By now, you’ve heard enough noise about crypto. You’ve probably heard how several people have slingshot themselves out of abject poverty or financial mediocrity into fortunes and dreamlike success in a few short years – for some, in practically months. You’ve perhaps listened to several online ‘experts’ talk about the glorious potential and sheer lucrativeness of going into the crypto business. You might even know some people who are into crypto but seem way too immersed to talk about it. And, in your mind, you know how big crypto is. Maybe you have already done some digging before finding this blog. So, you really know, and you want your own slice of the ever-growing crypto pie.
Well then, welcome to the right place. Let’s walk you through how to make money with crypto. No, not how to make a living – how to make a fortune with crypto.
Crypto Refresher
Now, why did we call all of the crypto news ‘noise’? Well, news is only ‘noise’ until you understand the factors that are involved. So, let us review a few ways to earn.
What Is Crypto?
- Cryptocurrency is a decentralized transaction medium that is used for trading online. It’s like money, but it’s not controlled by central banks. The most utilized are Bitcoin and Ethereum.
- Crypto runs on a blockchain, the digital ledger of cryptocurrency transactions. Many people buy and sell in cryptos, but their value majorly comes from investments.
- Using cryptocurrency exchange platforms and wallet apps like Binance and Coinbase, users convert centralized currencies like the dollar into crypto and transact as the value of their investment increases.
- In addition, cryptos advance in worth when large corporations announce that they will use them to transact or celebrities promote them. Consequently, they can lose value if companies and celebrities relegate them or if too many people decide to sell them at a certain period.
Now, let’s talk about how you can make money with crypto.
How to Make Money With Crypto
Investing
First off, let’s talk long-term.
You have probably heard of the traditional ‘buy and hold’ market strategy. Well, this is when an investor buys an asset when the price is low, holds it for a time, then sells it for a profit when the demand for that asset is much higher. With this strategy, buying assets when their prices drop is vital. But, you are taking a risk because you don’t know precisely which asset will be profitable. So, basically, you have to hope for the best and make an educated guess. But, if your predictions turn out to be correct, as some people’s Bitcoin predictions ten years ago did, you’ll be the one smiling from ear to ear while others complain about the economy.
So, which coin assets do you buy? Well-entrenched coins like Bitcoin and Ethereum rise and fall in value all the time, but while examining their charts, you will see that these coins have climbed up more consistently than they have fallen for a good while now. Newer coins get introduced into the market at higher values than they can maintain over time. Because people hope to recreate history with these new coins, they buy the coins at high prices and expect that the prices will climb higher, but they usually do the opposite and might even vanish due to a lack of buyers in the market. Thus, it is imperative to read the whitepaper for a coin before investing for the long haul.
Trading
Now, let’s talk short-term.
One should understand the volatile nature of the crypto market. On a short-term scale, you will find that prices increase and decrease unusually. You need to understand the technical and analytical sides to make a profit when trading. Study the market chart to see the performance of different coins, so you will know when and where to buy and sell.
Your ability to use analysis and techniques to know that a coin’s value will increase in a short time will determine your buying, and knowing that the value will decrease will determine your selling. So, you could make a profit whether you decide to sell or buy. It does take some commitment and time to learn the skills necessary to enjoy profits when trading short-term with crypto, but it sure pays off to become a master of the trade.
Boost Your Trading Strategy
To minimize the risks that you take and to maximize your profits, maintain these wise principles:
- Diversify – trade with different coins so that you can spread out your resources and give yourself more chances of success instead of putting all your eggs in one basket.
- Be minimalist – go for a verified exchange with low fees, so you trade for very little.
- Time is essential – please choose when you trade. There are peak periods every 24 hours. So, select your schedule and hit it daily.
- Know what’s new – information is power, so stay on top of the latest news about the market.
- Stop your losses – program stop-loss orders on every trade; many recommend a minimum profit/loss ratio of 2:1.
Lending and Borrowing
Now, what about using your profits to earn more profits by lending? Lending cryptocurrency is a type of transaction which is furnished by an agreement between a lender and a borrower. The borrower signs a contract pledging his or her crypto holdings as collateral to a lender in exchange for other cryptos or cash. In addition, the borrower agrees to pay interest to the lender.
Crypto exchanges like Nexo, SALT Lending, Celsius, and Oasis support crypto lending. The borrower and lender are individuals, not organizations such as banks.
Crypto lending does not come without risks. However, this is one way to make your crypto work for you and make more profit. So, take a dive and see what you can catch.
Staking
The energy taken to run a PoW (Proof of Work) as means of validation in a blockchain is very high. So, PoS (Proof of Stake) has been developed and seems to be a better validation algorithm. Therefore, staking is a means of validating crypto transactions.
To stake, you buy coins that you don’t spend but lock in a cryptocurrency wallet. Your coins are then used to validate a transaction by a PoS network. As a result, the network stays secure, and transactions can be verified. You are then given a reward that can be likened to an interest paid by a bank.
Transaction validators are chosen by the PoS algorithm based on the number of coins you stake, making staking more energy-efficient than crypto mining. Also, you don’t need to buy expensive hardware as the network does the work, although you have to watch out for price fluctuations.
Airdrops
This is not the best way to get free cryptocurrency because an airdrop presents the most significant risk. Many investors avoid it.
Airdrops happen when a developer wants support for new crypto. Thus, they give free coins to get traders to engage the crypto in the market. You can see when airdrops are in progress.
Be wary of any new crypto project. Hackers commonly use airdrops and ICOs (Initial Coin Offerings) as scams. Truth be told, most coins that are issued as airdrops are not very valuable to invest in. So, if you are a newbie, we advise that you stick with known coins such as Bitcoin and Ethereum.
Dividends
You can also earn dividends with crypto. This method works like investing in stocks and bonds.
Dividends are payments that are made to the shareholders of a company. For example, the company makes a profit for the quarter; it splits the profit among owners according to their shares.
You won’t see large payments hit your account if you don’t have a large balance, but tiny drops can become a sea over time. So, you can research the cryptos that pay dividends and buy a share.
Cryptocurrency dividends differ from stock dividends as they pay in tokens instead of cash.
Mining
Crypto mining is what original crypto pioneers did to make the market what it is today. It is based on the PoW (Proof of Work) consensus mechanism to validate transactions and secure a network. Expertise and substantial initial and continuing investments are necessary to start this process, as well as specialized hardware. A desktop computer could have been used when crypto was initiated, but this is not the case anymore.
Crypto Social Media
Creating content for various blockchain-based social media platforms will earn you rewards in the form of native coins and tokens, which you can then trade. Crypto social media engagement is a great opportunity to money with crypto.
Conclusion
So how does one make money with crypto? To make money with crypto right now, we suggest combining the methods we’ve discussed in the way that best suits you. The cryptocurrency space requires willpower and skills, but there is high potential when working and earning with cryptos. We will undoubtedly see new future forms of wealth creation with the use of cryptos. You could even be the person who invents the next big thing in the field.
