How to earn crypto

An Airdrop is an allocation of cryptocurrency either as a reward for holding a coin within a specific period - loyalty - or as a way of generating interest or usage of a new project. Though they are described as free they are generally dependent on some qualifying criteria.

Here are two examples to illustrate:

Blockstacks is a smart contract and dApp protocol built on Bitcoin. In order to promote their project they distributed 100 of their STX token to users of Blockchain.com in January 2020. 

The only qualification was that Airdrop recipients were fully verified Blockchain.com users i.e had provided verified proof of identity/address. The decision to use Blockchain.com was because its users are ideal for cross-promotion of related projects, and might go on to become users of the Stacks ecosystem.

The STX tokens were locked for a year, but after release reached a peak of $2.68 on April the 15th, 2021 which provided a potential return of $268 for Airdrop recipients.

Uniswap is a fully decentralized protocol for automated liquidity provision on Еthеrеum. 60% of their governance token - UNI - is allocated to their Community, a quarter of which was distributed as an Airdrop to historical users.

Uniswap looked at anyone who had called their smart contracts up to September 1st, 2020 and provided liquidity. Qualifying users were allocated 400 UNI for every unique address that was used to provide liquidity. 

At its highest point of $44.70 on May 3rd, the Uniswap Airdrop allocation was worth $18,000. You can find a more information here.

Read a more detailed explanation of Airdrops our Knowledge Base:

All businesses set aside a certain amount of money to promote what they do and gain new customers. The specific ways they do this - known as the marketing mix - will depend on the type of industry, where they find their audience and any regulations that limit advertising (e.g gambling or tobacco). 

A lot of the obvious marketing channels, like Facebook ads, Google or TV place heavy restrictions on the advertising of crypto-related businesses and services, which instead use more organic means. One of those is giving away crypto to build interest in their project. 

When you consider that the cost of giving away crypto is just allocating a budget that would otherwise be spent in a traditional way, it doesn’t seem so strange. It is very similar to getting a free tin of a new energy drink or tasty snack, outside a train station or stadium. It puts the product in the hands of prospective customers, generates customer feedback loops from usage, and creates loyalty.

If you look at the history of Bitcoin and the challenges it faced without a marketing team, one solution was the faucet - literally giving 5 BTC away, just to get people using it. Unfortunately, you can’t get $200k today just for clicking a button but the principle is the same.

Read a more detailed explanation of why free crypto marketing is so widely used, in our Knowledge Base:

A faucet automatically dispenses fixed amounts of cryptocurrency at set time intervals on completion of a specific action, or set of action. This might be simply completing a Captcha, providing an email address or watching an advert.

Crypto faucets are free in the sense that you don’t have to deposit any funds to access them, but you still have to provide something in return which is of value to the website - whether it is your attention, email address or the potential of providing future value.

Before you get too excited, the amounts faucets dispense are tiny, and given the minimum limits for withdrawal, are not a realistic source of generating meaningful amounts in the short term. This is either because the amount needed to withdraw is too high, or the commitment required to trigger the faucet returns are impractical.

The one mitigating factor is that the value of crypto changes a lot. What is considered of negligible value today, may become more meaningful in the future.

To prove that point, the first ever Bitcoin faucet dispensed 5 BTC just for completing a captcha, and at the time, most people would have considered that a waste of time.

Read a more detailed explanation in our Knowledge Base:

In order for some crypto projects to gain an audience, they give away small amounts of their cryptocurrency as a reward for people watching videos explaining the problem they solve, then completing simple quizzes.

This approach is called ‘learn and earn’ and is particularly suited to marketing crypto projects because they are complex ideas that can’t be explained in a banner ad or simple sentence.

The most well known learn and earn campaign is run by Coinbase who have given away over $200 (at face value) since 2019, which is now worth several times that amount, due to appreciation. 

Though earn and learn is considered a way to earn crypto for free, that is a misconception. It doesn’t account for the value of your attention, and more importantly, the personal details you need to provide in order to create a Coinbase account - which is a precondition.

This includes email address and proof of identity/address - passport, driver’s license or national ID. As a publicly traded company Coinbase are trustworthy but their motivations aren't simply charitable. They will seek to convert to you into a revenue generating customer, though there is no obligation on you to deposit funds and trade.

Read a more detailed explanation of learn and earn in our Knowledge Base:

Microtasking refers to completing very menial and repetitive digital tasks in return for small amounts of cryptocurrency. 

Two examples are Bitfortip which gives out small amounts of crypto for help answering user submitted questions and Bituro which is an app that awards small amounts of crypto for completing surveys or watching videos.

Microtasking often overlaps with faucets which dispense small amounts of free crypto but generally require some sort of effort on your part, which amounts to a small task.

Read a more detailed explanation of how microtasking works in our Knowledge Base:

A Bounty Program is an incentive scheme using crypto rewards as bounties for participants who fulfil basic tasks to promote a business or service.

This generally includes things like:

Bounty programs via forums are generally managed by other forum users that operate as Bounty Program Managers, essentially unofficial representatives of the business/service. They recruit users to the program and outline the terms and the payment. The longer your forum history, the better the incentives you’ll receive. Bitcointalk is a good example.

There are now businesses that operate bounty schemes on behalf of businesses, such as Gleam, while Coinmarketcap exclusive Airdrops function as a Bounty Program because of the requirements to participate.

Read a more detailed explanation of crypto Bounty Programs in our Knowledge Base:

There are a number of crypto banking services (aka CEFI) that offer a pre-paid visa or mastercard which pays cash back in cryptocurrency on purchases, while credit cards paying cash back in crypto are also appearing. You spend in your local currency but the cash back accrues in crypto.

