6 Ways To Earn Free Crypto

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Free money is nothing new to savvy consumers: Credit cards offer signup bonuses, bank accounts earn interest, and there are even tools to collect money while shopping online.

And now you can get many of these same perks issued in cryptocurrency instead of credit card points or US dollars.

If you’ve ever added cryptocurrency to your investment portfolio, these options offer an extra coin on top of your initial investment, but you should know exactly how it works before you dive in. You should also be prepared for the additional responsibilities that free crypto can demand, especially when tax season approaches.

While some forms of free crypto, like crypto credit card rewards, are only taxed on capital gains you earn when you cash out (like any other crypto you buy with your own money), others may. be considered taxable income when you receive it. , and it is your responsibility to report it to the IRS. Do your research to know your own tax obligations beforehand.

But if you’re already in crypto and ready to do a little extra tracking of your coins, here are some ways to boost your holdings for free.

Before you start

Critically evaluate any free crypto opportunity before entering. Most of the more legitimate ways to earn free crypto require at least some initial work, like taking classes on Coinbase Earn or navigating a buying portal for crypto rewards. And promises of free money are ripe for manipulation by crooks. Never accept an unsolicited offer of free cryptocurrency and do your own research on any opportunities before entering.

[READ MORE]: Is crypto part of your investment portfolio? These 4 questions can help you decide

1. Purchase rewards

Lolli, a Google Chrome or Firefox browser extension, offers Bitcoin Back when you shop with its business partners. It works the same as browser extensions like Rakuten or Honey which offer cashback and cashback when you use the portal or extension to shop online. Like these programs, Lolli rewards you for spending money regularly as you normally would when shopping online, and not for making purchases with crypto.

Retailers on Lolli range from Nike to Sephora to Malaysia Airlines. The rewards range from 1% to 30% Bitcoin in return, depending on the retailer and the product. Your rewards will go to your Lolli account, then you can transfer them to your crypto wallet or exchange account.

2. Credit cards

A cryptocurrency credit card works the same as other reward credit cards, but instead of earning cash or points with every hit, you’ll get cryptocurrency. While we love the simple cash rewards (and you can still buy crypto with your cash winnings), these cards can help you complete your crypto wallet more seamlessly.

Gemini and other exchanges have announced plans for cryptocurrency rewards credit cards, along with fintech companies like BlockFi and Upgrade. The reward categories on these cards are similar to many traditional cash back credit cards. The BlockFi credit card, for example, earns 1.5% in Bitcoin on every purchase you make, after earning 3.5% for the first 90 days after opening the account.

In addition to varying reward rates, each of these cards offers different redemption values. The Gemini Card will let you choose which crypto to redeem rewards in, while BlockFi earns Bitcoin rewards, and others limit your rewards to certain altcoins only.

As with any credit card, the rewards you earn with these cards are only valuable if you avoid their high interest rates. If you are using a card to earn crypto rewards, make sure you only charge what you can afford to pay off in full and on time each month, without having to pay a balance.

3. Look for Exchange signup and referral bonuses

Some cryptocurrency exchanges offer signup or referral bonuses for using their services. A previous Coinbase signup bonus offered $ 5 for new users to invest in crypto, for example, and the exchange is currently offering a $ 10 bonus to you and your referral when they create an account and trade at least. $ 100.

Make sure you pay attention to the terms of these bonuses. You may need to provide more personal information or take other actions to claim these rewards. Most of these offers aren’t lucrative enough to warrant signing up for a brand new exchange if you already have an account, but if you are just starting out, keep an eye out for any exchanges you are considering to see if they offer a bonus. listing or a reference for other friends who might be interested.

4. Coinbase Earn

The popular cryptocurrency exchange Coinbase offers incentives for using the Learn hub platforms. In order to get the free change, you will need to watch Coinbases videos, take quizzes, and then Coinbase will deposit a small amount of crypto into your wallet. The content is usually focused on a specific altcoin (like GRT and BOND) and therefore these are the coins that you will earn by completing the lessons.

Since altcoins aren’t generally recommended for long-term investments, you can convert these lesser-known coins to Bitcoin or Ethereum once you’ve earned them. But don’t forget to keep track of these transactions, because every crypto to crypto transaction is taxable. Additionally, you need to track the price value of all your income through Coinbase Earn and report it as income on your federal tax return. If you earn more than $ 600 from the program, Coinbase will send you a 1099-MISC form, which you can use to report your earnings.

You will need to have a funded Coinbase account, live in an eligible country, and verify all of your personal information to start making money 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 loan program where you lend your crypto to institutional borrowers and can earn up to 7.4% APY. BlockFi has a similar offer, the BlockFi Interest Account, which accumulates interest up to 7.5%. Lending your crypto to these institutions can add even more risk to the cryptocurrency’s built-in risk, so make sure you read the terms carefully before signing up and don’t lend more than you can afford to lose.

You can also earn interest by betting on certain crypto exchanges, like Binance.US. Staking means leaving the cryptocurrency in your wallet to earn rewards or interest. In doing so, you are helping to maintain the blockchain network. You can usually only bet certain coins in an exchange, which may require purchasing riskier altcoins to reap the benefits.

The interest you earn on your crypto as well as the income from staking are both taxable and you are responsible for reporting them as income. If you choose to participate, you will need to track the base cost of your income throughout the year to include it on your tax return.

6. Air drops

Of all the methods to earn free crypto, airdrops carry the most risk, more than we think is worth it for most investors. Developers perform airdrops when they want to gain traction for their new cryptocurrency. Simply put, they give coins to try to get adoption.

You can watch online to find out when the drop projects are happening; they are often promoted on the company’s website as well as by users on social media platforms and some crypto news sites. If you qualify, developers often send the specified amount of coins directly to your digital wallet address.

It is important to be careful with any new cryptocurrency project. Fake airdrops and initial ICO coin offerings are common scams used by hackers. Even when real, most coins issued in airdrops are not of great investment value. Experts recommend sticking to the more well-known cryptos, Bitcoin and Ethereum, especially for newbies. If you follow this recommendation, skip the airdrops.

Any crypto you earn from airdrops is also taxable income. You will be responsible for reporting it as such based on its fair market value on the date it was recorded in the distributed ledger (in most cases when you receive the airdrop in your digital wallet) , according to the IRS.

[READ MORE]: Cryptocurrency crime is on the rise. Here’s how to invest safely

Final result

While there are ways to earn extra crypto for free, don’t let the temptation of freebies force your hand. Cryptocurrency is a very volatile new investment, and you should never invest more than what you are willing to lose.

Free crypto may also not be free during tax season. Any crypto that can be considered income, as well as crypto-to-crypto conversions or holdings you cash out for US dollars, are taxable. You will need to track the market price of any crypto you get when you receive it, and again when you sell it, to report it to the IRS at the end of tax season.

[READ MORE]: Yes, your crypto is taxable. Here’s how to report virtual currency to the IRS

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