7 Ways to Earn Crypto
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You typically get cryptocurrency the same way you get anything else: You buy it. But, largely because of the technology behind the crypto ecosystem, there are also ways to earn it. These tactics can require technical expertise, some upfront investment and fees, and payouts aren't always big or consistent. But hey — free is free.
Here are seven ways to earn crypto.
Staking: Low fees and steady rewards, but you'll need crypto upfront
In a nutshell: Some coins and tokens are generated through staking. Staking involves depositing crypto you already own in order to have the opportunity to add new transactions on the network. Once deposited, your staked crypto is frozen, like collateral. If you’re chosen, at random, to validate a transaction, you can earn a crypto reward for the work your software does. If you’re caught doing any funny business, you can lose your stake.
If you already have the capital needed to be a solo staker but don’t want to get deep into the technical stuff, you can use a staking-as-a-service provider, like Allnodes, to do the work for you, for a fee.
What you’ll need to get started: You can use your home computer, but you’ll need some technical know-how (or the patience to learn) to get up and running. Becoming a solo staker on Ethereum requires you to stake 32 ETH, worth about $55,000 in September 2022.
Pros: Staking doesn’t require an upfront hardware investment, and its model is light on electricity use, which is great for your budget.
Cons: Ethereum currently earns stakers who run their own validator software an annual percentage yield of a little over 5%, though that number is expected to rise after Ethereum’s merge in September 2022. Solana’s APY is a bit over 6%. Nice to have, but nothing to write home about, especially when you might need to lock up thousands for the opportunity.
» More about proof-of-stake cryptocurrency
Staking pools: Stake small amounts, but you'll pay a fee
Examples: Rocket Pool, Lido.
In a nutshell: Don’t have tens of thousands of dollars worth of crypto to stake? Instead, pool what you’re able, similar to how crypto mining pools combine computing power. People stake smaller amounts until the group meets the required amount, and the validation process begins. Rewards are distributed proportionally, according to your stake (minus the pooling service’s cut).
What you’ll need to get started: Crypto you can stake.
Pros: It doesn’t cost much, and it’s easier than setting up staking on your own.
Cons: Sure, it’s easier to join, but the rewards are watered down. You may pay double-digit fees, and you have to trust an outside entity with your crypto. As with solo staking, you might be required to “lock up” your staked crypto, which means you won't be able to withdraw them for a predetermined amount of time.
» Learn about NerdWallet’s top crypto staking and rewards platforms
Exchanges that offer staking pools: Easiest staking option, but highest fees
Example: Coinbase, Binance.US
In a nutshell: You can join a staking pool on the same app where you already do your crypto trading, if they offer it. But, like a rental car company offering to gas up your rental for you when you return it, there’s a premium attached to this level of convenience. Don’t be surprised if a quarter of your rewards stay with the exchange.
What you’ll need to get started: An account at a crypto exchange and crypto to stake.
Pros: Ever open a savings account and a checking account at the same bank? The convenience factor is a big selling point. Same here.
Cons: In addition to high fees, there’s an ideological dilemma: Assembling huge pools of resources at a few big companies could take the promise of a decentralized financial system and replace it with the centralized model that cryptocurrencies are supposedly trying to replace in the first place. And not everyone is into that.
» Comparing exchanges? Check out NerdWallet's top platforms
Mining: Can be lucrative, but it's technical (and often expensive) to get started
In a nutshell: Run a special computer program on a special computer to solve really hard math problems. If you solve the problem before any other miner, you get some crypto.
What you’ll need to get started: Mining software, which is free, and a computer to run it on, which is not. In the old days, your personal computer would do the trick. But the problems that need solving keep getting harder, so you’ll realistically need to drop a few thousand dollars on specialized hardware. And then there’s the electric bill. Bitcoin alone is estimated to use about as much as electricity in a year as the world’s fifth most populous country, Pakistan, in the same time frame.
Pros: If your computer is the first to solve a problem, you’ll get rewarded. If you’re mining a block of Dogecoin, that means you get 10,000 Dogecoins — worth about $600 as of September 2022.
Cons: It’s hard to win as an individual miner — and just about impossible if you’re mining Bitcoin. Your competition includes companies that own warehouses brimming with thousands of computers.
» Learn more: How Bitcoin mining works
Mining pools: Mine for less, but for less of a reward, too
Example: Slush Pool.
In a nutshell: Split the work — and any proceeds — with a group of other miners.
What you’ll need to get started: The setup is the same as if you’re mining solo, except you’ll run software that coordinates the work with other miners. But don’t think you can hook up your old college laptop and ride the coattails of somebody else’s supercomputer. The more computer power you bring to the table, the more you stand to get paid.
Pros: At a high level, you’re trading the chance for big payouts for smaller, more consistent payouts. If relative consistency is important to you, this method should get you closer to that objective. And, to be frank, being a solo miner may be out of reach for hobbyists going after more established cryptocurrencies.
Cons: You’re still paying the same equipment and electricity costs as if you were mining solo. Plus, you’re usually paying fees to the pooling company that coordinates everything, which lowers your return.
Airdrops: It's like a free sample, which may or may not be worth your time
In a nutshell: An airdropped coin is like a tiny scoop of ice cream on one of those flat wooden spoons. It’s free, and the point is to pique your interest into getting more or generating buzz to build a following. Popular with new tokens or projects, especially, you sometimes just need to provide a wallet address.
What you’ll need to get started: You’ll need to find an upcoming airdrop — Reddit and Twitter are good places to start looking.
Pros: Free beer is the best beer, regardless of taste. Same principle here.
Cons: If you’re not paying for the product, you are the product.
Faucets: Do small tasks to earn small rewards
In a nutshell: Trade your time for crypto. Do a simple task — take an online quiz, watch a video, participate in a survey — for a nominal amount of crypto.
What you’ll need to get started: You’ll need to get a wallet where the crypto you earn can be sent. Googling crypto faucets might give you an idea of where to start looking, but consider reading a few reviews before you fully commit.
Pros: For crypto newbies, airdrops and faucets are an easy way to get started. You’ll get practice setting up and using a wallet, tracking prices and eventually selling your tokens.
Cons: Would you spend your time and share your information with a website offering you a dollar to take a quiz? If not, why would you do it for crypto? Scams are common in this space. What might appear to be a crypto faucet might actually be a phishing attack or a hacker attempting to infect your computer with malware.
The author did not own the aforementioned cryptocurrencies at the time of publication. The editor owned Dogecoin.
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