While some, like Warren Buffett, would consider any crypto investment to be speculative at best and little better than gambling, there exists a unique opportunity to earn fairly stable passive income from these ‘speculative’ digital assets, if you know where to look. While many crypto investors look for moon shots, the better long-term investment may be buying established currencies and tokens that pay out reasonable distributions over time, specifically through proof-of-stake (PoS), masternode or another similar reward system.
PoS coins are the closest equivalent to traditional dividend-paying equities, which pay out quarterly, yearly or monthly dividends based on the number of shares owned. In the same manner, staking your coins will gain you rewards over time, and more frequently than the aging dividend system. Masternode coins are similarly intriguing investments if you’re willing and able to risk more capital (masternodes require dedicated servers and large initial buy-ins unless you use a masternode pool).
With that in mind, here are 5 cryptocurrencies that will pay you interest for holding them. I’ve focused on coins that offer reasonable returns and relative stability (and hopefully, long-term price appreciation). Additionally, I prefer coins that payout frequently and can be exited easily without losing money — meaning an active market with good volume and no lockup period.
Neo (NEO) | $61.53 | $4B Mkt Cap | Interest: ~4-5%
The ‘Ethereum of China’ is the eleventh largest altcoin in the world and pays interest in the form of Gas (GAS), itself an altcoin worth $23.84 each (~$250 million market cap). Neo isn’t much more volatile than bitcoin and Ethereum, although the rapid growth could be cause for concern. While there are multiple places to store NEO and receive GAS, my favorite option is definitely KuCoin, since the exchange offers a dedicated NEO market and automatic GAS payouts.
PIVX is both a masternode and a PoS cryptocurrency, as many masternode coins are, and has one of the more reasonable staking ROIs at around 5%. While a masternode will run you north of $50,000, there’s no minimum requirement for staking, and it simply requires a connected wallet to receive rewards (with a balance of course). I find PIVX to be a compelling passive income investment because it’s an intriguing privacy coin with a focus on governance, and it’s listed on StakeUnited’s pool, so you can receive daily rewards staking PIVX.
Perhaps the most compelling member of this list, KCS holders receive a percentage of the KuCoin exchange fees, so you’ll be paid in each altcoin listed on the platform, based on that day’s trading volume. Receiving daily payouts in dozens of altcoins means your portfolio auto-diversifies and the returns should increase as KuCoin grows over time — and it should since the UI is better than Binance. This profit-sharing exchange token is the most investable exchange token on the market, in my opinion.
NAV Coin is a solid project with a steady upward price trend, reasonable staking rewards and big upside based on its current price. Despite being the smallest project on this list, NAVcoin is an ambitious project based on Bitcoin Core that may be worth a gamble simply based on their team’s ability to rapidly integrate new features. (more)
Decred (DCR) | $82.80 | $591.65M Mkt Cap | ~1.3% per ticket
Decred is one of those altcoins you wish you snagged a lot of when it was under a dollar each, it may still prove to be a good investment. With a still-reasonable market cap of ~$590 million and an intriguing system of governance, it’s easy to see how there’s still room for Decred to run. Decred rewards are a bit more complex than typical PoS coins, as DCR uses a hybrid PoS/PoW system that distributes rewards (and control) between stakers, miners and developers — and there’s staking pool(s). (more)
I know, I know, none of the altcoins I mentioned above are likely to get you rich quickly, which can be frustrating for investors with limited resources who don’t want to reinvest a few hundred dollars a year in rewards. And while I don’t want to encourage unnecessary speculation or ‘bad’ investing strategies, it seems worth mentioning some interesting altcoins with new or not-yet-implemented proof-of-stake systems.
TokenPay (TPAY) has been a popular speculative investment lately, running 285% from its $25 million ICO. TPAY aims to build a decentralized financial institution that includes everything from a licensed bank to a fully liquid exchange and payment platform (both peer-to-peer and merchant). Wallet users receive ~5% rewards for leaving the wallet open. (more)
Minexcoin (MNX) is a PoS stablecoin that attempts to algorithmically control volatility. Its goal is to be a ‘trustless’ bank where user balances are ‘frozen’ in wallets rather than deposited to receive interest. The interest rates for ‘parking’ coins for extended periods vary based on volatility. (more)
OmiseGO (OMG) aims to solve the coordination problem among payment processors, gateways and financial institutions using a network of stakers that will earn fees for validating transactions. OMG should become more valuable as the financial platform grows. (more)
Nexo (NEXO) is a brand new platform for cryptocurrency-backed loans that’s only valued at $170 million despite having over $1 billion in loan requests. According to the website, “NEXO Tokens are a safe haven as they provide passive income in the form of 30% [of] the company’s profits, distributed monthly to NEXO Token Holders.”
Going forward, I expect the trend away from PoW toward PoS and masternode-based systems to continue. Whether this is simply a short-term fad or the future of decentralization is more difficult to say, but it shouldn’t matter for the savvy investor who realizes these daily interest payments are too good to pass up and shouldn’t be neglected, whether or not these altcoins turn into traditional long-term investments.
Photo: BeatingBetting.co.uk (Flickr)
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Disclaimer: The author(s) of this article may have a position in one or more of the securities mentioned above. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.