Making money without doing anything for it; is a passive income. Passive income is a term that is gaining traction within the world of cryptocurrency and investing. Of course, it sounds great, doing nothing and making money, but how does generating a passive income work?

This article will explain what passive income means and what options you have to generate a passive income yourself. Would you like to know more about generating passive income? Then read on quickly!

What is Passive Income?

Passive income is a way of earning money unrelated to time or labour. You generate passive income by working only once or a few times, then generating a permanent income. So, before there is actual "passive" income, you must perform some actions first.

Generating a passive income with cryptocurrency is done by investing in a crypto-currency running on a Proof of Stake blockchain once or periodically. So you then develop a passive income on top of your investment. So when you generate a passive income on top of your cryptocurrency investment, you are not constantly buying and selling your cryptocurrencies. Your investment stays put.

Also essential to keep in mind: a passive income is not free, so you will have to deposit money before you can generate a passive income.

Staking & Earn

One of the most popular options to generate a passive income with cryptocurrency is through staking. Investing in cryptocurrencies connected to a Proof of Stake blockchain can generate passive income by putting cryptocurrencies to work to protect the network. At Coinmerce, you can turn on staking by investing in various coins, such as Cardano, Solana and Polkadot.

Another option is to turn on Earn for your crypto assets. Through the Earn programme, you lend your cryptocurrencies to a third party for a predetermined period. For this loan, you get returns on top of your investment.
At Coinmerce, you can turn on Earn for coins like Bitcoin, Ethereum and Avalanche.

The world of Decentralised Finance (DeFi)

Another well-known option is to invest your crypto assets in the world of Decentralised Finance, better known as DeFi. Within the world of DeFi, you have numerous opportunities to put your wealth to work and generate a passive income.

However, when investing in the world of DeFi, remember that the higher the promised returns are, the higher the risk you run. Be aware that depending on the choices you make, there will be consequences for your crypto assets.