Investment in the crypto market is becoming popular among investors all around the world. Cryptocurrencies like Bitcoin, Ethereum and a few more coins and tokens are among the most accepted cryptocurrencies for investment across the world. The most recent area in the crypto market is investment in NFT that is also rising in popularity.  However, the crypto market is very volatile and is not suitable for risk averse investors.

By considering the risk associated with investing in the crypto market, there are quite a few methods to earn passive income in crypto as outlined below.

Methods to earn passive income in crypto

1- Staking

Staking, which is operational on Proof of Stake or PoS blockchain networks, is one of the most popular ways to make passive income. All you need to do is to lock your crypto for a specific period of time and in return receive tokens and transaction fees depending on the network.

2- Liquidity mining

Decentralized Exchanges need a liquidity pool for facilitating the transactions of crypto currencies. Those liquidity pools come from the community members like yourself as an investor by depositing a certain amount of a crypto currency and receiving a certain amount of income in return. That is another popular way to make passive income in crypto.

3- Decentralized crypto lending

There are lending pools that you can deposit your crypto in and receive interest in return from borrowers. It is crucial to conduct research about the best lending pool service provider to deposit your crypto in. Borrowers must provide a collateral to be capable of borrowing funds from lending pools which secures the lenders fund. Crypto lending is quite popular but you must work with a reputable service provider.

There are several other less common methods that you can generate passive income such as investing in dividend earning tokens like KuCoin tokens (KSC) or VeChain(VET), playing crypto games and a lot more. However, you must keep in mind that you must deposit and lock your cryptocurrency for a specific period of time and receive cryptocurrency in return. As such, in case of depreciating the value of the crypto you are holding, you would lose money. 

What is the secure method to generate passive income in crypto?

There is no risk-free investment opportunity in Finance. Even government bonds which are considered as the most secure investment method are associated with some minor risk. As such, investment in crypto always comes with risk. However, there are some methods to invest more securely in the crypto market that we will go through right now.

1- Tokenized Tangible Assets

Tokenized tangible assets as a breakthrough to the block chain industry has raised a lot of interest across the globe. It can be a fungible asset like a barrel of oil or non-fungible asset like an artwork that is tokenized and the ownership and authenticity is secured in a blockchain network. Even though not all tokenized real world assets don’t offer a passive income stream, the good thing about them is that they are all linked to an underlying asset that has its own value in the real world. As such, the volatility of the crypto market doesn’t have a major impact on the value of an NFT which is pegged to an underlying asset.

2- Tokenized real estate

A tokenized real estate is one of the most secure investment opportunities across the crypto market and block chain industry. The concept is to divide a property into affordable shares and tokenize each share for investors to buy one or more token. By buying a token, the investor is not only the owner of a share of that property, but also is entitled to receive the rental income of that property on a pro rata basis. Furthermore, like other asset backed tokens, a tokenized real estate value only relies on the value of the property. That is what is called fractionalized real estate investment that is becoming quite popular these days.

Wrapping up

Investment in the crypto market, like other investment methods, is associated with some risks. However, there are investment methods in the block chain industry that not only minimize the risks, but also generate passive income streams for investors. Asset-back NFT in general and tokenized properties in particular are among those investment opportunities that are low in risk and can make you some passive income. The beauty about fractionalized real estate tokens is that many small scale investors will be able to invest in a share of a valuable property by buying a tokenized share of that property.

However, you must be very cautious about the regulations, where you are buying a tokenized property. You need to make sure that the investment you are making is supported and approved by the local government and you are supported by local law and legislation.