Many people desire passive income without much input. And the one or another ever wanted to buy Bitcoin without affording a penny. So why not monetize unused resources?
Passive income with cryptocurrencies is always a question of perspective. A coin may be worth 1 dollar today, but could lose half of its value tomorrow. Not exchanging profits into fiat money means rsiking losses despite profits in mining, lending, staking or masternodes. Especially in bear markets, we see cloud mining contracts terminated and exit scams such as the lending platform BitConnect. People that are looking for perks from active work can proof themselves as content creators or become a much desired coder.
Computing power
The best-known example for monetized computational power in a decentralized network is Bitcoin. Bitcoins are earned by mining: so-called “miners” afford computing power to be the first one solving a cryptographic puzzle that allows them to create a block with transactions and add it to the blockchain for which they receive bitcoins in return. With the strength of the Bitcoin network at 100k terahash per second, it is unpromising to start mining with a consumer computer today. The computational power would be far to small to expect returns or even set up a profitable mining activity. One would need to purchase special ASIC hardware just for mining and join a mining pool – a consortium of miners – to have a small chance for some return. Mining yields are unreliable and the price of Bitcoin is too volatile for a substantial cost-benefit calculation. Even miners in countries with low energy cost go offline when the operating and maintenance costs exceed their profits. With the Bitcoin halving, mining rewards are halved every four years which lowers selling pressure on the market and tends to lead to higher prices sooner or later. The next halving is scheduled for mid of May 2020.
With cloud mining one can rent mining hardware from a service provider on the internet, who mines Bitcoin on behalf of the customer. This produces daily returns, but yield often just breaks even the purchase cost. A contract is expected to pay off not earlier than after half a year making contracts by year little attractive. There is so much happening in the crypto space making one year equal to ten years in other industries. The provider will go rather bankcrupt or even disappears than it is likely to build a solid passive income stream from cloud mining.
Beyond that, there are startups such as the Golem Network working on a “supercomputer” for affordable, customizable computing power for business clients to rent from the community. Those contributing computing power are rewarded in GNT. However, currently there is a lack of demand and capacities, so that well-known companies will continue to use centralized solutions such as Amazon’s AWS at least for now.
Conclusion
Mining is not profitable for most people and not at all suitable for inexperienced newbies. Alternatives such as cloud mining are also not to recommend or at least to be taken with a grain of salt. The risk/reward ratio is unfavorable in many cases.
Lending
Capital gains that regular banking customers just can dream of: Ethereum makes it happen with services known as the brand-new “Decentralized Finance”. DeFi is also used as term for service providers that have little or nothing to do with decentralization. One should rather say „Finance services on the blockchain“ that may be designed in a decentralized but rather in a centralized fashion. The term CeFi (Centralized Finance) has not become widespread yet and may never be in contrary to DeFi (Decentralized Finance) as no company wants to go without the buzzword “decentralization”.
Peer-to-peer lending
Loans have been a traditional service by banks. With P2P lending on platforms such as Mintos* and Bondora, pretty much everyone can become a lender today and earn double-digit annual interest.
Our advice for Mintos is to only cooperate with loan originators with scoring A and B and only invest in loans with buy-back guarantee. Furthermore, you should only select those that pay interest income on delayed payments for a safe and calculable interest rate during the transition period until the buy-back guarantee comes to play when a repay is less than 60 days overdue. Beware the universal “Invest & Access” option. You may get your money back instantly without having to deal with contractual obligations but the risk is higher since the pooled money is invested in all loans on the platform including agencies with a bad rating. In case one or more loan originators become insolvent, this may likely lead to a liquidity shortage and could result in the loss of your entire investments in a worst-case scenario.
Crypto exchanges
Earning interest on loans is possible in the crypto scene, too, but one has to differentiate between multiple models. Often, one does not lend assets peer-to-peer but to a platform or a liquidity pool that provides the money in form of short and/or long-term loans paying the lender a variable or fixed interest rate. Variable interest is common on “real” DeFi platforms such as Compound, Dharma, dydx, InstaDApp or Nuo. Fixed rates – for a certain period of time – are the regular model on centralized platforms. Exchanges offer lending usually only in form of loans for margin trading. Traders borrow cryptocurrency for leveraged trading to go long or short on prices. Yield from margin lending is generally low and return on investment is hardly predictable. There is also the risk of an exchange getting hacked and become bankcrupt as illustrated by CryptoRank.
