Making money from cryptocurrency
is not entirely mainstream as of yet, cryptocurrency has become popular across the globe. So popular, in fact, that it has ranked repeatedly on the top Google search terms for multiple years and the industry sees a steady influx of users. Many of these new users are often curious about the industry because they have heard that there is potentially money to be made from it. Many of the earliest bitcoin investors, for example, made millions from their investment and this has led many to seek out the industry in hopes of doing the same.
There is, however, the question of whether there is actually any money to be made in cryptocurrency and how that can even be done. The simple answer to that is that cryptocurrency, like any other industry, offers a number of avenues for profit-making. Some of these offer high returns while others do not. Some are passive in nature while others require constant effort to yield any rewards. At the end of the day, it is up to you to determine which avenue is the best for your needs. The legitimate ways of making money from cryptocurrency are as follows:
This is arguably the most ‘basic’ way to make money from cryptocurrency. To understand how this works, it is imperative that you understand how cryptocurrencies are created. Cryptocurrencies are created through a process called mining. Mining involves the solution of a complex mathematical equation using specialized computer hardware. It is a very energy-intensive and time-consuming process but after it is completed, a pre-determined amount of cryptocurrency is given to the miner as a reward. Once this cryptocurrency is gotten, it can then be held on to by the owner or sold for fiat currency or for other cryptos.
If you do decide to make money from cryptocurrency mining, you have to consider the costs and benefits beforehand. As previously mentioned, cryptocurrency mining is an energy-intensive task and often requires the purchase of special equipment as well as electricity fees. The reward for mining is based on how much mining takes place and the value of the tokens once they are mined. This means that you might make a hefty profit if the cryptocurrency value is high after mining or you might even make a loss after mining is completed. Decide how much you are willing to spend on mining and how much you will like make after the task is completed.
To save costs, some miners form a pool and divide the energy and financial requirements of mining and split the rewards after. There are also mining companies that will mine for you in exchange for a fee and this can save both time and money for miners. Keep in mind that mining might not be feasible for everybody and some might want to opt for buying cryptocurrency from exchanges or working in exchange for cryptocurrency and then trying to profit in other ways.
You might have heard of cryptocurrency trading, whether online or in real life. People often make wild claims about how you can make a fortune trading cryptocurrency full-time. But do any of these claims have merit? It is important to consider the fact that cryptocurrency is a newer industry and because of this, it is often shrouded in mystery to those outside the industry. In reality, cryptocurrency trading is not wildly different from stock trading, except the assets being traded in are different.
It is possible to make money from cryptocurrency trading. This sort of trading, at its core, simply involves purchasing cryptocurrency assets and selling them when the price appreciates. There are a number of ways to go about this, however.
First, you may decide to trade in a single asset such as bitcoin or diversify your portfolio with multiple crypto-assets. The latter is often touted as a better idea due to the volatility of the market and the security that comes with hedging your bets across the board. After you have decided on the asset you wish to trade in, you have several trading options. Some people decide to HODL (Hold on for dear life) long-term and only sell their cryptocurrency when it has attained a very high price. Others choose to buy and sell assets at a fairly regular rate. If you choose to do this, it is best to decide ahead of time what price you are willing to sell your cryptocurrency for. Also, the more tokens of a particular cryptocurrency you have, the wider your total profit margin. However, this also applies in the event of a trading loss.
There is also the option of margin trading. Margin trading involves trading more cryptocurrency than you have on hand as part of a loan agreement. Exchanges that offer margin trading usually require some amount of digital assets as collateral. For example, you might have only 1 bitcoin but wish to trade 10 bitcoins. An exchange might be willing to loan you the remaining 9 that you need to trade in exchange for collateral and interest in the event that you make a profit. While this means that you can make more profit, a bad trade can mean that you can owe an exchange several times the amount that you have, so proceed with caution.
The cryptocurrency market is known to be rather volatile and so it is best to be careful when investing. Only invest amounts of money that you are willing to risk (there have been stories of people investing their life savings in cryptocurrency to disastrous results). Furthermore, make sure that you trade only on reputable exchanges that have proper security protocols and customer service in place. It has happened in the oast that exchanges have been hacked and all customer funds stolen as a result. Make sure that your funds are not kept on the exchange long-term for security reasons and consult more experienced traders before you begin your investment journey.
