Creating passive income streams can be the difference between the live you are living now and the life you want to be living. Passive income can help you build the financial independence you’ve always wanted. Simply put, passive income is income you can earn while you sleep. Traditionally people have earned passive income through real estate with income properties, monetizing their blogs or selling digital assets like eBooks. The rise in popularity of cryptocurrencies have made trading cryptocurrencies an accessible and potentially lucrative means to generate passive income, but:
WARNING: trading cryptocurrencies is not for the faint of heart.
Before we get started, please read the Crypto Noob Club’s disclaimer which outlines that all of the information found on our site is provided for educational, informational, and entertainment purposes only. We do not and are not qualified to provide financial advice.
Buy and Hold
Risk: Medium-High | Reward: High
One way to create a passive income with cryptocurrencies is to invest in some of the more popular, stable cryptocurrencies like Bitcoin and Ethereum and hold your position over a long period of time. With this strategy, you will be banking on the long term growth of your assets and less concerned about the short term fluctuations in value.
Let’s look at two examples where buying and holding cryptocurrencies would have been extrememly profitable over the past 12 months:
In November 2016 Ethereum was trading at just over $14 CAD. Just 7 months later, Ethereum jumped to over $500 CAD. After some short term fluctuations, Ethereum is now trading just below $400 CAD. That is a 2757% gain! If you invested $100 CAD in Ethereum 1 year ago, today it would be worth $2,857 CAD today!
One year ago, Bitcoin was trading at about $975 CAD. Today Bitcoin is worth over $8,450 CAD, totally in 767% gain in that period of time. If you invested $100 CAD in Bitcoin 1 year ago, today it would be worth $866 CAD today!
Invest in ICOs
Risk: High | Reward: High
ICOs, or initial coin offerings are the cryptocurrency world’s version of initial public offerings (IPO.) An ICO is a fund raising mechanism for new cryptocurrency ventures in which the public can participate. It is important to note that investing in ICOs is the riskiest way to invest in cryptocurrencies, but if you do your research and due diligence, you can make massive returns should you make a good bet.
For those who do not have the time to research upcoming ICOs but want to get in on the action, there is a solution. TokenClub is a Halifax-based monthly subscription service to the hottest ICO tokens! TokenClub researches new, premium ICOs takes care of all the hard work for you. You simply choose a monthly spend, and we send you a basket of premium new ICO tokens.
Get started with TokenClub here.
Risk: Medium | Reward: Low-Medium
Did you know that anyone can earn cryptocurrencies by mining them? The process of mining cryptocurrencies includes dedicating compute resources to participate in the validation of cryptocurrency transactions. In return, miners are rewarded for their work by earning fractions of a coin for every transaction that they validate. You can learn more about cryptocurrency mining in our post here.
The problem with mining cryptocurrencies is that not everyone has the technical know-how and the equipment to participate. That’s where the Crypto Noob Club comes in! We allow club members to participate in our mining operations by buying a membership, sharing in the costs of managing the operation and sharing the profits that it generates. The mining is offered as-a-service to our members, so it is hands off for our members.
Get started with the Crypto Noob Club here
Day Trade Cryptocurrencies
Risk: High | Reward: High
Just as you can in the traditional stock or currency markets, you can day trade cryptocurrencies. The goal here is to take a position in a cryptocurrency at a low price, then turn around and sell it when the price rises for quick profit – usually within the same day, as the name implies.
It could be debated whether or not day trading can be classified as “passive income” because it takes a lot of work in researching trends and averages to be successful. All you need to get started day trading cryptocurrencies is a verified account on a cryptocurrency exchange like QuadrigaCX or Coinbase and the cryptocurrency wallet of your choice.
Mix and Match
One way to reduce risk in the pursuit of cryptocurrency-based passive income is to diversify your strategy. You can combine the three aforementioned strategies and allocate your investments as you see fit, depending on tolerance for risk and desire for reward.