This article discusses how to generate passive income on Steem, a service I have used for over 8 months. I’m not a professional investment adviser, so this is not “investment advice”. Do your own research before making decisions on whether or not to do this. Buying Steem involves many risks, including loss of the USD value of Steem and complete blockchain destruction.
But if you are interested in earning passive income on Steem, or are just interested in how it works, here is how (with video links) to do it.
Delegate Steem Power and Earn Passive Income on Steem
This is not a new topic for me to cover, but it is nevertheless an important one, and if there is anything I have learned about teaching people to adopt new habits, it’s that sometimes repetition is not as tedious to the learner as it might be to the teacher.
My long term strategy for investing is to buy assets that produce (or will produce at a future date) cash flow. This can come from dividends (stocks), rent (real estate), and interest (CDs) in the most common situations. The best investments allow investors to retain their principle investment, using the cash flow to either build other investments or to live off of.
In a more ideal world, we’d spend our working lives saving and investing like this, and live off the cash flow in our retirement, passing the principle on to our heirs and building nice multi-generational wealth.
Cash (Flow) is King
Bitcoin, like gold, has no cash flow. Furthermore, it never will offer holders any cash flow, because it is mined by a small handful of mining companies that are positioned to scale their operations. Some tokens, like QTUM, allow users to stake their holdings and earn more; this process is called Proof of Stake. It is closer to having cash flow for cryptocurrency, but the returns are often random and it can be difficult to plan around irregular returns.
On the other hand, Steem’s Proof of Brain allows people to mine cryptocurrency through interaction with the blockchain. This is usually done via Steemit.com, where most users write blog posts or share pictures of food and travel. There is also Dtube, which is a YouTube clone that appeals to video content producers.
Many Steemians already know how this works. But there’s also a way to make passive income on Steem using your Steem Power! Passive income is a topic you’re interested in, right? If it weren’t, I don’t think Pat Flynn would be so popular.
I think this solution-passive income on Steem-makes it one of the easiest blockchains to invest in today.
Here’s Why It Works
Steem Power is influence. The more Steem Power (SP) you have, the more your upvotes affect the rewards pool distribution. Some people have hundreds of thousands of SP, and when they upvote somebody with full power, that person can receive $20-$100 or more from it. These “whales”, as they are known, are the Borgheses of the Steem blockchain, and their tastes determine a lot of what gets into trending.
A lot of these whales, however, are not actual user accounts. Instead, they are bid bots, which allow users to send a bid to receive an upvote. Whether or not you should use bid bots will be covered in a future article.
Again, the more SP an account has, the more it can directly influence others by upvoting posts of its choosing. If your Steem Power is very low, however, you’ll have very little effect upvoting others. You can use this technique to grow your Steem stash into a larger one that will have a greater effect on the blockchain.
This is How it Works
This is the genius of SP delegation: the SP never leaves your account. Instead, somebody else pays you for the opportunity to use it and upvote under their name. It is safe, and the Minnowbooster leasing market is the easiest way to do it. I’ve even made a video on how to use it.
You don’t need to have a lot of Steem Power to earn passive income on Steem; there are currently requests for 100 or 200 SP, which can net you 2-4 Steem per month of delegation. This is a great deal, as the annual percentage yield for lease requests changes from 14% to 25% (I’ve delegated at 33% a few times!), which is much higher than you’ll see in most other markets.
You don’t need to have a lot of Steem Power to earn passive income on Steem.
Once you’ve got your delegation set up, you don’t need to do anything. Minnowbooster will send you Steem daily, and you won’t be able to utilize the amount of SP you delegated until the delegation period (usually 4 weeks) ends. This means if your upvote was once 5 cents, and you delegated 80% of your SP, your upvote will now be 1 cent.
If you want to grow your SP long term, you can power up the Steem you get and grow your stash over the long run. Between Author and Curation rewards, and delegations, you should be able to earn passive income on Steem quite rapidly. Of course, you can always send your earned Steem to an exchange and sell it for another cryptocurrency or cash, if that is your preference.
For Those Leasing Steem Power
The other side of this trade is for content creators, generally. I would recommend leasing SP to creatives who are building a brand and want to find ways to grow followers and attention. User @d-pend is a good example of how to use leased SP to grow an audience: he has over 5k followers, and for a while he ran a lot of contests that allowed him to reward budding poets.
There are a lot of creative ways to use the influence that even a temporary amount of SP can give you that go beyond upvoting your own posts (although that is a legitimate use of SP). However, anyone leasing SP should have a plan in place on how to best use their short term influence boost.
How to Get Steem and Steem Power
If you’re a brand new Steemian, you’ll have 14 Steem Power that is delegated to you from Steemit inc. They do this so you can actually interact with the blockchain…SP also determines how much you can post, so those with brand new accounts won’t be spamming the blockchain with HD photos at zero cost. You earn SP by getting upvotes, but you can also get it by buying Steem and “Powering Up”. When you power up your Steem, you lock it away for a minimum of 13 weeks.
Steem can be purchased on an exchange like Binance, Bittrex, or Poloniex, then sent to your account. Steem is free to transfer, and it tends to arrive much more quickly than Ethereum or Bitcoin. Transfer a small amount (1 Steem) first before transferring a larger amount, to ensure you’re doing it right and not making a costly (and irreversible) error. As I mentioned above, you can also send your earned Steem back to an exchange and sell it.
Delegating Steem Power gives daily rewards in Steem, and can allow users to grow passive income, even in a bear market. In a bull market, it can be a rainmaker, as your delegated amount continues to be paid back in appreciating tokens. SP delegation allows market forces to act and distribute SP where it is most needed, and gives investors a reason to buy and hold Steem for longer periods of time.
It involves risks-the risk of losing your Steem password or getting your account hacked, the risk of the price of Steem dropping so much that your original investment can’t be recouped, and more. This article discusses the benefits of delegating SP and some of the possible outcomes, but it is not advice saying you should buy Steem. Do your own research!
Interested in optimizing your Steem experience? Do you want to learn more about the Steem blockchain and how Steemit works? Click the logo below for a deep dive on Steem: