The era of blockchain and digital assets is creating millionaires faster than any other industry that mankind has ever experienced. The Blockchain sector fits in perfectly with the new dynamics of the digital work-space and hands-free economy which could 100% be operated and managed on the internet.
The years 2020 and 2021 have reinvented the one thing that most are seeking, ‘passive income’ or income that comes to you whether you work or sleep. The coronavirus has set in a new precedent for the digital economy and its most appraised proponent ‘passive income’. In the blockchain, five main ways or strategies could be deployed to help individuals create good and sustainable passive income.
Masternoded.com will today be exploring five such strategies to help you reader position yourself for a better decade 2020 – 2030.
- Server Rental Services on the blockchain:
This is a new alternative to masternoding or mining. Server rental on the blockchain involves a technique where servers are fitted with specific algorithms and deployed to validate or govern a blockchain. These servers receive a share of the block rewards as compensation and these rewards which are usually more of the same token in that chain can be converted into cash and withdrawn for use by the owners of those servers. There are just a few companies which do this well and we are fortunate to be one of only a few doing such. To set up such a server you could visit www.masternoded.com and set up your server. This is different from mastrnoding and staking.
- Masternoding: Masternoding is the process by which an operator (individual or firm) locks up a certain number of coins on a particular blockchain, thereby creating a masternode. This masternode then forms the basis for the validation of new transactions on that blockchain, governance and voting, thereby leading to the operator being incentivised with new coins from each new block created.
Masternoding today has been used to replace the proof of work (POW) concept on some blockchains. The pioneer of masternodes is Dash.
The example below shows a Masternode created on Trittium starting with 12305 on the 15/05/2021 and earning 1944 TT extra by the 14/06/2021. These extra coins could have been sold to yield a passive income by the end of the month if need be.
Staking is based on the proof of stake consensus. Where a coin owner locks the coins as proof of ownership and therefore deserving the right to participate in network governance. Staking is similar to masternoding but it differs in that with staking, rather than building a node with the coins you own, you are lending them to the ecosystem for interest. This interest comes to you in the form of new coins mined or minted by the chain. It is similar to traditional savings where you deposit your money with the bank and they pay you interest. Staking is one of the best ways to earn passive income on the blockchain. Most of the Major cryptos can be staked for passive income or interest or yields.
This is a term commonly used to describe those who buy and hold cryptos for long term capital appreciation. A majority of people who invest in cryptos have their funds stacked in a number of alt coins with the hope that these coins will appreciate 5X, 10x or 10,000X in the two, five or ten years therefore making them rich or very rich. This doesn’t really earn them much by means of passive income but gives them the assurance or at least the hope that one day, a small amount invested in crypto today could become something significant tomorrow.
To hodl your coins all you need is a cold or hot wallet and you can do so on any exchange. Some of the best exchanges include Binance.com, coinbase.com etc. Or you could use a hardware wallet like Ledger or Trezor.
- Liquidity Mining:
This is the process of supplying liquidity to a protocol which is then used to facilitate decentralised exchange of different assets. So, you become a liquidity provider and you therefore earn trading fees or commissions when two assets are swapped for one another. For example, you could supply USDC and ETH to a USDC/ETH Pool and you will get an LP token. This token will then represent your share in the pool and the token will appreciate in value based on the fees earned when swapping is done. To this you will need to platforms or decks like UNISWAP, 1inch, SUSHISWAP, etc
There are many more strategies for passive income on the blockchain and there are many more being created as the industry continuous to grow and settle. The five above are amongst the most common and sustainable ways. It is important to also note that each of the strategies above have their own unique risks and, in each case, there is risk of total loss of capital. So, whatever you do, make sure you have understood the risks and rewards, and when you have weighed them against your investment strategies and are satisfied then go carry on.