At Wealth Factory, we help small business owners keep more of what they make — and help them focus more on cash flow rather than accumulation.
So with the rising popularity of cryptocurrencies, a lot of people are wondering how crypto fits into this cash flow financial philosophy.
And the answer — as surprising as it may seem to some — is that crypto is so strong at providing cash flow, that it likely belongs in almost everybody’s financial toolbox.
Especially if you are worried about surging inflation, rising taxes, and pathetic returns on savings accounts…
And especially if you want more cash flow to power your business or lifestyle.
You see, people who are new to cryptocurrencies often think the only way to make money is to buy coins like Bitcoin or Ethereum and hope they go up in value.
That can certainly work out if you have a very long time horizon.
But speculating on a price increase can be an extremely volatile and risky bet if you haven’t done your homework.
What many people don’t realize is that there are three ways to generate cash flow with crypto, which means you get paid no matter what the price is doing.
So how can crypto create cash flow?
Let’s dive in…
Cash Flow Method #1 – Staking
You’ve probably heard of Bitcoin mining — and especially how it is very energy-intensive and bad for the environment.
It’s true — and it’s what makes the Bitcoin blockchain one of the most secure transaction ledgers in the world.
Every BTC transaction is verified and added to the blockchain through a proof-of-work system.
The “miners” who make these validations on high-powered computers are rewarded with new Bitcoin.
However, in addition to being an energy hog, this type of verification process is also slow.
So newer crypto blockchain networks are based on a different model called proof-of-stake (POS).
These networks are much more energy-efficient and provide faster processing.
So how does it work? Without getting into the technical side of things, let’s just put it this way…
Instead of buying expensive computer equipment to solve complex calculations in order to validate transactions and get rewarded with new coins…
You can instead simply stake some of your cryptocurrency and become a node validator (or pool with others).
The person or company running that node is saying, “we promise to validate all transactions honestly. If we try to cheat the system, you can penalize us by taking a portion of our staked tokens.”
Here’s the key — the penalty for trying to cheat and steal from the system is always much higher than the reward you could potentially get by cheating…
So this unique mechanism keeps everyone honest.
As a reward for protecting the network, the POS blockchain rewards stakers with dividends or new tokens.
Most POS blockchains generate a return of 5-15% per year.
You can easily stake your coins in pooled nodes on exchanges like Kraken or Coinbase. Most major exchanges support this feature to some degree.
Cash Flow Method #2 – Yield Farming
Yield farming is an advanced topic that we cover more thoroughly in one of our recent CAPITALIZE issues (our weekly alternative investment newsletter)…
Plus, we dive deeply into yield farming in our Cash Flow Crypto bundle that is being re-opened next week.
At a high level, yield farming is just another method of generating new cryptocurrency from your existing crypto holdings.
It has drawn analogies to farming because it basically allows you to “grow your own cryptocurrency.”
The process involves placing your existing crypto assets into a liquidity pool where they’re used to facilitate trading, lending, and borrowing by other crypto networks.
By providing liquidity, you earn a share of the fees that are collected for these activities.
Investors earn in proportion to their share of the liquidity pool.
So basically, instead of just having your cryptocurrency stored in a wallet, you create ongoing cash flow through yield farming.
Typical returns for yield farming are in the 5%-20% per year range, but it’s also possible to make anywhere from 50% to 150% per year with the right token or pool.
More sophisticated yield farming strategies can offer some truly mind-blowing returns — at least for a short period of time.
For example, yield farmers who get involved early with a new project or strategy can reap sizable profits as volume and popularity surges. Returns can get as high as 1,000% – 80,000% APY, according to CoinGecko.
However, these strategies bear higher risk. So be sure to educate yourself before you jump into one of these pools.
With that being said, there is one more way to create cash flow with crypto assets…
Cash Flow Method #3 – Lending
You can also lend out your crypto assets and make a consistent, dependable return, just like a bank lends out dollars and collects regular interest payments.
This is one of the simplest and safest ways to create cash flow with your crypto.
Of course, the safety and simplicity of this technique also means lower returns. The advantage is that it doesn’t need constant monitoring.
In other words, this can truly be a set-it and forget-it type strategy.
Once set up, this can be a simple way to make 5-15% per year in extra cash flow, which still beats any bank account we know about.
The easiest way you can earn interest like this is in popular exchanges like Celsius and Nexo.
In the DeFi space, you can use platforms like Aave, Compound, or MakerDAO.
The rate they offer can vary daily, but once you lock in a rate, it won’t go down.
How Often Do You Get Paid?
Using these three methods can provide daily cash flow in some cases, weekly or monthly in others.
Sometimes you may need to lock down your underlying crypto assets for a set period of time.
In other cases, you can pull your crypto out any time you want.
On some of the staking platforms, tokens are paid out directly to your wallet every minute of every day.
You can then re-stake them to generate a compounding return, or you can cash them out for dollars.
What About Volatility?
When crypto prices are rising — earning cash flow on your crypto assets is like turbo-charging your returns.
That’s because not only are you growing the amount of crypto you have, the underlying price is also going up.
But if the price of crypto starts to fall — what then?
No one wants to see the value of their deposits going down, especially if they’re relying on the cash flow to power their business or lifestyle.
And that’s why it’s vital to understand that you can also stake or lend out stable coins like USDC, USDT, or UST that are all pegged 1-to-1 to the US Dollar.
The Value of Stability (with Stable Coin)
Simply put, you could trade in $10,000 dollars for 10,000 in USDC, and then stake or lend that USDC and earn anywhere from 5% to 20% per year in interest without doing anything fancy.
So even if Bitcoin or other crypto prices crash, your $10,000 is still worth $10,000 (plus any accumulated interest).
It’s the equivalent of holding digital cash, while still making a 5-20% return.
Consistent Cash Flow to Power your Business (or Lifestyle)…
Our top clients tell us that one of the most appealing aspects of our Wealth Factory financial architecture plan is creating a proven path to Economic Independence.
Economic Independence is when you have enough hands-off entrepreneurial cash flow to pay for all your basic living expenses.
So If you want a way to create consistent cash flow on a monthly basis, very few investments provide the kind of consistent return that stablecoins provide and still offer high liquidity (easy access to your cash).
For example, $500,000 converted to a stable coin earning a 20% return is $100,000 per year, or $8,000 per month in extra cash flow.
You can then use that cash flow to pay your bills, grow your business, or invest in other cash flow or lifestyle assets.
How to Take the Next Step…
If any of these topics sound exciting — and you’d like to get started with crypto — remember, there’s always risk when it comes to investing in anything…
And one of the biggest risks is lack of education and understanding about how an asset or investment works.
That’s why we’re re-opening our extremely popular Cash Flow Crypto Bundle for a limited amount of time starting next week (depending upon when you see this).
The bundle gives you everything you need to create passive cash flow from crypto, safely and responsibly…
Plus it also equips you to avoid the most common risks, missteps, and outright scams that have plagued crypto newbies.
In short — solid crypto education like this is a must-have if you want to be successful.
To see if the offer is currently open — or to add your name to the waitlist, check out the Cash Flow Crypto Bundle here.