Passive Income with Coinbase
The way this is going to work is certain coins allow us to grow our portfolio without doing anything. For example you can generating reward with Tezos. Tezos is an example of a proof of stake cryptocurrency. Basically when you own Tezos it's going to generate more Tezos in your account which you could then sell for United States dollar or whatever your fiat currency is or trade it for another cryptocurrency. This concept is known as “staking”. When you stake a coin it's going to build over time. Coinbase supports Tezos for staking. If you click on your portfolio you can see there's another option for USD Coin as well. USD Coin is also generating a reward but the return is very low. The USD Coin only generates 0.15%, comparing that to Tezos which generates 4.9% it’s very low but this is free money really. So if you want to hold cryptocurrencies and you're not really sure what to hold, it might be in your best interest to buy some proof of stake cryptocurrencies and watch those grow over time. That’s being said, your first reward should appear between 35 to 40 days after each purchase and then three to six days onwards after that. At some point your rewards will be added to your balance. This is a great introduction to staking, it's a great way to build passive income however there is one problem. Not to be a downer but here is the thing. Coinbase is fabulous and I recommend Coinbase to anyone. Well, it's one of the easiest ways to get started with cryptocurrency investing or trading but the fees for the staking are a little bit on the high end. That is unfortunate because it's not really transparent when you're staking with Coinbase. This 4.9% is actually lower than what you might get on other exchanges because Coinbase is keeping a hefty percentage of that. To get a little bit of extra information, you can go to https://coinbase.com/staking
The page discusses getting rewards with Tezos but if you scroll through you'll notice that there is a fee and you can find it in the user agreement so it's kind of hidden and you will see that the fee is a 25% commission. So you are losing quite a big percentage of your reward 25% might not be a whole lot but that's 25% that you're not going to have Compounding for you and that could add up to a lot over time. So here are my final thoughts to conclude this. If you're on Coinbase already you have coins in here and this is just where you want to store the coins and you want to broaden your portfolio and get some staking coins then by all means do it. But, if you're hoping to do this as a form of long-term investment maybe have it as a passive income stream then Coinbase might not be the best route to do this. There's all kinds of different exchanges and different ones have different fees but the one I recommend for staking is Binance. On Binance if you click on “Earn” then click on “steaking” you can stake three different coins.
If you're not in the US, you'll want to use Binance.com and there's even more options for Binance.com. Here are all the options on Binance.com. Over time Binance.us will look more like Binance.com as there's definitely a lot of options. This is compared to just the two options here Binance.us which is Tezos and the USD Coin, so definitely would recommend Binance. The benefit with Binance is that it is the fee free. That’s right. Instead of 25% like Coinbase, it's actually 0% fee so all of the returns from staking these cryptocurrencies will go to you. This could lead to a much larger portfolio over time and that's probably what I would recommend. So if you want to do that with Binance, you're going to need to register, sign up, go through the KYC verification and you can buy these cryptocurrencies using a bank account but you could also transfer Bitcoin into your Binance account and purchase one of these cryptocurrencies with that. For example on Binance you can choose a currency pair for Tezos and Bitcoin by finding XTZ/BTC which means that you're going to be buying Tezos using Bitcoin, you can either add the number of Tezos you want to buy or the amount of Bitcoin you want to spend. If you prefer to use USD then you can just go to “buy crypto”, then select the currency and then you can choose your source either a bank account or a USD balance and then you buy it.
Another note is that if you have cryptocurrency in a wallet that's not attached to an exchange, you'll probably want to transfer that into the exchange to do the staking. So for example if you have a Coinbase mobile wallet and it's not attached to your exchange account but you have Tezos on it, you would either want to send it to Coinbase or Binance, depending on where you wanted to do the staking. There's a send button, put the amount and then for where to send it to, whatever exchange you're using, go into your portfolio, select the coin such as Tezos, hit “receive” and then add the address you're going to use to receive Tezos. The potential for staking is huge especially as more and more people adopt cryptocurrencies. These currencies could go up in value and that would be on top of the extra cryptocurrency you get from staking, so you might get 5% or 6% from staking and then if the cryptocurrencies go up in value, you're getting a pretty high return on investment. It's very promising in terms of the future of cryptocurrency and while you are trading, you can also staking as part of your investment strategy.