A specialty is the exchange KuCoin*: with the dividend for KCS holders of approx. 3% per year, investors earn 50% of the generated transaction fees. An alternative to dividends is a token burn: Binance* continuously burns parts of the BNB total supply from the team reserves creating a higher price by scarcity in theory. But without taking coins from the market, the supply for trading is not reduced resulting in a minimal effect.
DeFi/CeFi platforms
As with crypto exchanges, one usually cannot park fiat money on DeFi platforms like on a bank account to earn interest. It has to be converted into supported assets first. “Real” DeFi platforms simply don’t have the framework and license to comply with regulatory guidelines in order to provide and manage fiat money (custody) services. Furthermore, liquidity and interest rates are often far behind centralized providers that usually offer the essential fiat-to-crypto transfer. But not even all centralized platforms offer accounts for fiat dollar or euro.
The solution is as simple as genius: The user buys a stablecoin, thus a digital US Dollar, preferably on well-known exchanges such as Coinbase*, Binance*, Huobi*, KuCoin*, Gate.io* or BitMax* by credit card or wire transfer if possible.
Note: Stablecoins are not a governmental medium of exchange but tokenized checks of a company or organization that holds at least the amount of the issued total supply of tokens as a reserve. These enterprises can organize themselves in a decentralized or centralized fashion. An example for a decentralized autonomous organization (DAO) is MakerDAO with the Dai stablecoin replicating the US dollar.
Much more popular on the crypto market is the most-traded stablecoin USD₮ from the private company Tether Limited registered on the British Virgin Islands. In their Terms of Service, Art. 3 Tether claims to be “100% backed by Tether’s Reserves” whose “composition […] used to back Tether Tokens is within the sole control and at the sole and absolute discretion of Tether”. It can be doubted that every Tether token is actually backed by a real US dollar. Furthermore, you should know that “the right to have Tether Tokens [for whatever kinds of assets] redeemed or issued is a contractual right personal to you” and not a general right to everyone. Tether continues to print tokens like a central bank without having ever undergone an official governmental inspection. The only “proof” they provided is an account statement signed by the law firm FSS dating back to June 2018. If you considered passive income by stablecoin lending, you should prefer alternatives such as TrueUSD, Paxos or exchange stablecoins like USDC from Coinbase*, GUSD from Gemini or BUSD from Binance*. It will take a while until DeFi platforms will provide interest on fiat money since there are high regulatory demands that need to be addressed. Until then you should be aware that stablecoins are anything but stable:
Fluctuations of +/- 1% are the order of the day and allow the issuing firms to use the spread for maintaining their business. You want to get a 1:1 ratio for a fiat to crypto dollar conversion, so be mindful.
Let’s discuss which platforms work best for high yield on stablecoins at preferably low risk.
Crypto.com
Crypto.com* supports more than 50 crypto and several fiat currencies. Their Visa Card and Euro wallet is now available in Europe. Those that want to spend their crypto assets by debit card need to convert it into fiat first – conveniently inside the Crypto.com app at the current market price. The service provider was founded 2016, is registered in Hong Kong and works on a DLT license from Malta. The fee model is somewhat confusing and well hidden inside the app. With the cashback program, one gets CRO tokens back as Pay Rewards for certain purchases when holding more than 10,000 CRO. CRO staking can be done by Crypto.com Earn that allows for up to 18% annual yield on CRO. Moreover, the platform provides attractive lending rates financed by crypto loans: a guaranteed annual return of up to 12% on stablecoins and up to 8% on popular cryptocurrencies (better than most P2P lending platforms) depending on the lock-up period und staked MCO tokens. People that want to risk more may be able to earn more with Crypto.com Invest assuming they hold over 5,000 MCO tokens as Crypto.com Private members. Support is provided by e-mail and live chat at any time.
