Cryptocurrency investing is becoming more mainstream by the day, fueled by eye-catching headlines about people making life-changing amounts of money and disruptive technology challenging existing markets.
You can invest in crypto tech royalties to get investment returns from both capital gains and through rewards like staking, interest and dividends. There are a number of ways you can invest in this market from owning cryptocurrencies directly, NFTs or stocks of companies focusing on crypto.
In this post, I’ll run through exactly what royalties are in crypto, how they work and the best ways to get involved.
What Are Royalties In Crypto?
Royalties in crypto are the same concept as royalties in any other industry, with the most well known being the music industry, This is where you own an asset and are paid a reward for owning that asset which in crypto can come in the form of staking rewards, interest, NFTs, capital gains or dividends.
Here are some of the ways you can earn royalties in crypto.
- Own cryptocurrencies that pay a reward for holding them, usually through staking (will explain how this works)
- Own NFTs that pay royalties and rewards
- Own stocks of companies that are developing or investing in blockchain technology
- Lending your cryptocurrencies or participating in yield farming
Tech royalties have also been referenced by Teeka Tiwari who is a well know cryptocurrency investor.
Is Staking The Same As Tech Royalties?
Yes, staking is the same as tech royalties as you are earning rewards through holding an asset. Staking is one way you can earn royalties from owning crypto assets, although you can also own stocks or NFTs that also can provide a return.
Crypto staking is the process of locking up certain cryptocurrency coins in a wallet or on an exchange to earn rewards, much like interest. Staking is done as part of a consensus mechanism called Proof of Stake which is a way to ensure all transactions are verified and secured without a payment processor or bank.
This is similar to crypto mining, however, instead of having to buy expensive graphics cards or specialised mining rigs to solve complicated mathematical equations, you buy a cryptocurrency coin and earn rewards for being part of the network.
Staking is considered by many a more advanced method of validating a transaction and is also a lot better for the environment as uses significantly less energy to run the network. You just buy a cryptocurrency coin that allows staking and stake it in a staking pool.
If you’re wanting to know more about staking, this post I’ve written on crypto staking and how to maximise returns may be useful.
How Do I Get Royalties Off NFTs?
There are two main ways to get royalties off NFTs, owning an NFT directly where you are able to claim rewards either just through ownership or by staking and by creating your own NFT collection, earning rewards through a commission of the sale.
For an example of earning royalties by creating your own NFT collection, one of the more prominent names in the crypto space is a person called Gary Vaynerchuk who made an NFT collection called VeeFriends.
There are 10,255 tokens in circulation and every time one is sold there will be a 10% royalty fee paid to VeeFriends, of which 1% has been pledged to be donated to charity, although as you can imagine the 9% of every sale can quickly become quite a significant earner.
Creating your own NFT collection can be very hard as not only do you have to create it in the first place, but you have to market them well and provide value to generate enough interest that people will be willing to buy them.
For someone just starting out in the crypto space, investing in NFTs that are already in circulation will be the easiest route. However, remember that the secondary market for NFTs can change rapidly and a project that is currently popular has no guarantee of even maintaining the current price, so make sure you do your own research and are careful.
Top 3 Tech Royalties in Crypto
The top 3 tech royalties in crypto can be different depending on your investing goals and appetite for risk. With staking being the main way to earn tech royalties, the aim is to try and balance staking rewards with investment growth so you don’t end up losing money overall.
With that said, here are the top 3 tech royalties in crypto for staking rewards coupled with investment gains.
- Cardano (ADA). With a solid roadmap for future developments and built with a foundation of rigorous academic research and testing, Cardano has been built to last. Offering staking rewards between 5% to 7%, owning Cardano can be a great way to earn royalties and also be part of the long term growth opportunity that this coin can provide.
- Ethereum (ETH). With Ethereum 2.0 aiming to move the cryptocurrency from a proof of work to a proof of stake network as well as implement a number of other upgrades, Ethereum is often cited as one of the leading platforms. You can stake your Ethereum to the Ethereum 2.0 upgrade and receive staking rewards between 4% to 7%.
- Avalanche (AVAX). With use cases and dApps being released regularly Avalanche is becoming a significant player in the space. Offering staking rewards of 9% it’s attracting a lot of attention and also with its focus on crypto gaming which is starting to see significant growth as a sector.
There are many cryptocurrencies that allow staking, some with extremely high annual returns of over 100%, however, it’s important to do your own research and remember that your capital is at risk. There’s no guarantee that a coin will go up in value, or even be around in a few years’ time.
If you prefer to go down the traditional investment route and invest directly into companies that are building blockchain technology, below I’ll run through some of the main public companies that are worth considering.
Tech Royalty Crypto Stocks
Investing in tech royalty crypto stocks is one way to gain exposure to the cryptocurrency market. By investing in these companies you will effectively earn royalties either through capital gains if the company performs well or through dividends if they are paid out.
Here are a few of the leading stocks in the crypto space.
- MicroStrategy. This is the company run by Michael Saylor and although they are a software business, have chosen a treasury strategy where they invest their cash reserves in Bitcoin. Now they have billions worth of Bitcoin.
- Galaxy Digital Holdings. The largest institutional holder of Bitcoin with Michael Novogratz as the founder and CEO. They specialise in many activities surrounding cryptocurrency including asset management, trading, mining and direct investments in early-stage and late-stage crypto ventures. These ventures are often difficult to access without a significant amount of capital or connections so this stock can be a good way to gain exposure to this type of investment.
- Coinbase Global, Inc. One of the largest cryptocurrency exchanges that allow people to buy and sell crypto, they went public on the Nasdaq in April 2021. They hold multiple cryptocurrencies including Bitcoin and Ethereum and are actively investing in a lot of their own technologies including having their own crypto wallet and building their own NFT platform.
- Tesla. I’m sure you are aware of Tesla, although they have chosen to invest some of their excess capital into Bitcoin as a treasury strategy to help hedge against inflation. This is similar to what Microstrategy has done, however, have only invested a small portion of its capital.
- Paypal and Block. Paypal and Block (formerly known as Square) both saw an opportunity to allow users to buy and hold cryptocurrencies within a digital wallet on their platform. Both of these companies only have a small fraction of their total revenue deriving from crypto, however, have a lot of plans to scale and become more dominant in the space.
- Hut 8 Mining Corp. One of the leading mining companies that mainly focuses on Bitcoin mining. Based in Canada, they invest in large scale mining operations although instead of selling the Bitcoin it mines, it tries to maximise shareholder returns through lending and yield farming, leading to compounded returns.
Does Ethereum Pay Royalties?
Yes, Ethereum does pay royalties through staking towards Ethereum 2.0. You can earn between 4% and 7% depending on the exchange or wallet you use. You can also earn royalties by owning NFTs that are on the Ethereum network, although the rewards can vary significantly by each project.
There’s a very large NFT market on the Ethereum network and can be seen on secondary marketplaces such as Opensea and Rarible.
Summary
Overall, you can earn tech royalties in crypto in a variety of different ways, although choosing the best strategy for you will depend on your appetite for risk and investment goals. Royalties can be earned through staking, investing in stocks or holding NFTS
Please remember, that this post isn’t intended for investment advice and is just my opinion. Make sure to do your own research, you may also find a way to make a better investment!
If you are just getting started in the crypto space, this post I’ve written on how to invest in cryptocurrencies may be useful. I hope this post has been helpful and given you an idea of how you can earn money within the crypto space.
Hi, I’m John. I’ve always had a keen interest in Finance, so much so that I’ve made a career out of it! This site is a place where I can share everything I’ve learned as well as give me the excuse to research certain topics.
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