What are crypto dividends?
Standard dividends, by definition, are the distribution of a profit from part of a company’s revenue. The payment is usually distributed among corporate stakeholders. While the managing distribution of dividends is being conducted by the company’s board of directors.
However, with the new era of cryptocurrency-driven economy, we have access to new forms of dividends.
This time slightly different than the dividends we have known our whole life. Because of cryptocurrency standard financial markets are evolving and with them the amounts of ways to earn with crypto. So, in short, we may say that our crypto dividends are simply a new way to earn money.
We live in interesting times when crypto is changing the world and average people can easily involve themselves in crypto dividends plans.
Staking Proof-of-Stake (PoS) coins
The most common way to earn passive revenue from your crypto holdings is with the Proof-of-Stake (PoS) algorithm based coins. With PoS system a person can ‘stake’ part of their coins to become a validator of transactions by locking coins inside a designated staking wallet. The idea is – the more cryptocurrency that person owns, the more staking chance they have. PoS based coins are energy efficient and unlike Proof-of-Work crypto won’t need excess of computing power.
The PoS blockchain algorithm chooses network members to validate blocks at random. The odds of being selected are growing proportionally with the number of owned and staked coins. You don’t need any particular capabilities to stake a PoS cryptocurrency and you only need minimal investment to start. However, you will need to manage your staking wallet, most likely be always online and have access to the internet.
All in all, the more coins you stake the more you will get in return. You can say that staking PoS cryptocurrency is a source of passive income, as all you need to do is to keep your staking wallet online.
Mining Proof-of-Work (PoW) coins
While cryptocurrency mining is not in the traditional way of earning dividends, mining does show some similarities. Miners are purchasing hardware mining rigs and then use it to mine a particular cryptocurrency with the hope of regular returns.
The downside of this approach is the fact that the hardware and rigs for crypto mining can be very costly, also mining requires a large amount of electricity to run the mining hardware.
Last but no least crypto mining gear require a serious amount of skills in coding and electronics in order to set up and operate the mining activity.
But probably the greatest fear of miners is a time of bear market – a general decline in the cryptocurrency market is happening. Historically, due to the crypto bear market, some portion of miners went through bankruptcy due to the sharp drop in prices of crypto assets.
Some of them ended up running their operations at great loss. So while mining can be hugely profitable, the volatility and the uncertainty of the markets play a large role in the fiat value of the dividends.
Crypto Trading
We can present cryptocurrency trading as an option to earn crypto dividends, however trading profits are not exactly standard dividends in the full sense of the word, and yet the trading expectation is still to achieve steady earnings. What is more trading is not a passive way of earning dividends at all, and typically requires a significant amount of time. Additionally, a trader would need a comfortable amount of initial capital to contribute and trading experience to be successful.
That’s not all, as traders must also deal with the never-ending stress linked with the cryptocurrency market volatility and uncertainty of the crypto economy. Last but not least, to be really successful traders need a vast amount of right tools, just to lessen the burden of constant market monitoring and to handle orders and properly carry out trading strategy in an autonomous fashion.
Final words
We are extremely lucky that we live in times with access to the internet, cryptocurrencies are becoming more and more popular and thus we have the ability to earn crypto dividends. The only thing left to do is to decide on which of the suggested way of earning crypto dividends you want to employ. This decision should entirely depend on your preferences and should match the risk level you feel comfortable with.
No matter what you will decide, you will find plenty of interesting options for earning crypto dividends.
Happy staking!
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