Earn Passive Income with Cryptocurrency Staking

When you use staking to create passive income, you won’t constantly worry about market fluctuations. Whether the market goes up or down doesn’t matter, you will profit either way.

If you don’t find a way to make money while you sleep, you will work until you die. — Warren Buffett.

What Is Passive Income

Bankrate defines it as, “Passive income includes regular earnings from a source other than an employer or contractor. The Internal Revenue Service (IRS) says passive income can come from two sources: rental property or a business in which one does not actively participate, such as being paid book royalties or stock dividends.”

How Does Staking Work

Staking is a method to let others use your cryptocurrency and make investments over a specified time. It works basically like a certificate of deposit. Typically, your crypto held by the exchange will earn a specified interest rate, usually, 3% to 13% depending on how long and how much crypto you have.

If you withdraw your money early, you might face a penalty. However, each broker or investment house has different standards for different coins. Most have a minimum number of coins you must stake. That makes it crucial to shop around, and even move your crypto if need be to get the best rate.

A valid drawback to staking could be that you must leave your crypto with the exchange for the specified period, affecting your ability to make trades when the market makes significant gains or dips.

For a lot of traders and investors, knowing that staking is a way of earning rewards for holding certain cryptocurrencies is the key takeaway. But even if you’re just looking to earn some staking rewards, it’s useful to understand at least a little bit about how and why it works the way it does. — Coinbase.

Those currencies that allow staking use a method called “consensus mechanism” or Proof of Stake (PoS) to verify your transaction.

What is Proof of Stake? — Earn Passive Income with Staking

This YouTube video from 99Bitcoins is clear, concise, and to the point. Plus, it tells you everything you need to start staking for passive income.

What Is Proof of Stake (PoS)

According to Ethereum.org, “Proof-of-stake is a type of consensus mechanism used by blockchain networks to achieve distributed consensus. It requires users to stake their ETH to become a validator in the network. Validators are responsible for the same thing as miners in proof-of-work: ordering transactions and creating new blocks so that all nodes can agree on the state of the network.”

Of course, that is how Ethereum defines PoS; other cryptocurrencies or exchanges might look at it differently. Likewise, ETH requires you to have a minimum of 32 ETH to validate stakes, you can earn a lot more as a validator, but you have more requirements than just leaving your ETH in the process.

Validators are like “crypto miners,” but the process doesn’t require as much energy or computational power. Validators or attestors must use their computers to verify staking transactions or get penalized. An attestor could lose a portion of their investment if they don’t participate and even lose all your ETH for fraudulent practices or attesting to a “malicious block” of transactions. You should probably avoid becoming a validator as a novice even though you can make more money.

Plus, at the current ETH to USD rate of exchange, you would have to tie up around $92,000 worth of ETH. Therefore, if ETH makes a 10% gain, you might not be able to trade it without sustaining a significant penalty.

However, you could join a “staking pool” if you have a smaller amount to invest. Be sure to verify the validity of the staking pool before trusting them with your investment.

A better token to start with might be Flux on Coin Metro, which only requires 500 tokens to stake, which at today’s price of around $1.39 per token would require an investment of $700.

Another option is Kadena (KDA) on Coin Metro, which requires 100 tokens at the current price of $12.72 would require an initial outlay of $1272.00.

You should not consider this as an endorsement of Coin Metro. This example shows what is possible using that exchange. It is an Estonia company that claims to be “a fully regulated, licensed and compliant cryptocurrency exchange” that follows EU law “as much as possible.”

Plus, Coin Metro has a 96% “5-star or excellent” rating by the 416 reviewers on Trust Pilot, with less than 1% who rated it “poor or bad.” I realize that is a small sampling, but many of these organizations are new in the world of crypto. If you read through some of the reviews, you will discover that the CEO personally answered some customer concerns.

Trust Pilot says, “Coin Metro is an EU-licensed crypto platform offering fiat-crypto-fiat exchange services, crypto margin trading, copy trading, a STO marketplace, and instant fiat on & off ramps in EUR, GBP, & USD. The entire ecosystem is powered by its very own native utility token, XCM.”

Plus, Trust Pilot lists the company’s customer service phone number and address. Before using it, you should verify its claims as much as possible and make a few small transactions to ensure it works as expected.

Final Thoughts

Staking isn’t for everyone. If you have the time, the best method is to do the research yourself and choose a solid investment strategy only with money you can afford to lose if the market or investment option makes a significant correction.

However, having the option to buy, hold, and earn interest on your investment allows you to earn while you wait for a better trading price.

DISCLAIMER: This article is for entertainment and informational purposes only. It should not be considered financial or legal advice. Not all information will be accurate. I am not a financial adviser, and anything I propose should be considered friendly banter to show you what is possible if you invest your money in these vehicles. However, there are no guarantees. Consult a financial professional before making any significant financial decisions.

Stephen Dalton is a retired US Army First Sergeant with a degree in journalism from the University of Maryland and a Certified US English Chicago Manual of Style Editor. Also, a Top Writer in Nutrition, Travel, Fiction, Transportation, VR, NFL, Design, Creativity, and Short Story.

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