If you’ve followed me for any amount of time here, you know I’m a MASSIVE cryptocurrency skeptic.

But I’m also really interested in new ways to generate passive income with my side hustle earnings, so I’m trying to keep an open mind about some of the newer investment options.

So today, I’m going to take a few moments to explore how to make money with crypto staking in 2024.

First I’ll walk you through my own early earnings with crypto, and then I’ll use those numbers to explain what crypto staking is, how to get started for as little as $1, and what the risks are.

Let’s get right to it.

Early crypto earnings

Now I only started dabbling in crypto staking a couple of months ago after seeing it offered on my trading platform.

And as you can see below, I’ve actually done pretty well with my crypto trading early on!

I just want to be clear up front that I’m not a financial advisor and I’m not telling you to buy or sell anything. I’m just providing info and entertainment for people who might be interested in alternative investments.

Now these numbers are admittedly really small, but at this point I’m just in the exploration phase with crypto staking.

I always make sure to build investment positions slowly over time so I don’t get stung by a sudden, major drop in price.

Still, you can see that the value of one of my coins, Solana, was actually up more than 200% in a little less than a month and a half at the time I took this screencap.

The others were hovering between a 30–60% gain over the same period of time.

Now why these four coins in particular?

If you’ve followed me for any amount of time here or in my Medium.com publication called Pure Dividends, you know I’m a MASSIVE crypto skeptic.

Those massive, volatile gains are one major reason why.

But I’m also fascinated by new investing ideas in general, so when I was introduced to the concept of crypto staking, I decided to check it out.

These four coins are the only staking coins available on my platform, so that’s why I targeted them.

What is crypto staking?

OK, so what exactly is crypto staking?

If you want to learn the nuances of how certain blockchains use “proof of stake” to verify transactions versus “proof of work” coins like Bitcoin, you should fire up the Google machine because I’m not going to get into the complexities of it in this video.

In the simplest of terms, you put your crypto up as collateral to verify transactions and you earn rewards for doing so.

This can be done with a few button clicks on your trading app, and some projects allow you to stake as little as $1.

Another very simplistic way to look at crypto staking as an investment is by comparing it to a dividend-paying stock.

Just as, say, a bank or energy stock will pay you cash dividends for holding them, certain cryptos will pay you a cryptocurrency reward for holding them.

There are a couple of catches to this, which I’ll get to in a moment, but first let me walk you through my early earnings from staking, how to participate in staking and then we’ll get into some of the associated risks.

So as you can see, at this point about a month and a half in and with a portfolio worth about $70, I’d earned about 73 cents.

Certain coins pay you more rewards for holding them than others.

As you can see in the graphic above, Solana pays an Annual Percentage Yield (APY) of 4.9%.

So why does DOT pay an APY of 11.1% versus Ethereum, which pays 2.9%?

I don’t actually know.

But I can take a guess, and I think it’s the №1 risk that comes with crypto staking.

Crypto staking Risk 1

When you put up your coins for proof of stake purposes, there’s a chance you could lose them.

Unlike dividend stocks, which are yours until you sell them, the company is acquired, or the company goes bankrupt, staked coins can be lost due to something called “slashing”.

Validators who violate protocol rules can face penalties and lose staked coins.

This is extremely rare and some crypto brokers will replace lost coins, but make sure you do your own research and understand what you’re getting into.

When it comes to crypto, I would think a useful rule of thumb is probably: the higher the yield, the higher the risk.

Crypto staking Risk 2

Staking also turns your coins into illiquid assets temporarily.

For example, it can take weeks to unstake Ethereum coins, so don’t even think about staking coins if you might need the cash at a moment’s notice.

Crypto staking Risk 3

It’s not impossible for crypto to suffer massive drops in price or for crypto projects to fail entirely.

Just look at what happened to Terra Luna, which in 2022 was trading at $120 per coin and today changes hands at $0.60. It lost all its value almost overnight.

Crypto staking Risk 4

Remember how my Solana popped 200% in less than two months?

Well that goes both ways!

One risk you have to be aware of when it comes to crypto is monster volatility.

Volatility can cause massive swings in the value of your assets, which at the end of the day are tied to real money.

Volatility can also induce poor trading decisions or overtrading out of fear, which can cause big losses over time and paying too much in transaction fees.

Crypto staking Risk 5

The fourth risk with crypto trading and staking is a massive market downturn.

I firmly believe that we’re headed into a recession in 2024, and recessions can put downward pressure on stocks and other investments.

And in a recession, high-risk assets, which — don’t kid yourself — crypto is, tend to get punished most harshly.

When people need cash if they’ve lost a job or suffered some other type of misfortune, what gets slashed first?

It’s not a must-haves like shelter and food — it’s nice to haves like speculative investments.

If times are tough and everyone is selling, crypto is probably going to get smoked.

Is crypto staking worth it in 2024?

I get the appeal of crypto.

People read stories about folks who made millions and think it’s normal.

But people buying garbage coins hoping they’re going to run 100,000% and change their lives are simply gambling — and they’re almost certainly going to lose.

I think it’s important for people to remember something else, too: the run-up in crypto prices between 2020–2022 wasn’t the result of any technological or economic fundamentals.

It was the result of a Black Swan Event: an unprecedented global pandemic followed by a massive market pump prompted by governments’ reactions.

Does that mean crypto projects and staking are valueless as long-term propositions?

Hard to say, really.

Personally, I’m interested in learning about all forms of passive income, which is why I’m experimenting with this for fun and content.

I’m a huge crypto skeptic, but I’m also trying to keep an open mind.

I’ll keep my bets small for now, and a year from now I’ll update all of you on how the project went.

At the end of the day, crypto staking probably won’t make you huge money, but if you’re looking at ways to diversify your investments and add risk, it may be something worth exploring.

Again, remember to always talk to a financial professional before making decisions and never bet money you can’t afford to lose.

Thanks for reading this post all the way to the end! If you enjoyed it, please give it a clap or two so others can find it!