Make $10 in Passive Income a Month Enabled by Crypto, Potentially $100’s
Earning Money While You Sleep and Browse the Internet
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Executive Summary
Staking Crypto - Earn 5% Interest or More
Earn Money While Browsing the Internet = $1-$10 / month
Crypto Mining - Potentially >$100 / month
Intro - Explaining Passive Income in Crypto
Who is excited by the 0.04% APY rate you get on your cash sitting in your checking or savings account?! If you bank with primarily online only bank, that rate jumps to 0.31% APY. Let’s play this out: if you put $1,000 in your bank account on January 1 2021, at end of the year, you will have an extra $0.40 to spend (at 0.04% APY), or $3.10 (at 0.31% APY). When taking inflation to account, while usually around 1-2% annually, this year it is approaching 5%, that means on January 1, 2022, your spending power on that $1,003.10 will be more like $955. So congratulations, you actually lost $50 in spending power in a year!
(Note: NONE OF THIS IS INVESTMENT ADVICE. DO YOUR OWN RESEARCH AND CONSIDER THE RISKS YOU ARE WILLING TO TAKE. I’ve posted links in here that may be helpful to learn more.)
So what options do you have to put your money to work and not lose spending power when inflation is higher? The obvious ones would be putting that $1,000 in the stock market, but there are other options, all of which come with varying levels of risk, see below.
Where would crypto fall on that spectrum? Well, it would be off the chart, with higher returns and higher risk. This is one major reason why I still maintain 1% to 5% of your net worth in crypto. While crypto has been around for about 10 years, the returns have mimicked venture capital returns, which retail investors don’t have access to. (This will be a topic of a future post). What do I mean by that? Well, in venture capital investing, a firm invests $100,000 in a private company, like Uber in 2012, and by 2019, that $100,000 is worth $77 million. Or in our $1,000 crypto example, that would be $770,000.
(Quick side note, think of a cryptocurrency like Ethereum, like a brand new company whose shares are available to everyone on Day 1 of the company. This is another paradigm shift that we’ll discuss in a future post.)
Aside from high risk, high reward opportunities in crypto, the crypto asset class also provides attractive options to earn money (yield / “dividends”) on your holdings. This is what I’m calling the passive income opportunities. We’ll define how passive income is made possible by crypto and Web 3.0, how they work and what options you have.
Body - Why and How Passive Income is Possible in Web3/Crypto
#1 - Staking Crypto - Earn 5% Interest or More
One way to earn passive income on crypto is what’s called “staking”, where a user can earn a certain interest rate for providing liquidity to the market and borrowing opportunities for those who want to lend out crypto. Before we get into the details, let’s draw some parallels on how this works today in the traditional banking system.
My diagram is a gross over simplification of how the traditional banking system works, as there are middlemen/intermediaries in place to ensure your money is safe.
You keep your money in the bank to keep it safe, and access it anytime. Great!
The bank then takes your deposits, and within regulatory limits, creates products like loans to give your money to businesses/others to invest in their futures.
The bank receives an interest rate on that money, with only a tiny fraction of that going back into your bank account.
The bank profits from being the middlemen with lots of overhead to keep the records straight and instill trust in the system.
But what about a world where banks aren’t needed to be recordkeepers and something like the blockchain technology creates and logs all of that transactional and ownership information? This is what staking crypto enables, as the blockchain has a record of who owns what, and “smart contracts” (that can be built on Ethereum) can ensure protection for both parties are in place.
So how do you “stake” crypto? Well there are a myriad of ways, each of which come with their own complexity and risk. But the easiest way is to stake your crypto on the platform that your online (“hot”) wallet is, so a platform like Coinbase. In a previous post, I mentioned how to get started in crypto, and recommended Coinbase. With this in mind, let’s quickly walk through how to stake your crypto in Coinbase.
In your Coinbase app, once you click into a particular asset, in this case Ethereum, you should see an option to stake and earn 5%. It’s really that simple to get started earning passive income!
But a few things to note before doing this:
You will be unable to access or trade the crypto that you ‘staked’ usually for a certain period of time. (unlike traditional banking)
Remember that you still own the asset, in this case Ethereum, so you will be earning interest (yay!), but the price fluctuations of Ethereum are still present (unlike lending money in a stable currency like the US Dollar).
For those curious: For Ethereum, it says “staking your ETH and getting ETH2”. What this means is that Ethereum is upgrading to an improved 2.0 version. To create liquidity for that update,
To learn more about how to stake your crypto and other ways to stake, watch this video.
BEST Crypto Staking Platforms 2021 (Staking Cryptocurrency for Passive Income)
There are other higher interest crypto assets you can stake and earn >10% interest on your crypto, but those are higher risk and much more complex to setup.
#2 - Earn Money While Browsing the Internet = $1-$10 / month
In a previous post, I hinted at that there are ways TODAY that you can earn crypto by doing your normal internet activities. One that I laid out was using the Brave browser, instead of Google Chrome or Microsoft Edge. I’d urge you to read my previous post, but the long and short of it is that Brave has created their own ad network that pays crypto to serve you ads. Instead of browsing in Google where web pages can be littered with ads, Brave hides all of those ads, then sends you notifications for ads. The more ads you’re served and you click on the more crypto you earn.
Once you’ve downloaded Brave, you’ll want to start an account at Uphold for Brave to deposit the crypto you’re earning. Currently, this is the only way for Brave to distribute your crypto to you. Brave as their own crypto token called the "Basic Attention Token" ($BAT). As of writing this, it trades at less than $1.
If you spend an average of 15 hours surfing the internet per month, you'll likely earn $5/month from Brave. Not huge, but it's something. And if $BAT increases in price, you'll make money on past usage as well! And there are plenty of catalysts to take $BAT higher. The major one being the Brave browser is being used by over 30 million people and growing. This makes Brave and the $BAT token one of the most adopted crypto projects to date.
#3 - Crypto Mining - Potentially >$100 / month
Wait what is crypto mining? In cryptocurrency networks, mining is a validation of transactions. For this effort, successful miners obtain new cryptocurrency as a reward. The reward decreases transaction fees by creating a complementary incentive to contribute to the processing power of the network. In other words, to ensure security and proper updates to the blockchain (or ledger of transactions), computer algorithms have to do the necessary validation the transaction is legit.
One of my future posts will dig much deeper in crypto mining, but mining requires specific hardware (usually hundreds of dollars to a buy a special device). So while you can earn the most passive income in crypto through mining, it does take an upfront investment. Different mining can have different setup requirements and maintenance needs.
I’ll officially begin my crypto mining journey in the coming weeks and months. I will report back first hand how it’s going. Two projects I’m bullish on crypto mining on are the Helium project ($HNT) and the Deeper Network project ($DPR). You can learn more below. At this point, I’m expecting to earning up to $250/month mining $HNT, and <$100/month mining $DPR.
Helium HNT Miners are the MOST PROFITABLE Mining Rigs to Buy in 2021
Staking DPR with Deeper Connect Mini - Deeper Network Staking Tutorial
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