If you’re considering adding cryptoassets, NFTs, or other related blockchain assets to your investment portfolio, you’re not alone — investor interest in the digital world appears to be growing.
Whether you’re buying stocks, real estate, or crypto, the goal for all investors is to make a profit. A fundamental goal in many people’s investment strategies will be to generate a passive income stream. Is that, however, achievable with cryptoassets? Yes, it’s a resounding yes.
Crypto — what is it, and why should you invest in it?
Before we get into passive income sources, it’s worth pausing to ask why you should invest in cryptoassets in the first place.
Cryptoassets, at their heart, promise a totally new, decentralized payment system, enabled in many cases by blockchain technology – the digital ledgers that record transactions. One of the primary reasons that many investors support and invest in cryptoassets is their interest in technology and the ideology that supports them.
The value of Bitcoin, Ethereum, and XRP is another important factor to consider while purchasing them. While the current value of any cryptoasset is no guarantee of what it will be worth in the future, some of the staggering gains that several assets have seen in recent years cannot be overlooked.
What should you look for when investing
Understanding the functions of each cryptoasset and the systems that support them might be beneficial. While coins and tokens are included in the larger category of ‘cryptoassets,’ there are significant distinctions in the business cases of the platforms that support them – for example, Ethereum’s intended applications are not the same as Cardano’s. In the end, these distinctions may have an impact on the native currency’s value.
Finding the ‘proper’ cryptoassets to invest in should, at the end of the day, be a personal decision based on both your research and your risk appetite as an investor.
How to earn a passive income with crypto
Passive income is simply a technique to earn money without having to put in the same amount of ‘active’ work that you do in your day job. Investing in dividend-paying stocks or owning an investment property with a rental income, for example, are common strategies to produce passive income.
Cryptoassets, believe it or not, can also be used to generate passive income. Earning ‘dividends’ with certain coins or earning interest by lending specified coins are two ways to accomplish this. Then there’s the stake.
Simply defined, staking is a method for cryptoasset owners to grow their overall holdings simply by owning the asset! Owners can’stake’ their cryptoassets for a defined amount of time, with the staked assets being used to assist maintain the blockchain’s integrity. Participants can win incentives as a result of their participation (typically, more of the cryptoasset).
So, how are you going to stake? You can stake on your own if you have the time and know-how, but most investors will find it easier to use a multi-asset investment platform that supports cryptoassets, such as eToro, which enables staking and will do the legwork for you.
If you’ve done your homework and determined that it’s time to add cryptoassets to your portfolio, the next step is to locate a trading platform.
Investors may trade a variety of cryptoassets on eToro’s web platform, including major assets like Bitcoin, Ethereum, Litecoin, Cardano, XRP, and Dogecoin. Plus, by using eToro’s dedicated staking service, investors of Cardano or Tron may be able to establish their own passive revenue stream.
Just keep in mind that, like most platforms, buying and selling cryptoassets on the eToro platform incurs fees. Staking has its own charges, as eToro keeps a tiny percentage of your staking yield as a fee for enabling the process – you can learn more about the staking fees here.
Are you ready to begin investing? Sign up for a free account to have access to eToro’s investment platform.