The team puts a lot of effort into platform security: All assets are stored in cooperation with the hardware wallet provider Ledger in cold storage. On top of that, there is a 100 million US dollar insurance provided by BitGo. Hot wallets are property of the company, so that a hack would not harm any user funds. Fiat money is held in regulated bank accounts which are backed by a governmental deposit insurance. Starting mid of 2020, the team will provide a non-custodial wallet enabling users to manage their private keys. This would allow for the recovery of cross-chain transfers and unsupported tokens that are subject to faulty deposits or have been distributed by airdrops. However, it is yet to be decided if the company continues to store a backup of their non-custodial users private keys (on request). With the referral code qdfn5sjvfd you will get 50$ in MCO tokens after registering, completing the KYC process and (purchasing and) depositing 50 MCO tokens to stake for 6 months for a free Visa Debit Card.
Nexo
Nexo.io is a custodial solution promoting itself as “licensed & regulated” on their website. After several inquires, the company only revealed their Estonian finance licenses for EU customers. The country of registration remains “secret”. In the Terms of Service it says: “These Terms will be governed by and construed in accordance with the laws of the Website Owner’s jurisdiction […]” At the Securities and Exchange Commission, the company was registered with a postal address on the Cayman Islands. Not unusual for the industry, but misleading considering the (aggressive) promotion as a licensed and regulated business. Even the annual dividends for NEXO holders approx. every 3 quarters cannot excuse the doubt people might have. Nexo does not only take the day of the distribution into account when it comes to calculating dividends but also shares Loyalty Rewards consisting of a third of the total dividend amount to NEXO holders depending on their daily NEXO holdings in the NEXO Wallet between both dividend payouts. Announcements are made on the official Nexo Blog. Yield is generous just like the minimum deposit required for wire transfers of currently 1,000 US dollars. Nexo ignores their strongest competitors on their website by comparing their features and services with the bottom-placed providers of the industry.
Celsius Network
Celsius.Network* is less progressive but puts much more effort on following the rules – as to be expecting with a branch in the highly-regulated United States. The company values their small but steadily growing customer base with the credo: “We can do well after we do good for our community”. The 80% weekly profit share, however, is nothing else than common lending yield as also provided by other DeFi platforms to lenders. All deposited user assets are automatically turned into interest-generating capital through lending. In contrary to the service provider Crypto.com, Celsius follows the principle #FeeFree. This is great but a listing of their CEL token on a popular exchange would benefit their platform a lot. Otherwise, their founder, CEO and inventor of Voice over IP Alex Mashinsky risks to waste a lot of efforts into safety and user experience that does not catch the masses. Using this* link will earn you a 10$ welcome gift when depositing assets worth more than 200 USD.
Pundi X
Pundi X offers an app in combination with their XPOS Terminal that merchants can use for payments via credit card or XPass Wallet. Users can set up virtual credit cards in the mobile app – for example using the futuristically looking smartphone of their partner Function X. The XPOS enables developers to add additional tools via the own app store – in a closed ecosystem with limited usage an optimistic proposition. Moreover, the Terminal functions as node to verify transactions of the decentralized network allowing merchants to earn some transaction fees. The native token NPXS is designed to be a (highly volatile) loyalty program whose price has fallen throughout 2019. The number of supported coins and tokens is rather small: Bitcoin, Ether, BNB, DGX, KCS, KNC and NPXS. Private keys remain inaccessible to users.
Consensus lists more than 100 companies in the DeFi sector. LoanScan.io shows the interest rates of the most popular decentralized finance platforms. A comparison of enterprises offering great products and services can be found in the German crypto ebook „Tips & Tricks for Bitcoin and other cryptocurrencies“ for 10€ on kryptokompass.info that enables you full access to the website’s premium content.
Conclusion
Lending is a great way to earn relatively high yield on (crypto) funds. This requires a little more induction than parking money in a bank account but is usually also more rewarding. One should be picky, though, regarding the location, safety measurements and protections such as an insurance not only of lending providers but stablecoin issuers as well.
