryptocurrencies have indeed climbed in value, and this will likely be the case in 2022 as well.
When it comes to what Is the best cryptocurrency to invest in 2022, the answer here isn’t only a single cryptocurrency but multiple cryptocurrencies, all of which have their own specific specifications, features, and history that make them stand out and provide them with a high potential for growth, which gets them included on this list.
One of the most dominant cryptocurrencies, for example, that you can invest in, that is to this day one of the best options out there is the Bitcoin (BTC) cryptocurrency.
Ever since it was released, it has remained the #1 most dominant cryptocurrency within the crypto space. However, you can also invest in Ethereum (ETH), which has been the foundation for decentralized finance (DeFi), Decentralized Applications (dApps) as well as non-fungible tokens (NFTs) throughout the past few years.
Other competing projects that showcase compelling reasons for investments include Dogecoin (DOGE), BNB (BNB), Cardano (ADA), and Solana (SOL).
There are numerous analytical platforms and experienced cryptocurrency investors who are consistently analyzing numerous cryptocurrencies within the market as a means of trying to figure out which cryptocurrency can explode in terms of value going forward. In fact, there are over 19,000 cryptocurrencies available within the crypto space, and as such, it can be a true challenge for anyone to truly figure out which cryptocurrency has the highest potential to explode in terms of its value. However, based on numerous analytics conducted by algorithms, companies, and investors, Ethereum (ETH) has the highest potential to explode in terms of its value. This is due to the fact that Ethereum is one of the best cryptocurrencies that has its own ecosystem based on smart contract technology filled with decentralized applications (dApps) and non-fungible tokens (NFTs), all of which contribute to the growth of Decentralized Finance (DeFi). This means that there are literally hundreds of projects that are dependent on this blockchain network, and as such, there is the belief that this project will remain a strong investment that can blow up in terms of value and popularity going forward.
