The cryptocurrency ecosystem brought a dozen of new ways to add a regular stream of income for investors. Their speculative nature allows you to profit from buying and selling them on exchanges like the Godex crypto platform, as well as accumulating them as a store of value.
However, running a cryptocurrency node is just one of the approaches you can take to start making profits in this niche. In this article, we take a closer look at what it means to run a node for your favorite blockchain and the opportunities and drawbacks it holds. More importantly, we will give you a list of proven alternative methods for making regular profits with crypto.
The Main Point of Crypto Node
To understand what the main point of a crypto node is, let’s first lay down some blockchain basics. In proof-of-work (PoW) blockchains like Bitcoin (and many others), miners use powerful machines to verify transactions, discover new blocks and create new coins.
However, this mining process requires expensive hardware that isn’t readily available to the mainstream user. Moreover, mining also consumes huge amounts of electricity, to offset the reward miners get from transaction fees and newly created coins. Having said that, mining is an essential element for securing the blockchain, which can be quite profitable.
Nodes, on the other hand, help to decentralize the network even further and add to its security. They independently verify transactions, providing further proof of data integrity. Moreover, they don’t require powerful hardware as they only verify transactions. For this reason, some blockchains reward node managers with smaller, yet, noteworthy rewards.
Masternode blockchains require you to purchase a minimal amount of a certain cryptocurrency to be able to run a node. So, in this regard, running a node doesn’t require an upfront investment in hardware. Instead, you buy a coin that you can easily sell on the open market afterward.
Strengths and Weaknesses of Crypto Node
There are some major benefits to running a node, in addition to getting compensated, with a few drawbacks. Let’s begin with the positive aspects of running a node first.
- Add privacy to your transactions. If you plan on using the blockchain for your personal needs, you won’t have to send your data to a random public node. This includes your IP address that can be used to trace back your crypto holding to your wallet, and ultimately, to your person.
- Confirm transactions yourself. You can participate in securing the blockchain and ensuring that you are confirming transactions in a trustless manner.
- Participate actively in improving the network. Every node counts towards a higher security blockchain.
With that in mind, a few disadvantages remain, such as:
- Minimal rewards. Running a node is not the most profitable passive income method for crypto.
- Requires some tech knowledge. Setting up a node will demand that you understand how blockchains work and how to set them up.
- Needs upfront investment. Even the best crypto nodes require some hardware investment. Additionally, you will need to buy a certain amount of a certain cryptocurrency, shoehorning you in that particular coin.
All in all, while nodes have some benefits, their limited rewards have made investors look for more profitable alternatives. Let’s have a closer look at what these are.
Alternative Profitable Ways to Get Crypto Income
As we stated earlier, cryptocurrencies bring a wide array of opportunities when it comes to profits and passive income. The most notable alternatives to running a node are:
- Staking. This approach requires that you lock up some of your cryptos onto the network to provide additional security for it. In return, you will receive rewards. The advantage here is that you can stake using staking pools, without a lower limit on how much you are willing to invest. Moreover, the process is usually very simple and requires nothing more than a mobile wallet that supports staking.
- Lending. You can lend out your crypto to various decentralized services and receive interest for your services.
Both of these options provide much better returns, with an average between 10% and 15% of annual percentage yield (APY).
Crypto nodes can be a great hobbyist venture. They allow you to actively participate in the blockchain and get some rewards for it as well. However, there are much more profitable options for cryptocurrencies out there that are easier to set up. Staking and lending are becoming increasingly interesting as more people join the blockchain ecosystem. These two are much more beginner-friendly than node running.