Staking and Masternodes
Staking means holding coins of a Proof of Stake (PoS) cryptocurrency in a staking wallet for consensus in a network which is usually rewarded by staking rewards in the concerning cryptocurrency. Blockchains such as NEO, Ontology and Theta use a separate token for gas or fuel which is needed to send transactions. On the other hand, Proof of Work-based cryptocurrencies such as Bitcoin and Ethereum use their own coin as gas, so that there is always some ETH needed in an Ethereum wallet to initiate transactions.
The more coins of a PoS blockchain are staked, the higher the return will be. Staking rewards are usually lower than interest on stablecoins by lending on platforms like Crypto.com* (6-10%), Celsius Network* (~4%) or Nexo (8%) but much more risky due to the cryptocurrency’s price volatility. Therefore, investing into a PoS coin solely for the sake of staking is often not or less rewarding. Staking is only possible in staking-capable wallets. Some exchanges such as Binance support staking of certain coins and distribute staking rewards proportionally. This can be helpful especially for active staking where one needs to use a wallet that stays open and connected to the internet at all times in order to have the chance for rewards. Prices fluctuate too much than one could call staking rewards a guaranteed return in fiat terms. When purchasing staking coins for the sole purpose of holding them for daily snapshots, trading fees and potential losses on market orders combined with the price difference between buying and selling are higher than the return in staking rewards.
Some projects implement so-called “masternodes” in addition to the Proof of Stake consensus algorithm. This is a specific number of coins in a wallet that qualifies for a validator node. To run a node, one transfers a certain amount of coins in one transaction to another wallet storing the entire (or necessary parts of the) blockchain. A key is generated that enables your node to validate transactions for the network.
Nowadays, there are hundreds of cryptocurrencies making it more and more unlikely to pick a hidden gem and running a cheap masternode today that will be successful in future. Nevertheless, masternodes allow to earn a few percent in the respective cryptocurrency. The higher the return on investment (RoI), the higher the inflation and the coin is supposed to lose value continuously, as more people will earn and have to sell to pay operating costs just as the miners with Bitcoin do.
Masternodes exist in every price range. The cost of a masternode does not make a cryptocurrency better or worse. But consider: An expensive masternode is potentially more “reliable”, however, a price drop for example as a result of a code bug can be spectacular. After all, trading volume is important: Coins, that are barely traded, are pretty much useless. You can find a comparison on masternodes.online and masternodes.pro. The YouTubers Altcoin Buzz provide a tutorial for newbies. It may be worthwhile to rent a cheap server, for example an Ubuntu VPS with static external IP address. Cloud and root servers are full-featured, dedicated servers, not just an instance or virtual container on a shared server. When this sounds too complicated, you could purchase a masternode hosting plan such as on Allnodes.
Conclusion
The prices of coins are too volatile than one could talk about a guaranteed income from masternodes in dollar terms. Those that believe in a PoS coin and invest based on its value, should not miss out on passive income by staking and masternodes if applicable. But it is not advisable to invest in a coin for the sole purpose of receiving staking rewards.
Providing bandwidth
Full Nodes store a copy of the blockchain. Even when they make the data available to others, they are usually not rewarded in contrary to miners or validator nodes that register transactions. But there are exceptions. You can find potentially rewarding full nodes of the Top 100 coins in the German crypto ebook „Tips & Tricks for Bitcoin and other cryptocurrencies“ for 10€ on kryptokompass.info that enables you full access to the website’s premium content.
Beware reward calculators for estimating income from nodes or provided resources! Teams tend to publish an open-end calculator on their website or count with irrational numbers in their whitepaper or blog post that are far off the status quo of actual transaction volume and can exceed it a hundred times, so that an investor earns 10 cents instead of a supposed payout of 10 dollars a month while having to pay the rent for the server nonetheless. You may not read about it as people tend to hide losses and misfortunes.
Sentinel Network
The Sentinel Network is still in alpha testing their decentralized virtual private network (dVPN) with the goal to route the user’s internet traffic encrypted and anonymously through the web. Everyone can become a network node and share bandwidth with the community in return of SENT tokens – more or less a monetized alternative to the slow Tor Network. In contrary to Sentinel, Tor, however, is well-known, has got more users and its own browser based on Mozilla Firefox. There are many more blockchain-based projects like Bit Tube, Lethean, Orchid, Substratum and WinQ in the same segment, but they’ve not got more to offer than a browser add-on, a very small community, are still stuck in testing phase and/or stagnate in development.
