How To Make Money With Cryptocurrency: A Beginner’s Guide
Cryptocurrencies have taken the world by storm. Bitcoin, the first and most well-known cryptocurrency, has seen its value skyrocket in recent years. Over the past twelve months, its value has increased from $1,000 to over $15,000. And as other cryptocurrencies emerge, such as Ethereum and Litecoin, their values are also on the rise. With so much money to be made in cryptocurrency, it is no wonder that more and more people are becoming interested in it.
But what exactly is Cryptocurrency has exploded in value and popularity in recent years. While Bitcoin is the best-known cryptocurrency, there are now many different types, each with its own unique features and benefits. If you’re looking to get into the cryptocurrency game, here’s a beginner’s guide on how to make money with cryptocurrency.
Can You Make Money With Cryptocurrency?
Yes, you can make money with cryptocurrency. Given the inherent volatility of crypto assets, most involve a high degree of risk while others require domain knowledge or expertise.
Trading cryptocurrencies is one of the answers to how to make money with cryptocurrency. Although the daily average volume of cryptocurrency trades is just 1% of the foreign exchange market, there is a lot of volatility in the crypto market. So there is the potential to do short-term trades.
Even though the crypto market is relatively small at the moment, there is great growth potential. In addition to some of the most well-known cryptos like:
Bitcoin
Ethereum
Cardano
AMP
Dogecoin
ElonGate
Iota
Moonshot
Polygon
Safemoon
Stellar
Tether
VTHO
Shiba Anu
Likewise, there are a host of crypto buying platforms like Binance, Coinbase, and Robinhood — so you have plenty of options when it comes to making money with crypto.
Essentially, there are quite a few methods for you to make legitimate money with cryptocurrencies, other than the obvious way of trading.
Let’s take a look at 6 strategies for how to make money with cryptocurrency.
6 Strategies for Making Money with Crypto
If you are wondering how to earn money with cryptocurrency, look no further! Strategies for making money with crypto rely on three mechanisms:
𝗙𝗶𝗿𝘀𝘁𝗹𝘆, you can invest or trade in the crypto exchange market. You can do this without owning any crypto yourself, like investing in gold on the stock market.
𝗦𝗲𝗰𝗼𝗻𝗱𝗹𝘆, you can use the coin you already own to stake and lend coins to the system or other users.
𝗧𝗵𝗶𝗿𝗱𝗹𝘆, you can participate in the blockchain system by mining or receiving coin rewards for work done in the system.
Based on these three mechanisms, here are the six strategies for making money with cryptocurrency:
- Investing
- Trading
- Staking and Lending
- Crypto Social Media
- Mining
- Airdrops and Forks
Each of these strategies is explored in more detail below.
1. Investing
Investing is the long-term strategy of buying and holding crypto assets for some time. Crypto assets are generally well suited to a buy-and-hold strategy. They are extremely volatile in the short term but have tremendous long-term potential for growth.
The investing strategy requires you to identify more stable assets that will be around for the long term. Assets such as Bitcoin and Ethereum have been known to show a long-term price increase and can be considered a safe investment in this regard.
2. Trading
While investing is a long-term endeavor based on the buy-and-hold strategy, trading is meant to exploit short-term opportunities.
The crypto market is volatile. This means the prices of assets can increase and decrease in price dramatically over the short term.
To be a successful trader, you need to have the proper analytical and technical skills. You’ll need to analyze market charts on the performance of the listed assets so that you can make accurate predictions about price increases and decreases.
When trading, you can either take a long or short position, depending on whether you expect the price of an asset to rise or fall. This means you can make a profit regardless of whether the crypto market is bullish or bearish.
3. Staking and Lending
Staking is a way of validating crypto transactions. If you are staking, you own coins but you don’t spend them. Instead, you lock the coins in a cryptocurrency wallet.
A Proof of Stake network then uses your coins to validate transactions. You receive rewards for doing so. In essence, you are lending coins to the network. This allows the network to maintain its security and verify transactions. The reward you receive is similar to the interest a bank would pay you for a credit balance.
The Proof of Stake algorithm chooses transaction validators based on the number of coins you have committed to stake. This makes it much more energy-efficient than crypto mining and does not require you to own expensive hardware.
You can also choose to lend coins to other investors and generate interest on that loan. Many platforms facilitate crypto lending.
4. Crypto Social Media
Multiple blockchain-based social media platforms will reward you for creating and curating content. You are often rewarded with the native coin of the platform.
5. Mining
Cryptocurrency mining is how to earn money with cryptocurrency like the original pioneers. Mining is still a crucial component of the Proof of Work mechanism. It is where the value of a cryptocurrency is generated.
If you mine a cryptocurrency, you are rewarded with new coins. To mine, you need technical expertise and upfront investment in specialized hardware.
Running a master node as a subset of mining. It requires expertise and significant upfront and ongoing investment.
6. Airdrops and Forks
Airdrops and free tokens are distributed to generate awareness. An exchange might do an airdrop to create a large user base for a project. Being part of an airdrop can get you a free coin that you can then use to buy things or to invest or trade.
A blockchain forks because of changes or upgrades in a protocol that create new coins. If you hold coins on the original chain, you will typically get free tokens on the new network. This means you get a free coin because you were in the right place at the right time.
