how to get passive income from cryptocurrency

 

Cryptocurrency is a unique means of payment that allows anyone to own it as long as they have an internet connection. In addition, cryptocurrencies also provide an opportunity for additional income for the owner. However, cryptocurrencies also come with a high risk as a means of payment. 

Here are some ways to earn extra income from cryptocurrency:

Farming the Harvest

One of the decentralized platforms (DeFi) gives you the opportunity to earn like a bank by making loans. Users need to connect a cryptocurrency wallet and put coins and tokens into a pool with other users.

The collected coins and tokens are then used for lending tools with interest and fees that have been mutually agreed upon. Simply put, this system is like peer to peer lending but in the form of cryptocurrency. 

The amount of profit earned depends on three factors, namely, the amount of the loan, the duration or time of the loan and the interest rate of the loan. Some examples of crypto lending platforms are Aave, Maker, Compound.

Mining

The main thing about cryptocurrencies is the blockchain ecosystem, which requires a lot of computers working in parallel to be able to work safely or commonly called mining. Popular cryptocurrencies like Bitcoin and Litecoin have an algorithm called proof of work (PoW). Miners around the world will compete to find blocks and will be rewarded with cryptocurrency.

Staking

The Pow system is not the only way to own new cryptocurrencies. There is a system called Proof of Staking (PoS). Cryptocurrency holders can participate in network consensus and receive payment for work done as a form of remuneration. Some platforms require you to have the knowledge and technology for the staking process. 

However, many platforms now offer automated staking systems. The condition is that you must have a fulfilling cryptocurrency in your account. It can be interpreted simply that you only need cryptocurrency capital that matches the platform and you will automatically get profit according to the agreement.

Games that generate cryptocurrency

Another way to earn cryptocurrency is by playing games. There are tons of games that give cryptocurrency as rewards. The most popular cryptocurrency-generating games that have proven to pay their players are Axie Infinity and Decentraland 12. Both games became very popular during the pandemic and became cryptocurrency-generating games.

Is cryptocurrency income taxable?

Basically, every income is taxable. If you own cryptocurrency and sell it or cash it in for a profit, it is usually subject to capital gains. It is advisable to consult a tax professional to learn about cryptocurrency income tax.

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