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Crypto Cashflow: How do I generate passive & active income in crypto?

Crypto is money! A lot of times this mere fact is overlooked. In my first article cryptocurrency: a financial revolution? I mentioned that one of the problems in the crypto space is that many participants see it more as a store of value than a transactional currency which is its number one purpose. Crypto is still a currency which can be earned, spent, exchanged, saved etc. So how exactly do we generate active and passive income in crypto? Here are a few ways:

Actively

1. Work/Own a business and accept crypto as payment

Just as we work in organizations and accept fiat, we could do the same for crypto. Learn needed skills and gain employment in companies who pay crypto, or accept crypto as means of payment for your business. There could be concerns with crypto as payment because of its volatility but that’s nothing stable coins cannot handle. Also, there could be errors while inputting wallet addresses, but thanks to unstoppabledomains, Solana naming service etc. an individual or brand can now save their wallet addresses under a domain e.g. cryptotalker.wallet, making payments more convenient and less susceptible to errors

2. Cryptocurrency Trading

Most popular way in the crypto community. This is placing buy/sell orders based on predicted directions of a coin’s price movement, by analyzing the past and current price patterns in the market. Many companies like Binance, FTX, and Kucoin have created platforms exclusively for cryptocurrency trading. Trading can be a highly profitable skill with the right education and guidance, however, it’s a risky market where you can take huge losses as well as profits.

3. Airdrops

Cryptocurrency community rewards participants with airdrops of tokens/coins for being highly active in the ecosystem. Usually, airdrops work by completing tasks that are listed out to anyone who is interested in participating and when these tasks are completed, the participants are airdropped the tokens as promised. Airdrops could also be given to early believers in a project like the Ethereum Naming Service (ENS) airdrop that occurred earlier this year, where people who minted a domain name e.g. cryptotalker.eth, got airdropped ENS tokens worth up to $10,000.

4. P2E (Play-to-Earn)

Thanks to crypto, you can now play games for fun and earn while doing so! P2E has provided an opportunity to earn rewards in crypto by playing games on either smartphone, laptop, tablet etc. It could serve as an extra source of crypto income or main source. A good example of P2E adoption is the game called Axie Infinity and how it has impacted participants in the Philippines. Some people play these games full-time and some others pay people to play for them while going to do other things with their time.

Passively

1. Providing liquidity (farming)/ staking

“If you can’t hoDL, you won’t be rich”

- CZ, C.E.O. Binance

Famous quote by the C.E.O of Binance which everyone in the blockchain community will agree with. It’s true that if you hoLD, you will be rich, but if you stake/farm while hodling, you can 10X your riches! This is basically using your coins/tokens to earn more coins. Decentralized exchanges (DEX) have made this possible. Staking is just like fixed deposit in banks, coins are locked up for a fixed amount of time and interest is earned on those coins. As for farming, DEXs need liquidity for transactions to occur. As a liquidity provider, you will own a share of the total liquidity pool and be rewarded with coins. These coins are generated from a percentage of transaction fees taken from users that make use of the DEX. However, there are also risks attached with providing liquidity such as impermanent loss. So make sure to do your own research (DYOR)!

Looking at crypto as a transactional currency will open up more ideas on how to actually earn crypto. How are you earning crypto today?

Most ways to earn are present in altcoin ecosystems. Bitcoin may not turn out to be the go-to crypto for transactions because more hodlers rather hodl than use for transactions.