The difference to a regular virtual private network (VPN) is, that internet traffic is not routed via centralized servers of a service provider but across the servers of the entire community. Expected advantages are unblocked websites and less captcha requests through ordinary IP addresses. The traffic from the user to the VPN or Sentinel Node is encrypted. This may be attractive for illegal streaming but may become a problem for exit nodes due to their visible IP address. A VPN protects users from nearby hackers like for example in public WiFi networks. When the target servers also used a Sentinel Node on their end, the entire connection would be encrypted and invisible to internet providers and governmental organizations. When you want to protect the content of your private e-mails from the data kraken NSA, you should communicate using PGP keys that sender and receiver need to exchange beforehand or can derive from a keyserver. Don’t forget that an effective protection of your private personal data on the servers of your webhosting provider remains key.
BitTorrent
BitTorrent is without doubt the best-known decentralized network for (often illegal) P2P file sharing. 2019, the add-on BitTorrent Speed brought the crypto token BTT to the application μTorrent. The goal is higher download speed due to the possibility of earnings in BTT. More network participants shall be encouraged to keep seeding torrents to other users after they have downloaded a file. The concept is simple: Leechers compete for more bandwidth by seeders via bidding mechanism similar to a tip for transaction mining. The more someone is willing to pay, the higher his download speed will be. People, that are specifically interested in returns from seeding could search on popular websites for torrents where there are few seeders but many leechers. A “discovery of demand“ feature for tracker is planned. Most popular exchanges take care about liquidity by listing BTT. The Team behind BitTorrent also works on decentralized data storage called BTFS.
Cloud storage
Cloud storage could be provided in a decentralized fashion with the help of blockchain technology when people with sufficient storage space store encrypted data of other users on their hard drives with a consistent internet connection. The algorithm of Storj.io distributes the data as globally as possible to prevent regional outages. Storage Node Operators (SNOs) earn STORJ tokens for their provided resources at fixed conditions. To incentivize storage nodes to stay online as long as possible, the earning amount grows over time holding back a certain amount from the first 15 months of the “trial period” until their graceful exit out of the network. Storj competes with Sia Tech and Opacity for the supremacy of the most demanded cloud storage solution based on blockchain. However, all services still lack (decentralized) apps comparable with the user experience of Google Drive utilities.
The table above illustrates storage pricing from the customer’s point of view. Someone interested in affordable storage will probably choose the Sia Network or startup Opacity. On the other hand, running a node in the Sia Network is not much attractive. The download of 1 terabyte of data will only earn you a few cents – but 20$ in the Storj Network. The question is, if the team behind Storj.io is capable finding enough partners for their Tardigrade Cloud Storage Service that launched in March 2020 and if these will download chunks of data to make the operation of storage nodes actually worthwhile.
The prerequisites for a storage node are high:
- 1 Processor Core
- Minimum 500GB of available disk space
- Minimum of 2TB of available bandwidth a month
- Minimum upstream bandwidth of 5 Mbps
- Minimum download bandwidth of 25 Mpbs
- Maximum down time of 5 hours a month
The latter may be the biggest obstacle. Outages on broadband connections are often higher than 5 hours a month. Since the majority of returns is held back especially in the first months and as it takes 10 months to be paid full rewards, one can expect to be unfavorably disqualified sooner or later. The home computer is therefore not well suited as a storage node even when Storj.io addresses private hosts.
