The cryptocurrency boom has brought the blockchain technology in the spotlight and while many consider that investing in cryptocurrencies is highly risky, the consensus is that blockchain technology is going to be the biggest disruptor to many industries since the Internet. Nevertheless, while there are many big corporations, such as International Business Machines Corp. (NYSE:IBM), Maersk S/A, and Moneygram International Inc (NASDAQ:MGI), that are working on blockchain-based applications to facilitate their operations, there are hundreds, or maybe even thousands of startups that are developing their own projects based on blockchain technology, looking to strike gold. Because of the popularity of cryptocurrencies and the advancement of technology that allows the creation of new cryptocurrencies, many startups have launched their own tokens that have been sold to investors.
At the moment, there are over 1,500 cryptocurrencies, most of which are tokens that can be used within a blockchain-based ecosystem. These tokens are different from traditional cryptocurrencies, such as Bitcoin and Litecoin, because their value is not determined by the scarcity or utility, but rather represent an asset or utility within an ecosystem and their value is determined to the usability of the ecosystem. Because there are so many tokens that were offered for sale to investors and are currently trading on cryptocurrency exchanges, startups are seeking other ways to attract investors aside from the potential profitability of their projects and the subsequent appreciation of their tokens’ value. One of these ways is a promise to reap benefits while holding tokens, which is similar to the way companies pay dividends.
There are many ways how blockchain companies choose to reward their investors. For example, Fluz Fluz blockchain offers members of its platform create networks and receive cashbacks from purchases made by people within the networks. EXMO, a cryptocurrency exchange that is about to conduct a token crowdsale, went the more traditional way by offering holders of its tokens dividends generated from offering margin trading services.
The majority of blockchain projects offer rewards in form of staking. Staking is a new technology on blockchain, also known as Proof-of-Stake, which is commonly used by cryptocurrencies that pay dividends. POS comes as an alternative to Proof-of-Work that is used on blockchains like Bitcoin, where members of the network have to solve complex cryptographical problems in order to validate transactions and add new blocks to the ledger, i.e. mining. Staking doesn’t require buying special hardware to get new coins. Instead the creator of the new block is chosen in a deterministic way and the network member with the largest number of coins gets the biggest chance of being chosen. Cryptocurrencies that pay dividends have to be kept in a special wallet that is compatible with the Point-of-Stake system and they have to reach a certain maturity to allow staking. Whenever a transaction takes place, a person is chosen based on its stake and it gets to sign the next block and gets the transaction fees in the process. In this way,
It should be mentioned that instead of investing in cryptocurrencies that pay dividends, there is a safer way to get dividends from cryptocurrencies, which is to invest in large companies that have exposure to the industry, such as the aforementioned International Business Machines Corp. (NYSE:IBM), which is working on several blockchain-based projects, or Moneygram International Inc (NASDAQ:MGI), which is exploring the use of Ripple blockchain to facilitate international money transfers.
Nevertheless, if you are set on investing in cryptocurrencies, we have compiled a list of seven cryptocurrencies that offer dividends, mostly through staking.
Mkt Cap: $201.34 million
TenX is a project that launched a cryptocurrency wallet and physical card that allows paying with cryptocurrencies at any store, even if it doesn’t support cryptocurrencies. The company is working with WaveCrest, a third party card issuer that was partnered with Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA), although at the beginning of January, Visa Inc (NYSE:V) terminated the relationship with WaveCrest, demanding that it closes all Visa cards. As a reward program, TenX distributes 0.1% of PAY tokens of purchases and periodically distributes 0.5% of the payment volume on the network in proportion to their stakes.