With a basic knowledge of economics and crypto, you can already start earning passive crypto income in Nigeria, which will expand your crypto portfolio. Want to know how? Read on to discover how you can earn money by investing in crypto.
Understanding cryptocurrencies
Cryptocurrency is a digital currency that has a value determined by demand. All crypto transactions are recorded on a blockchain, a public ledger distributed among all network members.
Thousands of crypto are available online, and many people have turned to them for their many benefits. The biggest one is its decentralised nature, allowing people to conduct monetary transactions without third-party interference.
What is passive income in cryptocurrency?
Crypto is an excellent financial investment to earn passive income. With this, you can earn rewards and profits by purchasing and lending coins for interest. However, you must start investing in cryptos before you can do this. Here’s how you can:
- Select a cryptocurrency exchange in Nigeria
There are various crypto exchanges in Nigeria. However, you need to find a secure one that offers additional features that can benefit your investment. This includes the available trading options, the cryptocurrency supported, and more.
- Create a crypto wallet in Nigeria
Before purchasing crypto, you should create a crypto wallet with secure storage for your digital assets.
- Purchase Cryptocurrency
With everything prepared, return to your chosen exchange and purchase your first crypto asset. Go to the platform’s ‘buy and sell’ section and fill out the necessary information to finalise your transaction.
- Store your cryptocurrency
After your purchase, transfer your crypto assets to your wallet for extra protection and keep your private keys secured. You mustn’t share it with others; only you can access your funds.
Ways to earn passive income with crypto in Nigeria
With your crypto assets ready, there are tons of opportunities to earn passive income with crypto in Nigeria, such as:
- Staking crypto
You can earn passive income by staking crypto through the proof-of-stake consensus mechanism. With crypto like Ethereum, new crypto transactions are verified through the proof-of-stake method, which requires a network member to stake their assets. Once the transaction has been verified, the owner earns crypto as payment for their assets staked.
- Crypto mining in Nigeria
The traditional way of verifying a transaction is through mining or a proof-of-work mechanism. This requires network members to compute complex mathematical problems to mine new crypto on a blockchain.
- Crypto trading in Nigeria
Trading is one of the most straightforward ways to earn passive income in the crypto market, which is done by paying attention to the value of the specific crypto. When its value becomes higher than the price you bought it for, then it’s time to trade them and earn from the price increase.
- Yield farming crypto
Yield farming is the process of earning interest when you deposit your assets into a pooled fund that will be used to execute smart contracts for trading, lending, and more.
- Crypto master nodes
Contrary to regular crypto holders, those who hold master nodes carry additional responsibilities within the crypto’s infrastructure. This is done through proof-of-service, where you must provide computing power to the blockchain and get paid in crypto.
- Crypto lending
Crypto lending is making your crypto assets available in a crypto exchange platform for other investors to borrow in exchange for interest.
- Crypto dividends
Another good way to earn passive income is through crypto dividends. In this process, you can earn through the distributed profits from the network.
Choosing the best cryptocurrency to earn passive crypto income
To earn passive income, it’s also vital that you select the right cryptocurrencies to invest in. You can do this by researching the market and considering factors such as:
- Liquidity
Liquidity refers to how easy it is to convert crypto into another digital asset or cash without losing the price value. This is important to consider since liquidity reduces risks in your investment. Specifically, it allows you to sell your assets quickly if you want to stop investing.
- Market capitalisation
Market cap is the overall value of specific cryptos such as Bitcoin (BTC), Ethereum (ETH), and more. This is determined by calculating the current price of a single coin and multiplying it by the number of coins currently in circulation.
- Network security
Since crypto is expensive and you’re staking real-world money, you must choose reputable and secure crypto coins and tokens.
One way to determine if crypto is secure is by researching whether there have been successful hacking attempts or stealing from the blockchain. If there have been records of it, it’s also essential to determine the steps taken to compensate crypto owners for their losses.
- Staking rewards
As previously mentioned, staking is one good way to earn passive income. However, there are varying rewards given for the task. First, check what you can make by staking a particular crypto to determine which ones are better to invest in.
