3. Look Out for Exchange Sign-Up and Referral Bonuses
Some cryptocurrency exchanges offer sign-up or referral bonuses for using their services. A previous Coinbase sign-up bonus offered $5 to new users to invest in crypto, for example, and the exchange currently offers a $10 bonus to both you and your referral when they make an account and trade at least $100.
Make sure you pay attention to the terms of these bonuses. You may be required to provide more personal information or go through other actions to claim these rewards. Most of these offerings aren’t lucrative enough to warrant signing up for an entirely new exchange if you already have an account, but if you’re a beginner, keep an eye on exchanges you’re considering to see if they offer a sign-up bonus or referral for other friends that may be interested.
Popular cryptocurrency exchange Coinbase offers incentives for using the platform’s Learn hub. In order to get the free change, you’ll need to watch Coinbase’s videos, take quizzes, and then Coinbase will deposit a small amount of crypto into your wallet. The content is typically focused on a specific altcoin (like GRT and BOND) and, as a result, these are the coins you’ll earn for going through the lessons.
Because altcoins generally aren’t recommended for long-term investing, you can convert these lesser-known coins into Bitcoin or Ethereum once you earn them. But remember to keep track of these transactions, as every crypto-to-crypto trade is taxable. Additionally, you should track the price value of all your earnings through Coinbase Earn, and report them as income on your federal tax return. If you earn over $600 through the program, Coinbase will issue you a Form 1099-MISC, which you can use to report your earnings.
You’ll need to have a funded Coinbase account, live in an eligible country, and verify all of your personal information to start earning with Coinbase Earn.
5. Earn Interest on Your Bitcoin
A few crypto exchanges allow you to earn interest on your cryptocurrency holdings. Gemini Earn, for example, is a lending program in which you lend your crypto to institutional borrowers and can earn up to 7.4% APY. BlockFi has a similar offering, BlockFi Interest Account, which accrues interest up to 7.5%. Lending your crypto out to these institutions can add even more risk on top of the built-in risk of cryptocurrency, so make sure you read the terms carefully before you sign up and don’t lend more than you can afford to lose.
You can also earn interest by staking on some crypto exchanges, like Binance.US. Staking means leaving cryptocurrency in your wallet to earn rewards or interest. By doing so you help maintain the blockchain network. You can usually only stake certain coins within an exchange, which may require buying into more risky altcoins to reap the benefits.
Interest you earn on your crypto as well as earnings from staking are both taxable, and your responsibility to report as income. If you choose to participate, you’ll need to track the cost basis of your earnings throughout the year to include on your tax return.
Of all the methods for earning free crypto, airdrops carry the most risk — more than we believe is worth the benefit for most investors. Developers perform airdrops when they want to gain traction for their new cryptocurrency. Put simply, they give away coins to try and garner adoption.