How passive income from cryptocurrencies and crypto dividends works

Cryptocurrency trading is now prevalent. The principle is simple: buy cheaply, wait for the price to rise, and then sell it dearly. The problem is that, in practice, it merely does not work. To trade profitably you need experience and time. However, cryptocurrencies offer several alternative ways to earn. Virtually effortlessly and without work.

Passive intake in trading cryptocurrencies

Mining is probably the best-known way to passively earn with cryptocurrencies. Miners lend their computer’s computing power to a cryptocurrency network. The miner’s computer records and processes information on the network using a unique program, for which the system rewards the miner. There are several types and algorithms of cryptocurrency mining, and there are also various criteria for rewarding.

However, some cryptocurrencies allow you to earn passively without a computer. These are a kind of cryptocurrencies where you buy a token to gain a share of the net profit. Owners of these cryptocurrencies can receive regular dividends, similar to shareholders.

Traditional cryptocurrency mining

The most popular type of mining is Proof-of-Work. For PoW mining, the computer performs millions of calculations per second and tries to find (by trial and error) a solution to a mathematical problem. The miner who finds the right answer first gets a reward. Others are unlucky and have to start a new task. PoW cryptocurrency mining is very demanding in computing power, so the more powerful hardware you have, the more calculations a device can perform per second. And the more calculations he performs, the faster he should find the right solution. PoW mining is no longer worthwhile for individuals, and large mining pools arise where users distribute rewards.

Cryptocurrencies with Proof-of-Work mining

PoW cryptocurrency mining is still used, for example, in Bitcoin or Litecoin. Initially, developers wanted to mine using processors. However, they were replaced by more powerful graphics cards and ASIC miners. Mining is, therefore, not worthwhile without a more significant initial investment. For PoW cryptocurrency mining, in addition to hardware costs, energy costs also play an essential role.

Bitcoin (SHA256 algorithm) and Litecoin (Scrypt algorithm) are mined mainly through powerful ASIC miners. Currently, ASIC chips resist, for example, the Equihash algorithm, which is more memory-intensive. Equihash uses Zcash, Zcoin, or Bitcoin Gold cryptocurrencies.

Proof of Stake

Many cryptocurrencies use the Proof-of-Stake (PoS) method. For cryptocurrencies with PoS mining, you do not need high computing power, but as many digital coins as possible on your virtual wallet (Staking Wallet) to activate staking mode. This will make your wallet a node in the network, so it will control and process transactions for which the system will reward you. The more digital coins you have on your wallet, and the longer you hold them, the better your chances of getting a reward. But without a significant initial investment, PoS will not pay off too much.

Cryptocurrencies with Proof-of-Stake

The PoS model uses NEO, LISK, Navcoin, Stratis, or Factom cryptocurrencies. Ethereum is also transferred from the first PoW mining to PoS. For some cryptocurrencies, you must own a certain amount of digital coins to participate in the PoS, or you must connect to the network for a particular time.

Operation of Masternode

Cryptocurrencies with Masternodes also work on a similar principle to PoS. Masternode is a computer that keeps up-to-date and complete copies of the blockchain, and connect it to the network. However, to run a masternode, you must own a significant amount of the given cryptocurrency. Besides, you must have an IP address, or a VPS (virtual server), and your computer must always be connected to the network. Masternodes communicate with each other, creating a secure network operation.

Cryptocurrencies with the masternode

What are other options than cryptocurrency mining? Masternode cryptocurrencies. Probably the best-known cryptocurrency that uses masternodes is Dash. If you would like to run a masternode for Dash, then you must own at least 1000 DASH coins. And this, at today’s rate, means a multi-million investment. For example, in March 2018, half a million US dollars were needed to set up a masternode, with an expected profit of approximately $3,000 a month.

Masternodes also use the popular cryptocurrencies PIVX or Crown. With these cryptocurrencies, masternode costs are considerably lower, which goes hand in hand with lower earnings. For example, in a PIVX network, where each masternode must hold at least 10,000 PIVX coins, the cost and the expected monthly earnings are about ten times lower than in the Dash network.


Joint-stock companies regularly pay dividends to their shareholders. Although not a rule, the amount of the dividend usually depends on the profit of the joint-stock company. Some cryptocurrencies also use this concept. The difference is that investors buy digital coins of the currency instead of shares.

Sometimes you need to own a certain amount of cryptocurrency to receive a dividend. What is important is also what wallet you have the cryptocurrencies on. For example, if you have digital coins stored on a stock exchange, you usually do not receive dividends, but the company does.

Dividend cryptocurrencies

If you don’t want to be mining cryptocurrencies, take a dividend from holders. Some cryptocurrencies pay rewards to their holders. The whole system works similarly to dividends of joint-stock companies.

This is how stocks work. Dividends are paid by popular cryptocurrency NEO. NEO tokens represent shares, and their holders receive secondary GAS tokens for remuneration. To obtain dividends is necessary to hold NEO tokens on compatible wallets (e.g., GUI, NEON) or on selected exchanges (Binance, KuCoin), which pay dividends in monthly intervals.

You can also earn rewards for holding digital coins with the Komodo cryptocurrency. Holders of at least 10 KMD who use a compatible wallet (Agama, Swing) will receive an annual reward of 5%. Also, ARK or DigixDAO cryptocurrencies pay for dividends.

Some exchanges have their digital tokens, and holders of these tokens receive a share of the exchange’s profits. For example, we can mention the KuCoin Stock Exchange, which distributes 50% of its earnings to KCS token holders. BridgeCoin (BCO) works on a similar principle.

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