How to get interest on crypto currencies?

Earlier on this blog, I covered cryptocurrency mining using your own machine and in cloud services. Now, let’s have a look at mining through just owning Cryptos. Mining through ownership is not possible for all crypto coins. In general, it is possible for crypto coins that are based on a Proof-of-Stake algorithm. As you probably already guessed, Bitcoin is not one of them (Bitcoin is based on a Proof-or-Work algorithm). However, there are already more than 2000 different crypto coins today, so there is a lot of choice.

As you may guess, there are also services to help you choose the best crypto currency for getting the highest return on your investment. One of those pages is stakingrewards. It lists many crypto coins and their staking yield, which I referred to as an “interest” in the title.

Through crypto wallets

The regular way of mining through stake is that you have a crypto wallet with crypto coins that is connected to the network. Through that connection, your stake participates in proofing mining results. As a reward for that, you get a small amount of the same crypto currency you help proof. Generally, you can expect to get an interest of around 5% on your stake.

Through master nodes

If you are looking for an even higher return for your investment, you might be interested in setting up a masternode. That will limit your your choice of coin quite a lot, since that is not possible for all of the proof-of-stake cryptos. A masternode is a stake plus a server process that is available to support the crypto network all the time. With that kind of setup, you might expect something like a 10% reward for your stake.

You can also see projects where the return percents are much higher, but usually they are very young projects with very high risks, or outright scams. If it looks too good to be true, it probably isn’t true. I would look for something that has been running for over a year and is among the top 100 (or top 20) cryptocurrencies (unfortunately, rating services do not disclose those parameters so you will need to do your own research). Stakingrewards shows at least some kind of risk score, which is why I would prefer them over e.g. the masternodes (https://masternodes.online/) service.

Risk

Crypto currencies are like start-ups for investors. Projects can turn worthless quickly. In case you are planning to get interest through the wallets you can adjust your risk easily by investment amount. With masternodes it is not so easy as a masternode will need some predetermined amount of coins. E.g. Dash mastermode (what would be one of the most reliable masternode projects) would need at this time investment of 80.000 USD. At this point it will come even more important to evaluate the risk of the project/coin, that the substantial investment won’t be a catastrophe.

Stakingrewards tries to help you to evaluate the projects/coins, by displaying risk score for each project. Notice that score is different from risk score. Score will take also into account profitability.

The risk score that the staking rewards calculates is based on market cap and liquidity. That is a good meter in the sense that maintaining liquidity costs, and scammers cannot afford to keep it up alone. To have a good liquidity, there must be many parties that believe in that coin. However, risk score is also a bad meter in the sense that the coin issuer can manipulate both of the parameters to some extent. At the moment, it seems that it would be possible to get quite a good rating from the service with an artificial setup.

Hosted masternodes

If you are not interested in hosting your own process, you could also buy that as a service from ginplatform.io Disclaimer: I have not used or investigated that service enough to be able to say if it is legit or not. At first sight, the service looks fine, but unfortunately they also list some scam cryptos. The service claims that they don’t take your cryptos, only the daily payment. If that holds, then there won’t come a big loss from that service. The real danger comes from the bad investment decision to purchase cryptos that have a high ROI, but are worthless after a short time.

Through plain ownings

In case you are not interested in hosting a process that has a permanent connection to network, you could consider the NEO coin (#17 in marketcap) that doesn’t need it. As far as I know, it is the only crypto coin to work that way. The only thing you need to do is to have it in your private wallet or your crypto exchange account.

That’s it for today.
Till next time!