To date, there are more than one and a half thousand kinds of cryptocurrencies on the crypto market. In connection with the fact that each cryptocurrency supports its own project, mission, blockchain, and mechanism of operation, mining and day trading have long ceased to be the only ways of generating income. The holders of some cryptocurrencies can receive income thanks to the support of the PoS algorithm, long investments, or Masternode launches.
Passive Income from Shares on the PoS
Unlike the Proof-of-Work (PoW) mechanism, where each miner actually has to prove that their node has performed calculations, under the PoS (Proof-of-Stake) method, the miners, called validators, prove the ownership share or stake of the cryptocurrency on the specific blockchain. The larger the share, the more likely the node will receive the right to hash the next block. At the same time, the revenue of the validators consists exclusively of transaction fees. The PoS algorithm has several significant advantages over the PoW as this mechanism is more resistant to attacks and not so taxing in electricity consumption.
In order to receive passive income from the PoS, one just needs to keep the computer on, and the wallet of the PoS cryptocurrency activated to confirm transactions on the network. One of the key advantages of this type of passive income is that one can sell cryptocurrencies at any time, for they do not lose in price because of the stake. One can also delegate their share of ownership to another validator and in return receive a percentage of the reward for mining. In this case, it is necessary to delegate one's share of ownership once and then just wait for the accruals.
Of the shortcomings, experts note the likelihood that PoS can lead to the accumulation of funds in the hands of one or a group of validators, which will negatively affect the decentralization of the network. Also, depending on the cryptocurrency, the entry threshold can be quite high, and significant revenues will require a large investment. The number of cryptocurrencies supporting the PoS consensus algorithm, however, is constantly growing, so the number of options available to investors also increases.
Of the presented coins, it is worthwhile to consider separately the cryptocurrency of the Stellar Lumens network (XLM), which uses its own Stellar Consensus Protocol or SCP consensus algorithm, rather than PoW or PoS. XLM coins are not subject to mining, but Stellar's network has a planned annual inflation of 1% of total XLM supply. Holders of coins have the right to vote for the address, which, in their opinion, should receive XLM coins generated during the course of inflation. To receive them, the address must collect more than 0.05% of the votes of all coin holders. As a result, XLMPools appeared in the network, which automatically distribute the received coins to the holders who voted for them.
The most popular and profitable cryptocurrencies that support PoS are:
Passive Income from the Launch of the Masternode
The Masternode is a networked computer with a server running a crypto wallet. Masternodes help the network perform functions that miners cannot, such as confirming instant transactions, ensuring decentralization of the management mechanism, and conducting private transfers.
The Masternode wallet can contain a certain number of coins as a pledge of the ownership share. The network automatically rewards the Masternode in exchange for supporting the network and locking a certain amount of cryptocurrency. Masternodes can support both PoS and PoW.
As for earnings on the Masternodes, they depend on the type of cryptocurrency, how this cryptocurrency works with the Masternode, and how stable the rate of this cryptocurrency is. As of this writing, the following cryptocurrencies support the Masternodes on their networks:
Monetary Unit (MUE)
Passive Income from Cryptocurrency Dividends
In the classical sense, dividends are a part of a company's profit that each shareholder receives for investments in the company's shares. In the same manner, a number of blockchain projects are presented on the market that offer dividends to the holders of their cryptocurrency upon the expiry of a certain period, e.g., a day, a week, a month, a quarter, or a year. It is worth noting that in order to receive dividends from a cryptocurrency, in most cases it is necessary to keep them in the recommended wallet, not on the exchange. Otherwise, the dividends will go to the exchange.
The NEO platform is often described by the participants of the crypto market as the Chinese version of Ethereum, and its cryptocurrency is considered one of the most promising this year. The platform exists for the development and support of a "smart economy," and among its project partners are Microsoft China, the Hyperledger project, Alibaba, and even the Chinese government itself.
The platform provides for the operation of two tokens, NEO and GAS. NEO assumes partial ownership of the platform shares, while GAS is used to pay for all transactions in the NEO network. To get a GAS, you simply need to have an NEO token in the wallet, where the "Claim Gas" option is provided, for example, in the NEON wallet. Each month, NEO holders are awarded GAS, and their number directly depends on the time of possession of the NEO token.
Private Instant Verified Transaction or PIVX is a project of the secure and decentralized PIV PoS cryptocurrency focused on confidentiality. This cryptocurrency appeared as a result of the hardfork in the Dash network. The developers of the cryptocurrency have set themselves the goal of issuing a coin which would make it possible to carry out operations quickly and anonymously, and its management system should be transparent and fair.
As in most cases with PoS-coins, holders of PIV are awarded fixed rates from operating deductions. In accordance with the PoS 3.0 protocol, the system uses both a fixed reward per unit and an innovative remuneration distribution. There are three ways of getting a PIV: earning money stored in a PIV wallet, running a Masternode, which requires 10,000 PIV or helping in the development and launch of PIVX projects.
Every 5 seconds there are 5 PIVs, which are automatically divided into three parts: 10% is transferred to the budget fund, which is used to finance further development of PIVX, and the remaining 90% (4.5 PIV) is distributed between the Masternodes and the owners of active wallets.
The Neblio project's ICO was held in August 2017, in support of the peer-to-peer blockchain network of the same name. Thanks to Nebilo, users can conduct transactions, start and work with decentralized applications, conduct ICOs, and use smart contracts. The platform operates the NEBL cryptocurrency, which is a means of payment on the network, and also provides instantaneous transfer of information.
The Nebilo blockchain uses PoS, in which users "stake" their tokens to ensure network security, which is called staking. Users receive a reward for staking proportional to the number of NEBL tokens staked.
All tokens were sold during the ICO, after which the only way of getting NEBL tokens left is buying them from holders or participating in staking to get a reward in tokens. Moreover, staking is the only way of creating new tokens in the Nebilo network.
NavCoin is a decentralized PoS cryptocurrency based on the latest version of Bitcoin Core. The NavCoin's cryptocurrency is completely anonymous, thanks to its technology which hides even the IP address of the computer from which the transaction was made.
NavCoin supports SegWit functionality and easy-to-use wallets that are equipped with advanced privacy features. Thanks to the PoS algorithm, holders can earn up to 5% of their investment by simply holding a wallet that supports this currency in a stake mode.
Passive earnings are also possible due to the storage of the cryptocurrency of the KuCoin exchange bearing the same name. The KCS token (KuCoin Shares) was launched in September 2017 as the exchange's shares. In this connection, all holders of KCS receive remuneration. The exchange distributes exactly 50% of its profits among investors, according to the value of their KCS balance. To receive daily remuneration, it is enough to keep KCS on the exchange. Also, the exchange plans to buy out 100 out of 200 million KCS, gradually burning them, by analogy with the Binance exchange.
BridgeCoin or BCO is the internal cryptocurrency of the decentralized CryptoBridge DEX exchange. Just like in the case of KCS, holders of BCO tokens are considered to be investors and receive dividends from profits in the amount of 50%. The charging intervals, however, vary depending on the trading volume of the exchange.