I have been following cryptocurrency since the first mainstream crypto-hype-explosion in 2017.
As a naïve college student I, like many others, dove headfirst into the cryptocurrency world with very little research in hopes of scoring big profits with almost no effort.
In a surprise to almost no one, I came out of that venture less profitable than when I went in.
Now having more funds to freely invest, I've recently (think the past 6 months) been looking for opportunities to dip my toes back in.
As of now, I have about 3% of my total investment portfolio in cryptocurrency. I've honestly been doing more researching than investing, and just a couple of weeks ago I made a game-changing discovery.
I learned that with little to no effort I could begin earning a significant amount of passive income on top of my core cryptocurrency investments.
I'll go into more detail down below, but the TLDR version is:
- Buy cryptocurrency (BTC or ETH to be specific)
- Create a BlockFi account
- Transfer your BTC/ETH to your BlockFi account
- Done!
What is Passive Income?
Passive income is the golden ticket to financial independence and early retirement. It's the idea that you are literally making money while you sleep.
(https://source.unsplash.com/-YHSwy6uqvk)
A lot of people have misconceptions about passive income, thinking they can start a side hustle like Youtube, Dropshipping, or Fiverr to produce passive income streams.
That's not passive income; that's just a second job.
If you are continually putting in the effort to maintain your product or service, that is not passive — it's active.
The goal is to discover and execute strategies that will grow your wealth with no required upkeep.
What is Cryptocurrency?
Cryptocurrency might be one of the most popular topics with the least amount of public understanding.
To be fair, it's a confusing and new concept that requires you to search for good educational sources.
In a very (emphasis on very) surface-level explanation, cryptocurrency is a decentralized form of digital currency that is not controlled by any government or corporate entity.
Note! This is not my Etereum wallet. It's a stock image!
Just like physical cash, it can be used online to trade for goods and services by businesses that accept it.
At its core, cryptocurrency is supported by a technology called Blockchain, which is a database that's spread across computers all around the world, that acts as a ledger for all of the cryptocurrency transactions.
Are you still with me?
Cryptocurrency at the foundational level is just currency. The extra layer of excitement comes with the price tied to certain types of cryptocurrency (also referred to as "coins") like Bitcoin and Ethereum.
All of these coins have different technical backgrounds that help dictate how they are valued, tracked, and transferred. Currently, the world is searching for the one that will be the most efficient and trustworthy down the stretch.
Just like with stocks, people rushing to get their hands on the next big winner (and the limited amount of each coin) is what drives the price both up and down.
I highly advise you to do more research on cryptocurrency and the major coins in the market before investing your own money.
Buying Cryptocurrency
I've intentionally left out the crucial step of buying cryptocurrency from this post because I really want to ensure you do some research before making any risky financial decisions.
All I will say is DO NOT buy cryptocurrency on a platform that is not specifically designed for it (this includes popular platforms like Robinhood and Paypal). Let me stress this, wherever you end up deciding to buy your crypto, ensure that platform will let you transfer your holdings to other wallets and platforms. This means buying on platforms that specialize in cryptocurrencies, like Coinbase or Kucoin.
I plan on writing more posts with resources and explanations on how to get started investing in cryptocurrency soon, but until then please hit up Google, do some reading, and come back here when you're done.
How to Earn Passive Income with Cryptocurrency
If you're reading this that means you've done your research, you have some cryptocurrency, and you're ready to make some passive income with it.
There are a couple of ways to earn passive income on cryptocurrency, one being staking (only an option for some less popular coins), and the other being the traditional concept of interest. I will be explaining the latter.
Most people, myself included, have investments in Bitcoin and/or Ethereum. These are the two most popular and trusted coins out right now by a large margin.
Most casual cryptocurrency investors tend to let their currency sit in their crypto wallet or on their trading platform of choice.
But what if I said instead of sitting in a dusty digital wallet doing nothing, your investment could earn up to 6%?
What is BlockFi?
BlockFi is a platform where you can earn passive income with cryptocurrency in the form of interest.
Instead of letting your funds sit in Coinbase Pro or some other exchange, which provides you no benefit at all, you can move your assets to BlockFi and start earning interest on your investments.
BlockFi only supports a few coins, but they support the two big ones, Bitcoin and Ethereum.
At the time of writing this, BlockFi is offering up to 6% interest on Bitcoin and 5.25% interest on Ethereum. That rate absolutely obliterates even the best traditional high yield savings accounts available right now.
After doing some initial investigation, it was a no-brainer for me. I take on no additional risk to make an additional 6% on my crypto.
In less than 30 minutes all of my Bitcoin and Ethereum was sitting in my new BlockFi account.
How to Transfer your Bitcoin and Ethereum to BlockFi
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Note: The links in this post use my referral which gives both you and I $10 worth of Bitcoin after you deposit over $100
- Follow this detailed post from BlockFi on how to transfer your cryptocurrency to your new BlockFi account and you're good to go!
Enjoy it While it Lasts
The interest rates that BlockFi is currently offering are almost too good to be true.
As more people understand and buy into the major cryptocurrencies, I fully expect the rates to drop. So if you're interested, jump on the train sooner than later.
Even if these rates only last for the next 6 months (I expect them to last much longer than that) you will still have made more passive income through cryptocurrency than you would have if you let your money sit doing nothing.
Are you interested in taking advantage of BlockFi? Do you use some other strategy to make passive income off your cryptocurrency? Reach out and let me know!
Words of Warning
I would like to call out that while I personally trust the BlockFi platform to hold my cryptocurrency there are some things you should keep in mind:
- BlockFi is a fairly new online company that faces the same risks as any other company (i.e., Hacks) and does not guarantee the protections as something like a traditional bank or exchange.
- They do not have the same decades-worth of trust and reputation as traditional banking institutions. In fact, they don't even consider themselves a banking or brokerage account. Please do your own research and determine if this service is right for you.
- MOST IMPORTANTLY! BlockFi offers high-interest rates on stable coins like USDT (also known as Tether). These coins are supposed to be 1:1 with the US Dollar. While it may be tempting to convert your cash to a stable coin to take advantage of the appealing interest rate, DO NOT DO THIS. Please do your research first! There is a lot of skepticism and concern over stable coins and their legitimacy in the crypto world, and I personally think it is a very risky path to go down.