As more and more people are leaning towards cryptocurrency investments, there is a growing need for cryptocurrency loan services. For those who wish to invest, this means that they can enter the cryptocurrency market with larger funds than what they have on hand and make larger gains. For those who want to make money from cryptocurrency, it means yet another opportunity to make money. If you want to potentially turn your cryptocurrency into profit without having to do the investing yourself, consider loaning out your cryptocurrency.
Loaning out cryptocurrency involves giving access to your tokens to another party in exchange for a pre-determined interest rate. This interest rate is dependent on the type of token, amount to the lent, and so on. By the maturation date of the loan, you will get both your original amount back as well as interest. There are a number of platforms that offer cryptocurrency loans, with some being centralized platforms and others being decentralized.
Decentralized finance (DeFi) platforms have particularly become popular in the last few years because it allows for these sorts of transactions to be carried out with relatively lower know-your-customer requirements than centralized platforms. This means that the two [arties involved do not need to know each other’s identity but can simply be matched up based on their needs. The use of such platforms also offer an added level of security as the leveraging of smart contracts means that funds are often held in escrow until the conditions of the agreement are met. This makes giving of crypto loans a safe and relatively easy way to earn an income from your cryptocurrency.
In a similar vein as lending out cryptocurrency, it is also possible to earn interest from cryptocurrency by simply depositing it on a number of platforms. Similar to how a fixed deposit account works with a traditional bank, you deposit your cryptocurrency in an account on one of these platforms and then you begin receiving a pre-determined interest. The interest you receive is, however, dependent on a number of factors.
For starters, these platforms typically pay more for some tokens than others. Furthermore, the longer that you keep your tokens on these platforms, the more interest you will receive. If you are already planning to HODL your tokens long-term, this would be a good way to earn interest while you do so. There is also the option of staking your cryptocurrency to further earn interest. Staking involves fixing your cryptocurrency and allowing it to be used for the confirmation of transactions on the blockchain. This often earns investors more interest on whatever platforms they use. Many of these platforms also keep customer funds in cold wallets to eliminate the risks of thefts.
Before you do this, conduct research on the interest rates for each token and time period and determine which is right for you. As a precaution, investors are often advised to invest only smaller amounts or amounts they are willing to risk in the beginning and slowly increase their deposits as time goes on. There is also a risk of fixing your funds in such accounts because should the price of tokens increase, you might be unable to withdraw your funds and take advantage of the price hike. As such, extreme care should be taken before making use of a crypto deposit.
Lotteries have excited for centuries and even those that do not participate are usually aware of how they work: a certain amount of money is staked, either through the buying of a ticket or some other means, and a winner is declared who receives a certain amount of money. Lotteries also exist within the cryptocurrency space, though it works a little differently. Cryptocurrency lottery pools involve a number of individuals staking their cryptocurrency into a community wallet. The cryptocurrency that is kept there is then allowed to accrue interest over a given period of time. Then, a winner within the pool is selected at random and they receive both the principal and the interest.
This is similar to simply staking cryptocurrency to receive interest but because up to hundreds of people are pooling resources together for this purpose, the winner gets even more money than they would have on their own. Another benefit is that there is virtually no risk associated with such cryptocurrency lotteries. In traditional lotteries, the entry fee or cost of the ticket is non-refundable. This means that everyone who does not win such a lottery will not receive even their initial investment in return.
In the case of cryptocurrency lotteries, all those who pool together their tokens are refunded the initial deposit, whether they win the lottery or not. This means that you have nothing to lose financially by participating in such pools. These pools often differ in payment structure as some payout on a daily, weekly, or monthly basis. Whether you choose to participate weekly, monthly, or even on a daily basis, there is a decent chance that you will walk away with some winnings.
Initial Coin Offerings:
No one knows for sure what cryptocurrency or blockchain project will be the next big thing and but it is a good idea to get in early on the action through Initial Coin Offerings (ICOs). ICOs allow early investors to buy the tokens of an upcoming blockchain or cryptocurrency project in the hopes of making a profit when the project takes off. There are hundreds of ICOs on the market at any given time and while some are more promising than others, it would not hurt to invest in a few.
Should you decide to take this route, however, it is imperative that you conduct as much research as possible. It has happened in the past that some ICOs turned out to be a scam.
There are many ways to make money from cryptocurrency, whether by actively working at it on a daily basis or through more passive means. Should you decide to throw your hat into the ring and make a living from cryptocurrency, consider some of our tips above.