Make Massive Passive Returns with Bitcoin!
- thomas johns
- Sep 9, 2021
- 4 min read
Updated: Sep 27, 2021
How To: Make Massive Passive Returns with Bitcoin!
1024 words
Don't work hard – work smart!
You are probably looking to develop a long-term strategy that makes money all the time, even when you are asleep. A great way to do this is passive income – but it has become harder to create these kinds of returns.
Central banks have the interest rate slammed to the floor – and inflation is on the rise.
Buying low and selling high used to be the only method to profit from digital assets, but that is no longer the case. Airdrops and staking are good ways to earn with crypto, but you can use either with big daddy Bitcoin.
Earning Passive Income with Bitcoin
Earning interest from your Bitcoin assets is pretty simple. You won't be able to get the kind of returns that many Decentralized Finance (DeFi) platforms offer – but you don't have to hold anything but Bitcoin either.
Like any form of lending, there is risk anytime you lend an asset. We have a few good platforms for you to look into, but be sure you fully understand the risks of lending Bitcoin before you send your tokens to a wallet you don't control.
Creating Passive Bitcoin Returns
Bitcoin lending platforms, like other fintechs, make it reasonably simple for Bitcoin holders to sign up and start creating yields with their Bitcoin stash. Here are a couple of platforms you can check out if you want to make a little passive income with Bitcoin.
BlockFi, a prominent cryptocurrency lending company based in the United States, currently delivers some of the highest returns on Bitcoin in a secure and trusted environment. BlockFi has established itself as a leader in Bitcoin – and also supports Ether, and popular stablecoins.
BlockFi customers can opt to lend Bitcoin in exchange for USDC or lend USDC in exchange for interest paid in Bitcoin.
The platform has Gemini Custody as a partner, which is a renowned US exchange known for its sophisticated security procedures. Interestingly, users that lend money to BlockFi have the option of earning interest on a variety of assets.
This means that customers can opt to lend Bitcoin in exchange for USDC or the other way round. In addition, no minimum deposits required and minimal fees applied are defined as other advantages from this platform.
Hodlnaut
Hodlnaut is another popular platform that offers consistent returns – allowing you to profit while you HODL. Depending on the currency you possess, current rates range from 6.2% to 12.7%.
These percentages are, of course, subject to vary based on market prices, but the company does have one unique feature that you will not find in many other platforms.
In most cases, if you own Bitcoin and your Bitcoin is held by a company that pays interest, you will receive the interest in Bitcoin.
However, Hodlnaut allows you to select from six different cryptocurrencies to grow your digital riches while diversifying your crypto portfolio automatically. These include Bitcoin, Ethereum, DAI, Tether and USD Coin.
DeFi Bitcoin Lending is Catching On
Besides the platforms mentioned above, DeFi Bitcoin lending platforms are also determined as a great way to earn interest on Bitcoin within the larger DeFi ecosystem by using Ethereum-based versions of Bitcoin generated using a token wrapper.
Essentially, Bitcoin is kept in escrow in exchange for an on-chain representation of that Bitcoin on the relevant blockchain (in DeFi's instance, Ethereum).
The permissionless aspect of DeFi lending, together with the non-custodial character of many of these providers, are the key advantages of this method.
Aave, Compound Finance, Fulcrum, Maker and Nuo Network are DeFi lending platforms that offer Ethereum based Bitcoin passive income.
However, it doesn't matter which platform that you choose, each cryptocurrency loan platform has its own specialty that investors can easily make a general comparison based on their main offers such as interest rate, deposit limit, lending duration, and reputation.
Lending v. Staking
You might be wondering about the difference between lending your Bitcoin on a platform like BlockFi, and staking it on a DeFi platform with some form of wrapped Bitcoin.
First, with staking, there may be less risk, depending on how the platform is structured. DeFi platforms use smart contracts, which means that there is no third party between you and the counterparty that is paying interest to hold your Bitcoin.
When you lend with a centralized platform, you basically have to trust that platform 100%, just like when you trade with a centralized exchange.
Which is better for you?
We don't know. Just be sure you understand what you are doing before you jump in, and you will have a better idea of how you are generating passive income with your Bitcoin.
Stay Safe and Stack Bitcoin
There is a fundamental relationship between risk and return in every investment, and if you are getting rates that are considerably greater than you can get on cash in the bank, there must be something going on – right?
To start with, there is no central bank in the world of Bitcoin. With fiat currency, there are a team of central banks that act as a global money cartel
We swear – that is exactly how it works.
This group of money masters set interest rates, issue loads of cash to their banker buddies, and generally aren't great for the masses who are forced to use their product – which is fiat currency.
Because there are no central banks in the world of crypto – the markets set the rates themselves, and they bear a closer relationship to the actual conditions that exist in the market.
Anyone who has to buy their own food knows that inflation is ramping up, so it shouldn't be a surprise to see that the larger tokens can gain as much as 10% per year in interest (more or less where USD inflation is at the moment).
Of course, cryptos are volatile when compared to fiat currency. A decade ago Bitcoin was worth less than $1,000 USD. Now it is sitting around $49,000 at the time of writing.
That is the kind of volatility that we would take any day!
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