As the cryptocurrency industry is booming, people are exploring new and more exciting ways to earn cryptocurrency rewards, learning about decentralized finance (DeFi) apps and cryptocurrencies. You would probably have heard about credit card reward programs, cash backs on shopping, bank account interests, and various sign-up bonuses. These programs have one thing in common – they allow you earn interest for using their services. With the increasing proliferation and adoption of cryptocurrencies, people can get these perks in cryptocurrencies instead of fiat currencies or credit points. Many people in the US (and elsewhere in the world) already hold cryptocurrencies but do not know how to earn rewards on them. Rewards help investors get some extra coins on their crypto investment. However, investors need to be careful about the tax implications of the extra coin. This short article will walk you through the steps for earning rewards on your cryptocurrencies.
A crypto credit card works just like a regular credit card, but you would get cryptocurrency rewards instead of cash back or credit card points. Many credit cards give cash back in the form of air miles or special offers that can only be redeemed in a limited way. While everyone loves cash back, they might not end up using those air miles. Crypto cash back makes a smoother transition into your crypto investment portfolio.
Many crypto platforms offer crypto credit cards with a lucrative rewards scheme. In many ways, they are similar to the traditional credit card; however, they allow you to earn cryptocurrencies on every purchase. Some crypto debit cards allow users to choose the virtual currency they want to receive crypto rewards in. However, some cards offer only a limited number of options – bitcoin and a couple of altcoins. Like traditional debit cards, customers can only take advantage of the rewards if they pay their due in full monthly. They will be charged high-interest rates if they have a debt balance, ultimately making the deal unprofitable.
Referral and Sign-Up Bonuses
Many exchanges offer a referral or a sign-up bonus to customers using their services. For instance, Coinbase offers $5 to new customers to invest in cryptocurrencies while $10 to both the parties if joined through a referral code and traded for at least $100 on the platform. Usually, terms and conditions are attached to such bonuses; therefore, you must read them carefully before signing up. Sometimes, these offerings may not be lucrative enough for people already using another crypto exchange. But for beginners, it’s always good to browse and find the most appealing offers. You can always ask your friends to sign-up and earn a referral.
Earning Interest on Your Cryptocurrencies
Several crypto exchanges allow their users to earn interest on their cryptocurrencies. For instance, Unbanked Yield enables customers to earn yields on their crypto funds while giving them the best possible rate. The goal is to help users stay in complete control of their funds while they experience the immersive world of Web 3.0 and earn the highest possible yields. Similarly, several crypto lending platforms allow users to earn interest while they lend their virtual currencies to the platform.
Another way to earn interest is by staking. Platforms like Binance allow their customers to stake their cryptocurrencies to maintain the blockchain network and earn interest. Unbanked offers one of the most competitive rates – as high as 8% – for staking its native currency, UNBNK. It is very straightforward to stake UNBNK. You just need to choose the amount you want, check the corresponding interest rate, and then begin staking. Unbanked allows you to earn rewards on your rewards. Capital gains on crypto interests and crypto staking are taxable by law; therefore, you need to take note of your earnings throughout the year.
Another popular way of earning rewards in cryptocurrencies is Coinbase Earn which allows users to earn cryptocurrencies in exchange for certain activities on its platform. For instance, you can get a small amount of crypto for watching Coinbase videos, taking quizzes, etc. Many educational and informative lessons on the Coinbase website about altcoins allow you to earn some extra coins.
Additionally, you can always exchange the altcoins into more popular cryptocurrencies like Bitcoin or Ethereum if you want to invest in a longer-term. Since even crypto-to-crypto transactions are taxable, you must keep a record of all these transactions to report in your tax returns. Similarly, you must track the number of crypto rewards you gained on Coinbase earn, as you also have to report those on your tax return. Coinbase will provide you with the form 1099-MISC if you have earned over $600 through the program. To start earning through Coinbase Earn, you live in an eligible country, own a funded account, and verify all your personal information.
Developers airdrop or give away new coins to facilitate broader adoption and increase their popularity. You can look up airdrop projects online and check which companies are giving away new cryptocurrencies. If you enroll in their program and qualify, you will get some cryptocurrency directly in your wallet. However, airdrops are not the safest options because hackers use fake airdrops and ICOs (Initial Coin Offerings) to steal your cryptocurrencies. Always remember that airdrops are not donations, so they are taxable incomes as well, and you need to report them in your tax returns.
There are many ways of earning extra cryptocurrencies; however, you must verify all the information before committing to a method. Investors need to be cautious with fraudsters and scammers using similar schemes to dupe people of their cryptocurrencies. Experts recommend that beginners conduct extensive internet research before investing in ICOs or sharing their wallet addresses with someone claiming to offer crypto rewards.
If you are interested in knowing more about how to earn crypto rewards, check out our blog.