Earning Crypto Rewards
Entities that participate in securing specific blockchain protocols can earn crypto rewards for their efforts. This process is known as crypto mining on Proof-of-Work (PoW) protocols and staking on Proof-of-Stake (PoS) networks.
Validating via Crypto Mining
Cryptocurrency mining is the process of using computational power to validate transactions before they’re added to the blockchain. Each time a miner successfully validates a block of transactions, the network mints new “virgin” cryptocurrency as a reward. Miners can hold these crypto rewards or exchange them for other crypto or fiat currencies.
Crypto Staking Rewards for Validators
Crypto holders can lock their assets in smart contracts to receive crypto staking rewards from the underlying blockchain protocol. In doing so, they become network validators. Similar to how banks reward customers with interest on their savings, blockchain networks reward validators for their participation in the ecosystem, which helps generate new blocks on the blockchain. Many users choose to stake directly on blockchain protocols like Cardano, EOS, and Polkadot. However, staking services are also available on exchange platforms like Binance, Gemini, and Kraken or within wallets like Ledger and Exodus.
Crypto Credit Cards and Crypto Debit Cards
Crypto reward cards function much like conventional credit cards that integrate “cash back” offers or points programs. Until recently, most crypto debit cards (like those from Coinbase and Fold) issued rewards as points or miles, not as cryptocurrency. However, new offerings like the Bitcoin Rewards Card from BlockFi are partnering with established financial institutions to facilitate crypto-denominated rewards. In this case, card holders receive 1.5% of purchases back in bitcoin.
Similarly, Crypto.com offers the Crypto.com Visa Card. This crypto rewards credit card offers up to 100% reimbursements for several streaming services and up to 10% cash back on other purchases (depending on card tier). These tiers are determined by the amount of CRO coin a user has staked. Staked CRO is usually held for a six-month lock-up period, during which users can earn up to 12% APY.
Gemini has announced a forthcoming crypto rewards credit card in partnership with Mastercard that lets you earn up to 3% back on dining, 2% back on groceries, and 1% back on other purchases in bitcoin or other cryptocurrencies.
Affiliate Program Crypto Rewards
To generate public interest, many crypto platforms have introduced referral programs. For example, the Binance exchange offers the Binance Affiliate Program, while Gemini, Paxos, Trezor, and Coinbase all have similar offerings. These rewards are often redeemed via affiliate links, referral bonuses, or other discounts. Users should always perform due diligence to help ensure they’re supporting projects built on solid fundamentals.