Let’s investigate if reselling a virtual private server is worthwhile. We’ve got two VPS running, one with 4 cores, 16GB RAM, 4TB HDD and another with 8GB RAM and 1TB HDD, both are entitled to unlimited bandwidth. We noticed that within the last half year during testing phase the minimum bandwidth requirement has not been reached. Income and expenses have been as follows in Q1/2020:
Expenses:
30/12/2019: 15.13$ server rent
01/01/2020: 22.00$ server rent
28/01/2020: 14.85$ server rent
01/02/2020: 22.00$ server rent
26/02/2020: 14.69$ server rent
01/03/2020: 22.00$ server rent
= 110.67$
Income:
04/01/2020: ~197 STORJ @ ~0.103 USD = 20.33$
05/02/2020: ~638 STORJ @ ~0.140 USD = 89.29$
10/03/2020: ~468 STORJ @ ~0.125 USD = 58.54$
= 168.16$
Mind that our servers have been online since August 2019, therefore we have received 50% of the regular earnings. With a mature node of over 10 months runtime we would have got double the amount. The held-back reserve is to cover an uncoordinated exit or disqualification to pay repair bandwidth from other nodes as stated in the table above that share the same data to be distributed to other nodes. So far, there has not been a single file lost in the Storj network and the team based in Atlanta is diligently working on keeping it this way. Otherwise, the service could not justify the high pricing for downloads. Please note that this is just a snapshot in time and not a promise for a sustainable income model. During the testing phase in 2019, we’ve had higher expenses than income despite the team’s “surge payouts”. With the public launch of Tardigrade, we expect a growing demand, though, and hopefully growing profit as well.
Regarding the value of storage tokens, the leading programmer behind the Oyster Protocol spoke out after committing his exit scam:
“I advise all of you to get out of crypto. Go educate yourselves about what is happening with Tether. The entire crypto sphere is a giant Ponzi scheme. […] If you want to sell back to a greater fool then you will only find yourself to be that fool. […] If you understand how the storage-peg works then good for you, you realize that current price shocks are ephemeral and that the price of PRL will eventually become bubble-resistant and associated with the fair-market value of storage.”
Theta Network
Theta Labs needs bandwidth for video streaming. Caching and validator nodes are rewarded in TFuel, the gas for transactions in the Theta Network. Earnings depend on the shared or, more specifically, uploaded content, but used to be less than a dollar a day. Sliver.tv is a streaming partner of Theta that is also cooperating with the Chromium-based Brave Browser*.
Conclusion
It is still to be seen which platform will deliver the best return on used resources. BitTorrent is one of the largest decentralized networks, but with more participants comes usually more competition thus smaller returns. On the other hand: when a service such as the Sentinel Network not enough users, returns are hardly predictable. The US-american startup for decentralized cloud storage Storj.io could be a hidden gem. It’s always best to DYOR (Do Your Own Research) and run a promising node for trial without heavy expenses or commitments.
Reward content creators
Thanks to APIs of major platforms such as YouTube, Twitch and Twitter, it is possible to reward content creators. The Brave Browser* enables the usage of Basic Attention Tokens that users receive for interacting with subtle, unpersonalized, privacy-preserving advertisements.
The platform Verasity turns promotion upside down: Publishers and promoters purchase VRA/VRAB tokens to reward users for watching their videos or ads. Verasity provides not just a browser plugin but also embeds their VeraWallet into the website, so that users don’t have to switch between multiple apps.
The video streaming network DLive* combines both models to offer a platform that is all about community interaction. In 2020, the project moved from the Lino to the Tron blockchain. Since then, their dApp is part of the BitTorrent ecosystem.
Airdrop
Airdrops are or rather have been a great way to collect some tokens for free. An entire free token distribution is the exception today, since in the past few years, tokensales have proven to be an attractive crowdfunding opportunity. With the few ICOs today, projects use airdrops primarily as marketing strategy to (artifically) increase their community, as one has to follow a project on various channels in order to receive a few tokens in return. That way, projects with weak concepts still can reach a decent community size.
Free airdrops are often part of a referral system promoted by influencers or in the hodgepodge of posts in the oldest crypto forum Bitcointalk. When a team distributes their tokens solely by interaction on social media channels without having a real product, it is to be expected that the token will have little to no value. Some teams use a disposable token just to gather personal data of a target group by stipulating a Know Your Customer (KYC) process in the pretext of fulfilling anti-money laundering (AML) requirements. These are nothing but snowball setups, where money will not flow to the participants but into the pockets of the initiators when they sell the aggregated data to third parties. Be extremely cautious to whom you give your personal information as data is the next generation currency.
