Cryptocurrencies to HODL for Passive Income
- 2018-06-28 08:02 AM
Trading cryptocurrencies is not the only way to earn from the decentralized digital revolution. With one dapp after another being rolled out on the Ethereum blockchain, and many more dapps expected to launch on other platforms, the opportunities to earn are on the rise.
But generating income from the blockchain revolution can be a lot easier than launching a dapp or day trading cryptocurrencies — in fact, it’s possible to earn passive income by simply hodling certain cryptocurrencies.
In this article, we take a look at our favorite cryptocurrencies for generating passive income.
Blockchain-Based Models for Passive Income
There are several models that allow for regular returns on your digital assets through holding cryptocurrencies.
Mining used to be all the rage in the early days of the digital gold rush, but it has since become less and less profitable due to high competition. Especially for the larger cryptocurrencies, such as Bitcoin and Ethereum, mining requires a large initial investment, and the return on this investment can take several years to yield profits.
There’s a chance to succeed if you figure out a way to get cheap electricity, but you would still need a large initial investment. Mining smaller cryptocurrencies can still turn out to be profitable, but the risk that the coins you’ve mined will decline in value is also a lot higher, as the mining space has become super-competitive.
Running a masternode, especially for the more popular cryptocurrencies, can still be incredibly profitable. Simply put, a masternode functions as a server, but in a decentralized network. Masternodes are used to complete unique functions that regular nodes can’t, such as instant and private transactions.
Running a masternode requires holding a large amount of native cryptocurrencies of the network you want to become a masternode of. In return for staking such a large amount of cryptocurrencies to support the network, you’ll get rewarded handsomely in the cryptocurrency of the network.
The PoS model is the alternative to the energy-intensive PoW model for mining cryptocurrencies. Instead of mining for cryptocurrencies through hardware, cryptocurrencies using PoS blockchains are created by holding cryptocurrencies in a staking wallet. In this model, the more coins you stake, the bigger the chances are that your wallet will solve the next block, consequently earning you even more coins.
This can be seen as a downside, as the chances of you earning through this model depends on the amount of coins you have invested in the first place. But an upside is that you can stop staking and sell your holdings at any time.
Some blockchains offer dividends to holders of their native cryptocurrency. These cryptocurrencies have to be kept in the wallet specifically created for that blockchain. Traditionally, companies reward their shareholders by paying them dividends — that is, a portion of the profits — based on their number of shares they hold.
It works the same with blockchain projects — the decentralized model rewards people who hold on to their cryptocurrencies. When holders are paid dividends in accordance with how many tokens they own, they are incentivized to keep their cryptocurrencies instead of trading them. This, in turn, leads to greater price stability of the cryptocurrency.
Our Favorite Passive Income Coins
As you can see, there are multiple ways to make some extra crypto by hodling. The following 3 cryptocurrencies make this possible without the need for large initial investments, which are required for mining and for running masternodes. Your passive income will depend on the size of your holdings, but you can start making a return even with a small amount of these cryptocurrencies.
The blockchain platform NEO rewards holders of their native cryptocurrency. Earning this reward is simple, as all you have to do is store your NEO in an official NEO wallet. Binance also rewards NEO coin holders, but since it’s an exchange, you don’t hold the private keys and thus don’t really own the coins yourself. It’s an industry best practice to keep your cryptocurrencies in a private wallet. Other exchanges keep the rewards for themselves, so get your NEO out of those.
NEO holders are rewarded in GAS, the token used on the platform to pay for transactions. This means that as long as there are transactions on the NEO blockchain, GAS will be in demand — and thus will have value — which makes receiving free GAS tokens a pretty sweet deal.
GeekCash is a new digital currency, based on Bitcoin and Dash, that enables anonymous, instant payments to anyone, anywhere in the world. GeekCash uses peer-to-peer technology to operate with no central authority: managing transactions and issuing money are carried out collectively by the network. Exactly, GeekCash is a community governance, cooperation and growth to decentralized economy.
In the future, the GeekCash is used to transfer money and pay in an ecosystem consisting of 6 projects. Some projects have been researched for 4 years. In there, the social network project will be deployed as soon as possible, the remaining secret projects will be gradually opened …
With solid foundations prepared beforehand, GeekCash have ambitious plans for the future.
With Masternodes help keep integrity of network and enable support for PrivateSend and InstantSend. Earn up to 80% of the block reward running a node and contributing to the network.
Masternodes enable the following services:
- InstantSend (instant transactions). In contrast, Bitcoin takes about 10 minutes to confirm a payment.
- PrivateSend (anonymous transactions). In contrast, Bitcoin transactions are totally public and traceable. Only the identity of the addresses is anonymous.
- Decentralised Governance (masternodes govern, while the blockchain funds development). In contrast, Bitcoin is controlled by a few big miners and funded by 3rd party centralised institutions with self interests.
- Masternodes are also given voting rights on proposals. Each masternode has 1 vote and this vote can be used on budget proposals or important decisions that affect Geek.
Follow GeekCash at:
Although still a work in progress, I couldn’t ignore VeChain Thor (VeChain’s pivot & re-branding); a project that has been making waves in the space as of late. VeChain Thor is going to move beyond the supply chain, and into Enterprise Decentralized Application (dApp) solutions. I will not discuss how VeChain currently works, but will focus on VeChain Thor.
VeChain Thor will introduce two new tokens:
- VeChain Tokens (VET) will act as the smart payment currency in order to enable rapid value circulation within the ecosystem based on the VeChain Blockchain. VET represents the right and privilege to occupy and use the public blockchain resources. The more VET one holds, the more rights and higher priority they have (to use the blockchain).
- THOR Power (THOR) will be the fuel on the blockchain and will be consumed/burnt after certain operations are performed, such as transferring VET or executing smart contracts.
The VeChain Blockchain will be secured by 4 different types of nodes. There are some minimum requirements in order to become a node. Node types are determined by the amount of VET they hold and maturity date.
Other Passive Income Coins
Even though these are our 3 favorite passive income coins, there are many more out there, especially the coins based on the Proof-of-Stake model. These include but are not limited to:
- Stellar Lumens
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