Want to make some cash with cryptocurrency? Cryptocurrencies have become another method for people to invest and rake in returns from activities such as holding native coins or participating in mining.
As cryptocurrencies become popular, reports of people who have made huge profits and losses keep rocking the headlines. To get more out of cryptocurrency investing, it is important to understand the target coins and the preferred method of making money from them.
This post is a closer look at how to make money with cryptocurrency, outlining the best methods that people can use to rake in profits.
Buying and Holding Crypto Coins
This is one of the easy methods in terms of how to make money with cryptocurrency. The process involves buying the preferred coin and holding until the price appreciates. Then, sell the coin for a profit.
The method is among the strategies that many investors in cryptocurrencies use. For example, when an ICO is announced, people buy the native coins in large quantities because the price is low. Then, they sell them for a profit when the tokens hit the market, and the price appreciates because of demand.
Some of the digital coins that delivered high returns to investment to holders include Bitcoin and Reddcoin. Consider Bitcoin (BTC). A person who bought BTC in 2009 when the price was under one dollar and sold in January 2018 when the price hit the peak of $19,000/BTC enjoyed more than 1,899,900% return in investment. Now this is over a 9-year period… 9 years. This shows that holding long-term helps to make money in any space including crypto – crypto is not a get-rich-quick-scheme.
When targeting to make money from holding, it is important to follow the following three tips:
- Select high potential cryptocurrencies
- Be patient before selling the coins to enjoy high profit
- Store the coins safely preferably in cold storage such as a Ledger Nano S wallet
Buying and Holding Cryptocurrencies that Pay a Dividend
Another smart way of earning money from cryptocurrencies is buying and holding the coins that pay dividends. Some cryptocurrencies, especially those that use a proof of stake (PoS) consensus algorithm, encourage people to buy the native coins and holding them to secure the network.
In return, the coin holders are paid a dividend. This method was thought to be a better way of securing the crypto network as coin holders would find it hard to conspire to harm the network holding their investment. Some of the cryptocurrencies that will pay a dividend for holding native coins include:
How to Make Cash with Cryptocurrency Trading in the Exchanges
As the popularity of cryptocurrencies continues growing, trading them in the exchanges has become one of the top methods of earning money from them. The cryptocurrency exchanges are trading platforms that operate like the forex markets but deal with digital coins as opposed to fiat currencies.
To make money with cryptocurrency trading in the market involves buying the coins when the price is low and selling when the price is up. Some of the top trading platforms you can consider for trading cryptocurrencies include:
Note that like the forex trading platforms, the crypto exchanges require some understanding about the market dynamics. This means developing skills to interpret the market trends, following market indicators, and selecting the right trading pairs.
Traders are also required to understand that cryptocurrencies are highly volatile and the prices can move in either direction. Therefore, do not simply look at the possibility of making profit. It is also possible to incur a loss if the price moves in the opposite direction!
Make Money Though Cryptocurrency Lending
Cryptocurrency lending is an easy method of making passive income depending on the coin you hold. The process involves lending cryptocurrencies to users and earning an interest when they repay.
The secret to making more profit is ensuring you select the right lending companies/ platforms and only working with trusted clients. This reduces the danger of the borrowers failing to repay your funds.
Some of the top cryptocurrency lending platforms include:
Make Cash Blogging on Digital Coin Websites
As cryptocurrencies become even more popular, more people are searching for related content to make the right investment decision. If you are a blogger in the industry, you can make money blogging about cryptocurrencies.
The main target should be trying to understand what people are looking for and providing the right answers. Consider answering key questions such as “Can you make money with cryptocurrency?” and “What are the latest trends in the crypto industry?” to help people getting into the industry.
You could also provide guides on trading, creating digital tokens, or dealing with complex topics such as cryptocurrency regulations. A blog that provides insights on the current crypto regulatory environment is likely to attract interest from readers.
If you are generating highly valuable content, it is possible to monetize it for cryptocurrencies by only allowing full access to users for a fee. You could even charge a subscription for such access. Some of the top blogging sites to consider include Steemit and Yours.
Ways to Make Money with Cryptocurrency Mining
Cryptocurrency mining is the process of finding new blocks and adding to the respective network’s public ledger for a reward. The process is used to help cryptocurrency networks release new coins into circulation and protect the respective network from a 51% attack.
The process of mining depends on the consensus algorithm being used by the network of the targeted coins. If you target to mine coins from a network using the proof of work (PoW) consensus algorithm such as Bitcoin and Litecoin, you will be required to buy mining equipment such as ASIC and supporting hardware.
You also need to consider the associated cost of power to run the mining rig. If you find the cost of using ASIC too high, it is still possible to make money by joining a mining pool. These are companies that pool together the mining power of different users to raise the chances of confirming new blocks.
Because mining using ASIC equipment is very expensive, some cryptocurrencies adopted resistant consensus algorithms such as scrypt proof of work. Therefore, you can mine cryptocurrencies such as Monero, Zcash, and Ethereum Classic using GPU.
Remember to carefully evaluate the mining pools to avoid scammers. Check the reputation of the pool, confirm that they pay members, and make sure there are no hidden charges. Some good mining pool options include AntPool and BTC.com.
Raise Funds Though Cryptocurrency Arbitrage
One characteristic of the cryptocurrency niche is that it is a free market beyond government control. This is one of the reasons why the prices of cryptocurrencies are not regulated and therefore are sold in different platforms at varying rates.
To take advantage of this price differences, you can use crypto arbitrage. This involves comparing the price of a coin and buying from exchanges selling at lower rates and selling in others offering higher rates.
Note to also check the cost of running transactions in such exchanges to avoid all of your profit paying the cost of transactions. Consider using only the exchanges such as Binance and KuCoin that have low transaction charges for traders.
Make Cash Building Cryptocurrency Projects
Another method of making cash with cryptocurrencies is building crypto projects. Unlike in the past when creating a cryptocurrency project was complex, the process has been simplified so much that even those with little technical expertise in blockchain can issue their own tokens. Here are some of the projects that you can use to make a profit with cryptocurrencies:
- Create your own crypto token: If you have a project or business and want to raise funds to support its growth, it is possible to issue your own token and sell in the market. One of the platforms that helps businesses to create tokens is Ethereum.
- Build a decentralized application (DApps): As the blockchain niche keeps growing, the driving force is the applications that people create. For example, you can join the Ethereum platform as a developer of decentralized applications (DApps).
- Note that creating DApps is a complex process that can only be done by people with an understanding of computing technology and Blockchain. Indeed, many cryptocurrency project founders such as Vitalik Buterin are experts in programming and decentralized technologies.
- Run an ICO (Initial Coin Offering): ICOs are fundraising events for businesses. The process involves creating tokens attached to the entire business or a specific section before releasing them into the market.
Some of the top ICOs that have helped businesses to make significant money include NXT and IOTA.
The Final Take
The Blockchain industry has opened doors for people to make money in different ways using cryptocurrencies. The good thing about cryptocurrencies is that they are diverse and any person with interest can make some cash. Experts in computing can make money building decentralized apps, while investors can stake major coins for a reward.
Even those with no technical skills in computing can still write or work to get paid with cryptocurrencies. No matter the method you select, it is important to follow the best practices such as keeping the coins secure in cold storage and not revealing private keys to third parties.