Some projects are handing their tokens to stakeholders of a coin (of the underlying blockchain). An example is BitTorrent, whose team distributes BTT tokens to TRX holders based on monthly snapshots of the Tron blockchain. The ratio is so small, though, that a buy and sale of TRX on the 11th of each month is not worth it regarding the amount of receivable BTT tokens.
In general, making oneself eligible for an airdrop as a tokenholder through a short-term investment outside of the top 10 coins is very risky due to the lack of liquidity as the ”Mega-Airdrop” from TrueDeck has shown. The 2:1 increase of the circulating supply caused the token to lose 80% of its price within hours. If you cannot free yourself from getting into a coin for the eligibility of a secondary coin by airdrop or hard fork, you should rather park your balance on a cooperating exchange to sell right after the snapshot. Use a block explorer to determine the block height such as Ethstats.net for Ethereum. When you hold your coins in a private wallet, it would take too long to transfer the coins to an exchange after the snapshot to sell.
An Airdrop must not be confused with a Hard Fork of a blockchain, when it is not initiated for a new blockchain but to solve a code bug for example. In that case, the protocol may be substantially modified, but there is no new coin issued. A token swap is not the same like an airdrop, too, even though stakeholders receive coins for their tokens on a new blockchain, but the former tokens are declaredly worthless, since the new coins function as the new medium of exchange in the network.
Faucet
A token faucet is used on websites to give away coins and tokens for free or in exchange of completing tasks or polls by a user. Payouts can be initiated above a certain threshold using platforms like FaucetHub or CoinPot that require the user to register an account. Passive income looks different. The promotion of 5,000 Satoshis per task often turns out to be three nulls less on average.
Who should give away money for free? The only rational would be a share of income from advertisements, but since most people use adblockers nowadays, earnings have shrunken substantially. When this was even further divided by a share to the website visitors, operators of a faucet cannot give away more than a few cents a day “for free”, not to mention the risk that people use automated bots behind multiple accounts with different IPs in an endless milking fashion. Some websites block access to their faucets when an adblocker is detected. And even more are just scam sites encouraging people to click silly captchas on ad-polluted pages without paying a penny or even worse, smuggling malware to the user’s PC. The time of Gavin Andresen’s 5 BTC faucet is over. The very most of faucet websites is a pure waste of time!
When your intention is to avoid a connection between your wallets but you need a little gas like Ether in another wallet for a token transaction, you can use wallets with Atomic Swap functionality or an inbuilt exchange service. Remember that you remain pseudonymous only as long as there is no outgoing transaction from your wallet to a platform where you are registered via KYC. Alternatively, there are fee- and trust-based mixing services. Do not give your private e-mail address to an anonymization service provider and especially not to a faucet operator unless you want to be flooded with spam mails.
Active income with cryptocurrencies
Beside compelling ways of passive income, there is still the traditional model: time for money. Although many people dream of fincancial freedom in the future by investing in cryptocurrencies, for the time being it may be worthwhile getting started with active engagement:
Coinbase* is one of the first platforms offering “payed learning”. You can participate in a quiz after watching episodes about cryptocurrencies on Coinbase Earn*. Every correct answer earns you a few dollars in the concerning cryptocurrency. Some projects even offer giveaways on their platforms as to be found here.
Many, if not all blockchain projects are desperately looking for IT experts. Coders familiar with blockchain technology have got the agony of choice in jobs making the dream come true to work as digital nomad on the beach of Bali switching from cocktail to touchpad to cocktail. But when you started learning to programme today, beware that the garden-variety of coders may be replaced in future by artificial intelligence that they (or rather their colleagues) have created. Better try to get your foot into the door today as a translator, moderator, founder or something similar in the blockchain space or beyond.
Links marked with * are referral links to recommended services with a bonus for both parties. Even though services are chosen with extreme caution, neither the author, nor the publisher is liable for services from third-party services.
You can find much more content about cryptocurrencies in German on KryptoKompass.info Purchase the German ebook and gain access to the updated, exclusive content on the webpage. It may be your best-invested 10 euros in the crypto scene. If you wish to know the premium content available in English, please contact: mail@kryptokompass.info
Written, researched and © by Milan Hoppe as of 25/03/2020