- Development and community support
Since the value of crypto is largely determined by the demand from its investors, it’s important to know if the crypto you’re considering has an active community. In line with this, you should also take stock of the future developments they plan and the community’s support for this.
If the majority of the community dislikes future developments, then it’s likely that the demand will fall. So be sure to select the crypto with an active and supportive community.
Cryptocurrency investment risks and challenges
Crypto investment is not without its risks. That’s why you should look at the downsides to determine whether the challenges are worth it or not. Here are the biggest risks you’ll face when investing in crypto:
- Market volatility
The crypto market is extremely volatile, with crypto values rising and falling according to demand. You need to prepare for this if you want to know how to earn passive income with cryptocurrency.
- Cybersecurity risks
In the digital space, hacking and other cybersecurity attacks are among people’s biggest problems. This is no exception when investing in crypto, and you should be prepared to face this if the issue arises.
One good way to avoid cybersecurity risks is by investing in crypto that constantly updates its security measures. While this doesn’t guarantee total security, it significantly reduces the risks.
- Regulatory risks
Although crypto has been around for a while, it is still in its infancy. That’s why many countries are hesitant to adopt crypto into their jurisdiction. As a result, different regions have varying regulations when it comes to owning and trading crypto.
To avoid complications, you need to be constantly updated with your country’s current regulations and the crypto market’s overall status. This is especially important to avoid getting in trouble if you travel a lot for long periods.
- Fraudulent activities and scams
There have been people who have fallen for scams when purchasing crypto. However, this can be avoided mainly by vigilance and research before investing. Additionally, you should only purchase crypto assets through legal platforms to avoid the risk of losing your crypto funds to malicious entities.
Tips for successful crypto passive income strategies
There are various ways to earn cryptocurrency passive income, but it’s still essential to follow helpful tips to ensure safety and security. To help you with this, we’ve listed some essential information you should follow:
- Set attainable goals
When it comes to investing, you must never go in blind. You must have clear goals and the right strategies to attain them. You need to look at your budget, availability, and risk tolerance to do this.
- Only invest what you can afford to lose
Since the crypto market is extremely volatile, there’s always a possibility of a market crash. That’s why it’s vital that you only invest the money you can afford to lose. This lessens the risk of crippling your finances in a market crash that devalues your assets.
- Diversify your portfolio
Even if one particular crypto provides high returns on your investment, it’s important not to stake in a single asset. This ensures you don’t suffer severe losses if that crypto crashes. By diversifying your portfolio and investing in various crypto, you ensure you won’t lose all your investments when one crypto tanks.
- Keep up with market trends
It’s crucial to be updated with the crypto market to always prepare for what can happen and determine the right action. In line with this, you should always pay attention to market trends and evaluate them to see how to take advantage.
That’s why you should look into the latest developments in crypto passive income platforms, passive crypto mining apps, and other new ways to earn from your investment.
- Keep your investments safe
Safety should be your number one priority when investing. That’s why taking all the appropriate precautions to keep your assets safe is essential. One of the best ways to do this is by having crypto wallets to keep your assets safe.
Start earning passive crypto income today
Investing in crypto is complicated and requires a lot of learning to succeed. However, once you clearly understand the market and know what you’re doing, it’s easy to earn passive income.
However, you should play smart and avoid making investments when you’re not ready. Do thorough research and learn from your peers before investing in having better chances of earning passive income.
FAQs
How to make passive income with crypto?
There are various ways to earn passive crypto income, but it depends on how much time and effort you put into it. Some of the best ways to make passive crypto income include crypto lending, staking, and yield farming.
What is the best passive income for crypto?
Determining the best way to earn a passive crypto income is difficult since it depends on individual preference. But you can try the different methods we’ve listed to see which one you’re most comfortable with.
Is passive crypto income a good option for me?
If you don’t have a lot of time to focus on your investment, then earning through passive income is the best option for you. By choosing one option that doesn’t require active involvement, you’ll be earning crypto even if you don’t constantly check your progress.
Why is interest important for crypto investors’ passive income?
Most of the activities you can participate in to earn cryptos, like lending and staking, pays in interest. So, if you want high returns, consider your preferred strategy.
