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The Cryptocurrencies with The Highest Dividends

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February 7, 2018 | 

Joanna Newman |  0 Comments| 

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Don’t panic if your dictionary doesn’t have an entry for the word “Hodl”.

It’s a term that we are seeing increasingly often on blogs and websites related to Blockchain and cryptocurrency. For many, it’s an anagram of the verb “hold”, but refers exclusively to the world of crypto-finance. For others, it’s an acronym for “Hold on for Dear Life”, which is a call for investors to favor long-term investments over immediate gains.

In the world of digital finance, there are a variety of currencies whose Proof of Staking (POS) are like HODLing and need to be distinguished from each other.

Getting in on the Gains


It’s not enough to simply make a currency and assign a value to a new type of cryptocurrency or else everyone would be creating their own massive reserves of the stuff.

In economics, the amount of currency created is directly linked to wealth that it produces, and this relies on its level of production. And, this means that the more money that is minted, the more it will lose value.

In terms of cryptocurrencies, however, there are no designated federal reserves. It is the miners who create the money by following the specifications of the algorithm related to each currency. For example, Bitcoin uses a protocol that is known as Sha256. The “central” bank in this type of situation is all the tokens that are mined and then put into circulation.

https://www.youtube.com/watch?v=tGMs3uGKdGQ

Master nodes, are the members of the Blockchain who regulate and control then cryptographic environment. They are the ones who validate that miners have done the work and then pays them. This is known as POW or Proof of Work.

One way to limit the price volatility of a cryptocurrency is to mine and inject even more tokens into circulation. Another solution is to the volatility is known as Staking or POS (Proof of Staking). This is another method of payment for portfolios who have held their tokens for a time frame specified by the cryptocurrency.

Neither the POW, POS or the payment of the Master nodes are eligible for dividends. They are simply paid for their operating services in relation to the Blockchain.

What are Cryptocurrency Dividends?


Defined as the share of net profits earned by a corporation and then paid to their shareholders at the end of each year. This is no different in the world of digital finance.

Anyone who owns a portfolio is inherently a shareholder for the cryptocurrency that he owns, which means they qualify to receive dividends at the end of each fiscal year.

To generate revenue, there must be some sort of service provided. But, to generate dividends, the cost of these services must be lower than the revenue throughout the year. The costs of Blockchain’s operations are made up of the cost of the services it provides. The function of cryptocurrencies is, among others, to provide a service to its users outside of the Blockchain and can, therefore, bring in more value to it.

So, cryptocurrencies can be grouped into two different categories according to whether their revenue comes from inside or outside of the Blockchain.


The Cryptocurrencies with the Best Dividends


The ranking of the following cryptocurrencies is based on their market cap as of February 6th, 2018.

  • NEO (Chinese Ethereum) – Ranked number 8 in terms of its market cap, NEO is considered the cryptocurrency that redistributes the most dividends. This digital currency offers services such as fundraising for startups. However, NEO distributes its dividends in a different currency: Gas. Now, Gas is trading at about $34.20, as opposed to NEO, which is trading at $92.30.

  • XEM – The revenue from the 10th cryptocurrency, in terms of market cap, comes from its transfer fees, which amount to 0.1% of the transaction. To be able to benefit from these dividends, the first computer to verify a transaction must have at least 10,000 XEM in their portfolio.

  • OmiseGo – Ranking 24th on the list, OmiseGo makes most of its revenue for transaction fees that are around 3.65%. It is estimated that each token should return a dividend of about $8 USD this year.

  • Binance Coin – 28th on the list, Binance redistributes the transaction costs of 0.1%. Users can further reduce this fee by paying Binance outside of its platform. The discount for the first year is 50%, the second year is 25%, the third is 12.5%, fourth is 6.75% and by the fifth year, transaction fees are 0%.

  • DigixDAO – This currency ranks 39th on the list and offers two different tokens to its users. There is the Digix Gold Token (DGX), which is backed by gold prices and the DigixDAO, which is reserved for its shareholders. DGX transactions are taxed at 0.13% and then the dividends are shared quarterly.

  • Augur – This currency ranks 39th and proposes variable dividends based on a voting system and predictions about the market. It is advised that you use their online tools for this calculation.

  • KuCoin - 40th on the list, KuCoin offers its users daily dividend payment. These dividends correspond to the distribution of 50% of the transaction costs that are collected throughout the day.

  •    Komodo – Ranking 48th, users can benefit from the 5% dividends collected from transactions by keeping their KMD tokens in a portfolio where they can be transferred from.

  • ARK – Ark comes in at 50th on the list. It is known for its “SmartBridge” technology, which is the payment method based on a voting system. With ARK, you have as much say in the market as you have tokens. The profits are then redistributed between Masternodes, after being elected by their voters.


There are, of course, other cryptocurrencies that did not make the list but do offer dividends such as PIVX, TenX, NXS, Particl, TaaS, QuantumProject, Edgeless, Counterparty, Neblio, etc.

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