A lot of people have been lucky and smart enough to take advantage of the opportunity presented by bitcoin and other cryptocurrencies. People have made a lot of money by making the right investment in cryptocurrency. Cryptocurrency investing is actually not as complicated as a lot of people think, once they are ready to put in the required efforts and patience.
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What is Cryptocurrency? A Brief History of Crypto
Satoshi Nakamoto was one of the first people to bring public attention to cryptocurrency. He published the original bitcoin whitepaper in 2008, and the cryptocurrency industry has witnessed so much growth over the years. At the height of 2017 bitcoin’s growth, “How to buy Bitcoin” was ranked as the third highest “How to” search on Google.
As of today, the market capitalization of cryptocurrency market is in excess of $450bn. And over the past couple of years, bitcoin and cryptocurrency accounts and transactions have seen an average of 60% per annum. Cryptocurrency has created wealth for people over the past decade at a rate that has never seen before in history, especially for its early adopters and investors.
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How to Make Money with Cryptocurrency
Although, a lot of gains have been made within the cryptocurrency industry, the industry is still at the initial stages of development. The crypto space evolves in circles, and a cycle begins with an increase in the price of crypto assets. This draws the attention of traditional and social media alike, and the attention generally draws more people into the crypto space creating new codes, ideas and projects.
So far, we have seen 4 cryptocurrency cycles that peaked in 2011, 2013, 2017, and 2021. And despite the fall in price at the end of each cycle, the development has continued to witness consistent growth. Each cycle peaks with a technological breakthrough and rise in price of cryptocurrency,
The long-term price appreciation is likely to be sustainable by increased interest in cryptocurrency as an asset class by institutional investors.
Making Money with Cryptocurrency: Six Strategies to Consider
There are many different ways to make money with cryptocurrency and generate income in the crypto space. Given the inherent volatility of crypto assets, most involve a high degree of risk while others require domain knowledge or expertise.
Invest Cryptocurrency is an automated platform that allows you to invest in cryptocurrency and make enough money to build your wealth. Investing in cryptocurrency is usually associated with taking a long-term view by buying and holding assets for some time. Crypto assets are generally well suited to a buy and hold strategy.
Cryptocurrency are very volatile in the short term, but have a lot of long-term potential. According to research done by investment firm Fundstrat, majority of bitcoin and cryptocurrency gains come in the 10 best trading days of the year. In fact, missing these days every year between 2013 and 2018 would result in a negative 44% annual return.
Because of this inherent volatility, long-term investing is one of the better approaches to make money through cryptocurrency. As with any investment, crypto should be considered in the portfolio context based on your investment goals and risk tolerance.
Trading cryptocurrency for profit
The main difference between trading and investing is usually the time it takes. While investing can be considered long-term, trading is meant to exploit short-term opportunities. Trading cryptocurrencies requires certain skills and experience. Specifically, the ability to read charts and understand technical indicators. An in-depth knowledge of blockchain and different projects, however, is not required. This way of making money is more about understanding the price action in the historical context and using that to predict future prices, often on a short-term basis.
Investors can either buy and sell actual crypto coins or use derivatives in order to make money, such as a contract for difference (CFD). When you trade crypto using CFDs, you speculate on the direction of the underlying asset’s prices without actually owning it.
You can either take a long or short position, depending on whether you expect the price of an asset to rise or fall. Therefore, CFDs give you an opportunity to profit from both bull and bear price movements in underlying securities.
Trade Bitcoin to US Dollar - BTC/USD CFD
CFDs allow trading on margin, providing you with greater liquidity and easier execution. You should also note that CFDs are a leveraged product; therefore, profits, as well as losses, are magnified.
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Staking and Lending
Staking and lending are quite similar and allow investors to make money with cryptocurrency and altcoins. Staking is simply a process of locking coins in a cryptocurrency wallet and receiving rewards to validate transactions on a Proof of Stake (PoS) network.
The PoS algorithm chooses transaction validators based on the number of coins they committed to stake. PoS does not require expensive hardware and is much more energy-efficient. Another option which allows investors to stake coins while holding them in a secure offline wallet is possible, and this is known as Cold staking. Tether, NEO and Stellar (XLM) are some of the coins you can stake.
When investors stake, they are lending coins to the network. This is needed in order to maintain its security and verify transactions. Another way to make money with crypto is to lend coins to other investors and generate interest on that loan. Many platforms facilitate crypto lending, including exchanges, peer-to-peer lending platforms and decentralized finance (DeFi) applications.
Crypto Social Media
The world’s first blockchain-based social media platform known as Steemit was launched by Dan Larimer in 2016. The platform rewards users with its native coin, STEEM, for creating and curating content. Steemit ran into some troubles after 2017 and the number of users has been declining since. However, multiple other platforms have been built on the initial idea of rewarding users for creating content. Narrative, Sapien and Scorum are some of the examples.
Mining is a crucial component of the Proof of Work (PoW) consensus mechanism and is one of the oldest ways of making money with crypto. It is a process of verifying transactions and securing a PoW network. Miners are rewarded with new coins, through block rewards, for performing these functions. In the early days of Bitcoin, mining could be done on a desktop computer but today requires specialized mining hardware.
On the subject of supporting a network, running a masternode can also be profitable. Masternodes are wallets that host a copy of the entire network. Both of these methods require technical expertise and significant upfront and ongoing investment.
Airdrops and Forks
Airdrops and forks are the crypto equivalent of being in the right place at the right time. Airdrops are free tokens, usually distributed by an exchange to generate awareness and create a large user base for a project. Forks are essentially changes or upgrades in a protocol that create new coins. When a blockchain forks, holders of the coins on the original chain typically get free tokens on the new network.
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