Selling cryptocurrency is not the only possible way to generate income from this asset. There is a quieter and more stable variant, although it does not promise super profits. This option is receiving dividends from the amounts that are stored in your wallets.
What are dividends? As in traditional business, it is a way of redistributing profits between members of the stock corporations. This profit can be paid in different forms: shares, products or money. The principle of cryptocurrency dividends is the same – it is a reward in the form of a profit percentage for investing in cryptoassets.
Some people confuse dividends and staking – this is a mistake, because these types of profits have obvious differences:
- staking is a reward for supporting the network, and dividends are defined as a share of profit;
- payment of dividends is not charged a commission, unlike staking;
- staking is a high-risk enterprise, the payment of dividends is more stable;
- staking is a source of funds to start the network, which cannot be said about dividends.
Here are the best ways to profit from cryptocurrency in different ways.
Exchanges that pay dividends
So, what stock exchanges offer dividends to asset holders:
- KuCoin (KCS) is one of the first exchanges in Hong Kong that started to pay cryptocurrency dividends to its token holders. The source of the exchange’s income is the commission charged for each transaction, and exactly half of these commissions are distributed to asset holders in the form of dividends. Accordingly, the size of the dividends is proportional to the size of the profits. The starting package for receiving payments is a minimum of six tokens that are stored directly on the platform.
- FTX is an exchange based in the Bahamas and registered in the state of Antigua and Barbuda. Payouts to asset holders are proportional to the level of bets on the exchange. It is interesting that even users who have not yet had time to place their coins on the exchange can begin to make a profit – they are offered a referral rate of 25%. This is the first level of the multilevel system of profit distribution. The highest level is for users who have placed at least one million FTT on the exchange. The referral rate of the top level is paid at 40%, as well as a number of other ” benefits “, such as up to one thousand withdrawals of FTT without commission and 6 IEO-tickets.
- BitMax is one of the most generous crypto exchanges in comparison to the amount of dividends that it pays. Up to 80% of transaction fees are paid for rewards. In a year, a user can get up to 50% of the amount of cryptocurrency that is stored on the platform. It is one of the highest returns.
Cryptocurrencies that pay dividends
Not all cryptocurrencies bring the same income, so we have prepared for you the top best assets that allow you to profit in the form of dividends, and in the form of staking:
- Decred is a decentralized multiplatform cryptocurrency that pays rewards. The own token is called DCR and its holders receive up to 30% of the invested assets. Stability is ensured by the use of PoW and PoS consensus protocols.
- Ontology is a fast-growing network whose staking is recognized as one of the most promising. Its own token is called ONT, and its holders can receive income in the form of both staking (4%) per year and dividends.
Cryptocurrencies for staking tokens
These cryptocurrencies do not pay dividends, but they allow you to get stacking rewards:
- Reddcoin is the proprietary cryptocurrency of the social networks Twitter and Reddit. The popularity and demand for these resources guarantees the stability of the token. Payouts are secured by the proof-of-stake protocol and allow earning up to 5% per year.
- Neblio is a cryptocurrency created to support smart contracts and ICO starting. Its functioning is based on blockchain technology. This asset can be bought and sold on LetsExchange.io, among 340 cryptocurrency coins. We advise you to hurry up, as staking NEBL tokens in the long term is incredibly profitable, bringing up to 10% per year.
- NEO offers its holders daily payments. To receive income, it is necessary to make sure that the wallet supports the receipt of income in GAS, because that is how NEO profits are paid out. Daily payout is 0.0003 GAS. Thus, you can count on a stable income.
- VeChain also offers token staking and daily payouts. The size of the holder’s reward is 0.00042 VTHOR per day for each VET available, which is quite a significant rate.
- PIVX is a token network that relies on a high level of depositor privacy. It is a fast-growing project with characteristically high payout rates for its startup phase. Their size is about 5%, which makes PIVX a potentially profitable but risky investment. It is recommended to use cloud staking capabilities, as the host needs to be online all the time.
- Komodo pays a staking fee using an effective verification protocol. The initial investment to access the benefits of the network is at least 10 KMD. One of the main advantages is that there is no requirement for the user to be online at all times. This point sets Komodo apart from most competitors. Rewards can be as high as 5%.
What are the features of paying taxes from dividends and other income in cryptocurrency?
Cryptocurrency, as well as the revenues derived from this asset, still remain in a gray area. The relevant legislation is imperfect and often contradictory, depending on the country. Therefore, before starting to make profits from cryptocurrency in the form of dividends, staking fees or any other, it is important to clarify fully the local tax laws.
What is more profitable, trading crypto or getting dividends?
Profits from cryptocurrency exchange trading have higher absolute figures, but it is a high-risk activity. At the same time, dividends allow receiving relatively low but stable income, which can be a more profitable investment in the long term.
Dividends which are paid for cryptocurrency assets are an attractive and stable way to generate long-term passive income. However, the success of the enterprise depends to a very high degree on the right choice of the object of investment. For more information, subscribe for our updates.