In order to qualify for one of these cash back cards you generally need to stake a specified amount of the cryptocurrency token native to that service, or at least be a user of crypto banking services offered.

Staking means purchasing and locking up those tokens which is a way of creating a healthy token economy.

Once you have staked the required amount you simply top-up your card with your local currency from your regular bank account - through an App - and use as you would any other bank card. Some services enable you to directly spend from your crypto balance.

Cash back is offered in tiers. The more you stake, the higher the cash back and associated rewards, such as refunds on Netflix or Spotify.

Aside from the required staking, there is no explicit cost, but as with all crypto, the token you stake and earn cash back in, is volatile, so may end up being worth a lot less than when you staked. As soon as you unstake, you lose all cash back privileges.

Putting that obvious risk to one side, crypto cash back cards are a good way to earn a passive crypto income from spending you would you be doing regardless.

Some of the main providers are of cash back cards are:

Read a more detailed explanation of how CEFI and crypto cash back works in our Knowledge Base:

If you have bought crypto as an investment, intending to simply hodl, rather than trade, you can additionally gain passive interest on your funds like a savings bank account.

There are a growing number of self-styled crypto banks offering this service. You simply need to:

Tips for using crypto interest services

These are some of the popular services:

Read a more detailed explanation of how to earn interest on your crypto in our Knowledge Base:

There is no central bank setting interest rates for crypto, in fact there are no banks at all. The interest rates available for centralised (CEFI) and decentralised crypto services result from a combination of things:

CEFI providers and DEFI protocols want you to deposit crypto and are willing to pay you interest because other users want to borrow it, mainly because they feel they can generate returns in excess of the cost of borrowing.

The biggest demand is for Stablecoins. Traders who want to trade highly volatile alt coins prefer to do so using a trading pair with a stable asset. During periods of price correction, they can close trades and sit out the market holding Stablecoins. Some traders will borrow for arbitrage trades.

Cryptocurrency Exchanges charge a cost for borrowing through funding rates. In essence a funding rate is what it costs you to borrow crypto from someone else. The rate will reflect the expectation of any change of the borrowed coin. Demand is exaggerated because many exchanges offer leverage of up to x100.

If the perception of a coin’s value is high in the short term, demand to borrow will also be high as traders look to take advantage. They might borrow Coin A, hold in the expectation of a short pump, then sell it and buy back below the price they paid to borrow.

Some CEFI providers will offer higher rates of interest simply to attract new customers, then at a later date will reduce the yields. In a similar way DEFI protocols set high APYs (Average Percentage Yields) because this encourages users to lock up funds and decrease the velocity of the coin, which can drive down price.

Read a more detailed explanation of how CEFI and DEFI interest rates are set in our Knowledge Base:

If you have done your research, and decide to buy some crypto as an investment, you’re faced with the difficult question of timing your purchase. Cryptocurrency is volatile, it goes up and down all the time, but if you believe the long term direction is positive, and as an investor (not a trader) you intend to keep it for several years, you’d ideally want the lowest possible entry price. 

Even with a technical understanding of how price moves, timing the market is exceptionally hard, so to remove the stress of that decision you can do something called cost averaging. 

Cost averaging means spreading your investment over regularly sized and spaced increments to gain an averaged entry price. You build up a position over time which averages out the high and lows. Cost averaging is a great way for someone new to crypto to build a portfolio.

Many exchanges offer recurring purchases as a feature. Just create an account, add a payment method, set the amount and interval, and keep track of the average value of your investment in a spreadsheet.

Read a more detailed explanation of cost averaging in our Knowledge Base:

Defi is short for decentralised finance, and refers to the range of financial services that you access just through a supported crypto wallet and an internet connection. No application process or KYC is required.

DEFI services fall into the following main categories:

Depositing/Borrowing - Nothing new under the sun here. If you own a crypto asset you can deposit it with a Defi application and receive interest, or borrow crypto assets, paying interest. Though this is familiar territory covered by traditional banks, to borrow via DEFI you need to provide collateral in excess of the amount you want to borrow.

The Average Percentage Yields (APYs) for simply depositing funds are modest on the Defi spectrum, but way better than your current savings bank account. The level of APY is driven by demand for borrowing, which is highest for Stablecoins.

Staking - Similar to depositing in that you allocate your crypto in the same way, the difference being that you lock up your crypto asset up for a fixed period, and how your funds are utilised.

Defi applications incentivise Staking as it puts a brake on the selling of the asset and limits its supply, both of which protect against a decline in the asset’s value.

Staking can also apply to committing your funds to cryptocurrencies with a Proof of Stake consensus mechanism. Validators process new transactions and get paid a few in return. The chance of being chosen increases with the amount of the underlying crypto that is staked. By adding your funds to the staking pool you earn a share of the fees.

Liquidity Provision - Liquidity provision means lending a crypto asset or pair of crypto assets to provide liquidity for a Defi application like a DEX (Decentralised Exchange) in order that they can offer trading in that crypto. In return for providing liquidity you get a portion of the trading fees and tokens issued by the DEX, which act like a dividend.

A Decentralised Exchange allow users to swap almost any token by simultaneously incentivising other users (LPs - Liquidity Providers) to provide the liquidity to make this possible without funds being centrally held. The entire process is facilitated by Smart Contracts, so has no formal structure and therefore doesn't regular customers to create accounts or provide any details.

Yield Farming - Generating the best possible returns from combining/multiplying the yield generating opportunities across Defi - as listed above. This can be manual or automated strategies that are recursive, constantly redeploying funds to earn the best available return.

Read a more detailed explanation of Defi in our Knowledge Base: