Buying your first cryptocurrency isn’t the only way to be part of the cryptocurrency space.
Cryptocurrencies require people. The more people who own or use the cryptocurrency, the more validation that the cryptocurrency has as a legitimate digital currency. If a cryptocurrency is minted but has no one using it, it is just fancy lines of code but not a currency. A currency has to be used as a medium of exchange to have value.
If you are interested in dabbling in cryptos but don’t want to put your money in, here are 8 ways to earn cryptocurrencies for free.
Note: This is not a recommendation for cryptocurrencies. Do your due diligence before you choose to participate or trade in cryptocurrencies.
#1 Crypto Cashback
By using a cryptocurrency-linked card such as Crypto.com Visa card, it is possible to earn cryptocurrency for free, just like how you would earn cashback from cashback credit card.
At the lowest tier, using Crypto.com Visa card for your regular card transactions allows you to earn 1% in CRO rewards – CRO being the cryptocurrency coin of Crypto.com. Using such a card would allow you to accumulate CRO. However, the amount that you earn would fluctuate depending on the value of CRO. You can earn more CRO rewards if you stake your CRO, but that will involve more upfront costs. We will elaborate more on staking later.
For example, based on a card spend of $100 and 1% reward, you would earn about 17 CRO in January 2021 compared to 6 CRO presently in Sep 2021. It is harder to earn CRO now as CRO value has risen significantly since the start of the year. While this is good news to existing reward holders, new users may find it difficult to accumulate CROs. On the flipside, CRO value can also fall significantly making it easier to earn CRO but less valuable.
Amount Needed To Start: Free
#2 Play-To-Earn NFT Games
For gamers, an interesting way to earn cryptocurrency is with play-to-earn games. Players can earn in-game rewards which be either sold directly on exchanges if they are tokenised or they can sell the collectible NFTs they collect in the game.
Currently, most popular play-to-earn game is Axie Infinity. To start playing the game, you need to gather a team of 3 Axies. The entry price of each Axie is around US$200. For players who don’t have or are not willing to pay that upfront cost, many existing players with excess Axies (managers) set up “scholarship” programmes where they loan their Axies to new players who will then use the loaned Axies to play the game to earn the in-game rewards – Smooth Love Potions (SLPs). The rewards are split between the player and the manager. These SLPs can then be sold on the crypto exchanges or used in-game to breed new Axies which can also be sold for ether (ETH).
Aside from Axie Infinity, there are some play-to-earn NFT games that do not require a starting capital to start playing. For example, Gods Unchained is a free-to-play trading card game. Players accumulate cards by purchasing or by winning PVP matches. You can earn the cryptocurrency GODS when you sell your cards within the game. While you can technically play the game without buying more cards, it is likely that winning PVP matches would not be easy without the boost from having a variety of cards.
Amount Needed To Start: Free if you find a “scholarship” or play a game that is free-to-play
#3 Referral/ Sign Up Bonuses
Another common way to get started in cryptos to earn the referral/ sign up bonuses. Similar to how new brokerages (such as Tiger Brokers and moo moo) give sign up bonuses, many crypto exchanges also offer sign up bonuses to new users. Depending on the crypto exchange, these sign up bonuses can range from $10 to $100 worth of cryptocurrencies. However, note that many of these exchanges would require you to make a certain number of deposits or transactions before you can receive the sign up bonuses.
Many of these sign up bonuses are also referral bonuses. If you refer a friend or someone to use the platform, you and your friend will receive the referral bonus. For example, Gemini users who refer new users will receive $10 worth of bitcoin, if the new user completes the requirement of $100 worth of transactions. A new user will earn $10 worth of bitcoin as the referral/ new sign up bonus, if they transact $100 or more within 30 days of their account creation.
Amount Needed To Start: Free, depending on the deposit or transaction required.
In 2014, $100 worth of Bitcoin (about 0.3 BTC) was given away for free to all undergraduate MIT students, increase the knowledge and adoption of bitcoin. That $100 worth of bitcoin would be worth close to US$15,000 today. While this would be unimaginable today, the fact remains that knowledge and adoption is essential for a new cryptocurrency to gain its footing. To do so, most new cryptocurrencies set aside a percentage of the circulation for marketing purposes.
Developers of new cryptos can choose to release their new coins for free to existing cryptocurrency holders, usually Bitcoin or Ethereum holders. In order to receive these free coins (also known as airdrops), you would have to hold BTC or ETH in a crypto wallet.
Amount Needed To Start: An amount of ETH or BTC in a crypto wallet
#5 Hard Forks
Hard forks are another way you can receive new cryptos based on your existing cryptos. In a hard fork, the developers of the cryptocurrency decide to create a second version of the same cryptos. This could be due to development differences or community differences. For example, Ethereum is a second iteration from a hard fork. The original Ethereum blockchain is known as Ethereum Classic while the current Ethereum is the blockchain that reversed the 2016 DAO theft hack. All holders of Ethereum during the hard fork received equal amounts of Ethereum and Ethereum Classic when the cryptocurrency separated into two different blockchains.
However, not all hard forks will result in a new cryptocurrency. The 2021 Ethereum London hard fork did not result in the creation of new cryptocurrency.
Amount Needed To Start: An amount of cryptocurrency that will undergo a hard fork
If you have an idle computer or laptop lying around, mining for cryptocurrencies can be a way to earn you cryptos.
Many cryptocurrencies, notably Bitcoin, work on the basis of proof-of-work to validate the blockchain. Under proof of work, each new block of the blockchain is “mined” by solving a complex cryptographic algorithm. Miners are rewarded with an amount of the cryptocurrency – the mining reward – for being the first to solve the cryptographic algorithm.
As long as you have idle computing power, such as a spare computer or laptop, it is possible to set up your device to mine cryptocurrencies. For example, two siblings aged 9 and 14 years old reportedly earned $30,000 mining cryptocurrencies. However, do note that mining cryptocurrencies require very intensive computational power which may shorten the life of your devices and consumes significant electrical resources.
Amount Needed To Start: Idle computing device(s), knowledge to set up cryptocurrency mining and electrical costs
Some other cryptocurrencies, such as Cardano, work on the basis of proof-of-stake to validate and add a new transaction to the blockchain. In a proof-of-stake, instead of using computational power to solve cryptographic problems, validators are chosen at random to create the new blocks on the blockchain and earn the rewards.
To earn the staking rewards, you would need to hold your cryptocurrency on the network. Typically, you would need to join a “staking pool” or acquire enough of the cryptocurrency to form a staking node. During the staking period, your cryptos are usually locked in and you would not be able to trade or transact them.
For example, to start staking when Ethereum moves to proof-of-stake, you would need at least 32 ETH or about US$90,000. Alternatively, you can join platforms, such as Matrixport to participate in staking at a lower threshold.
Amount Needed To Start: Amount of cryptocurrency for staking
#8 Yield Farming
Yield farming is the practice of lending your crypto to earn more cryptos. While also commonly known as staking, yield farming can include other forms of staking besides staking to earn the validation rewards as mentioned above. You can stake or lock in your coins to earn interest/ rewards. This is similar to securities lending where holders of a stock can lend out their stock ownership to a borrower for an agreed return and fee.
Yield farming provides liquidity to the markets and can generate additional interest income for long term hodlers of cryptocurrencies. Do note that there are multiple ways of yield farming discussed within the crypto community which may not be accessible to a newcomer.
Amount Needed To Start: Amount of cryptocurrency for yield farming
Free is Not Risk-Free
Regardless of which way you choose to acquire your free cryptos, there is usually a cost either in starting capital or effort/ “sweat equity”. You are also subject to the price volatility of cryptos and the inherent risks of investing in cryptos, so choose wisely because free is not really free.