Get the weekly summary of crypto market analysis, news, and forecasts! This Week’s Summary The Crypto Market ends the week at a total market capitalization of $1,071 trillion. Bitcoin is up by over 3% after a successful week. Ethereum decreased by almost 2% over the past seven days. XRP gained nearly 2% in value this week. Almost all altcoins are trading in the green, with very few exceptions. The DeFi sector decreased the total value of protocols (TVL) to around…
What Is Crypto Passive Income and How Does It Work?
Crypto passive income refers to earning money through investments in cryptocurrency without actively participating in trading or managing the investment. This can include earning interest on deposited funds through a crypto lending platform, receiving dividends from holding a certain amount of a specific cryptocurrency, or earning a return through staking a proof-of-stake coin.
Ways to Earn Passive Income in Crypto
There are several ways to earn passive income in the cryptocurrency market:
- Staking: Staking is the process of holding and locking up a certain amount of a specific cryptocurrency to participate in the validation of transactions on a proof-of-stake blockchain network. By doing so, users can earn a return on their investment in the form of new tokens.
- Lending: Crypto lending platforms allow users to lend their cryptocurrency to borrowers and earn interest on their deposited funds. This can be done through peer-to-peer lending platforms or lending to institutions.
- Dividends: Some cryptocurrency projects offer dividends to holders of their tokens. These dividends may be paid out in the form of the underlying cryptocurrency or a different token.
- Masternodes: Masternodes are full nodes that perform specific functions on a blockchain network, such as providing increased privacy or instant transactions. Running a masternode typically requires a significant investment in the underlying cryptocurrency but can provide regular returns in block rewards.
- Yield Farming: This strategy allows users to lend and borrow digital assets and earn interest on their deposited funds. It’s been popularized by the DeFi (Decentralized Finance) movement. However, this approach is more complex and risky than traditional passive income methods.
- Cloud Mining: It’s a service where a company owns and operates a mining farm and sells the hash power to customers who want to mine without having to operate the hardware themselves. This is also a passive income but can also be risky.
- Buying and holding: This strategy involves purchasing a certain cryptocurrency and holding it for a long period with the expectation that its value will appreciate. This can be a relatively low-risk passive income strategy, but the return on investment will depend on the specific cryptocurrency’s performance.
- Investment Funds: Investing in crypto investment funds, professionally managed pools of capital that invest in a diversified portfolio of cryptocurrencies. The returns are distributed among the investors.
- Crypto Index Funds: Investing in crypto index funds, which track the performance of a basket of cryptocurrencies, similar to traditional stock market index funds.
- Crypto Interest Accounts: Some crypto platforms offer interest-bearing accounts for holding a specific cryptocurrency, similar to a savings account at a bank. These accounts usually require a minimum deposit and may have a lock-up period before funds can be withdrawn.
Lesser Known Ways to Earn Passive Income in Crypto
- Cryptocurrency affiliate marketing: By promoting and referring others to a cryptocurrency exchange, wallet, or other crypto-related service, users can earn commissions on trading fees or sign-up bonuses from their referrals.
- Cryptocurrency mining through hardware renting: Some companies allow you to rent out your idle mining hardware to others, earning a passive income from the mining rewards generated by the rented hardware.
- Cryptocurrency bounties, airdrops, and contests: Some cryptocurrency projects offer bounties for completing tasks such as bug hunting, translation, or community building. They can also offer airdrops and various contests. These bounties, airdrops, or contest prizes are usually in the form of the project’s tokens.
- Cryptocurrency liquidity provision: Users can earn a passive income by providing liquidity to decentralized exchanges (DEXs) through liquidity provision. Users deposit equal value of two different cryptocurrencies into a liquidity pool and earn a share of the trading fees generated by the DEX.
- Cryptocurrency cashback rewards: Some crypto wallets and debit cards offer cashback rewards in a specific cryptocurrency when used to make purchases.
These methods of earning passive income in the cryptocurrency market still carry risks. The value of cryptocurrencies can be highly volatile and can fluctuate rapidly. Remember to do your research and invest only what you can afford to lose.
What Are DeFi Lending Platforms?
Decentralized finance (DeFi) lending platforms are decentralized applications (dApps) built on blockchain technology that enable users to borrow and lend cryptocurrency. These platforms use smart contracts to automate the lending process, eliminating the need for intermediaries such as banks. Here's an example of how a DeFi lending platform might work: Alice wants to borrow 100 ETH, so she goes to a DeFi lending platform and posts a request for a loan. Bob, who has 100 ETH to lend, sees Alice's…
What is The Capital Gains Tax in Crypto?
Cryptocurrency capital gains tax is the tax imposed on the profit made from the sale or exchange of a cryptocurrency. The tax rate for capital gains can vary depending on the country or jurisdiction. Still, in the United States, it is typically calculated as the difference between the cryptocurrency's purchase price (or cost basis) and the sale price multiplied by the individual's marginal tax rate. In some countries like the US, you only need to pay the capital gains tax…
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Cryptocurrency is a digital or virtual currency that uses cryptography for security. It operates independently of a central bank or government. Bitcoin, the first and most widely used cryptocurrency, was created in 2009. FIAT money, on the other hand, is a currency a government has declared legal tender, but a physical commodity (such as gold) does not back it. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material…
Short-Term vs. Long-Term Crypto Investors
Short-term crypto investors typically buy and sell digital assets within a short time, often within a few hours or days. They are often driven by market fluctuations and aim to make quick profits. Long-term crypto investors hold onto their assets for longer, often for several months or years. As a result, they often believe in the technology and potential of the digital asset they are investing in and need to be more focused on short-term market movements. Short-Term vs. Long-Term…
What Are Bitcoin Maximalists?
Bitcoin Maximalists believe that Bitcoin is the only true cryptocurrency and that all other cryptocurrencies are inferior or unnecessary. Therefore, they often advocate for using and adopting only Bitcoin and reject the idea of diversifying one's cryptocurrency portfolio with other coins or tokens. Bitcoin Maximalists are known for their strong belief in the value and potential of Bitcoin as a decentralized and scarce digital asset. They often view it as a store of value or hedge against traditional fiat currencies…
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What is Crypto Tokenomics?
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What Are Gold-Backed Tokens?
Gold-backed tokens are digital assets backed by a physical asset, in this case, gold. They are typically issued by a company that holds a certain amount of gold in reserve. The company will issue certain tokens representing a specific amount of gold. For example, one token might represent one gram of gold. These tokens can be bought and sold on various cryptocurrency exchanges, similar to how other cryptocurrencies, such as Bitcoin, can be traded. The token's value is tied to…