If we can agree that the stock market has volatility and a tad of chaos then we should be able to agree that the crypto market has those but on steroids. It turns some people off and that is understandable. What some people may not know is that there is a way to turn the crypto market into a calmer place to invest and it is much the same way many do so on the stock market. I choose dividends as my main focus on the stock market and the crypto market has a similar feature albeit different. It is called staking and you can use it to make passive income. Staking is where you stake a portion of your coins on your crypto exchange and in return you receive passive income from them. How much you receive and when varies based on the coin the the exchange. Why would they pay you to borrow your coins ? That reasoning can vary but think of it like a bank paying you interest on your savings so they can use that money to make loans. Also on some crypto networks, staking your coins helps secure the network itself, and you're rewarded for that help.

Think of it like a savings account in a bank. You deposit some of your money into a savings account, you earn interest while you park it there, you can withdraw it but then you will earn less interest. This is a crudely simple analogy but you get the picture. Where staking differs is that the interest you receive is usually paid in whatever coin you staked so you still need to convert it back to whatever currency you use and transfer it from your crypto platform and into a normal bank. A few things to note is that staking income is fully taxable in Canada currently and as for other countries I highly suggest looking up your local laws. In Canada it is also currently taxable regardless of whether you redeem the passive income you make. One more note is to make sure you understand the terms of staking as they can vary for each coin. Some can be withdrawn or “unbonded” immediately but others require a period of time before they can be returned to you. The staking income is available to be used as soon as it is paid out.

The reason I suggest staking is that much like dividends or savings interest it renders the chaos of the coin price going up and down to be of little consequence to you. It will affect you when you go to redeem your staking income but in the day to day you can earn passive income regardless of the coin price fluctuations. It has turned crypto into a more enjoyable way to invest for me. Not every coin can be staked but plenty can. Much like dividends and interest you won’t get rich quick like this but you will unleash the power of compounding if you can take a more long term view. If this at all sounds like something you want to do I suggest beginning your research and finding out which coins and exchanges work for your needs.
Show older
Game Liberty Mastodon

Mainly gaming/nerd instance for people who value free speech. Everyone is welcome.