How to Legally Make Money with Cryptocurrency
So you’re interested in getting into crypto and want to turn Bitcoin into cash. You’ve heard all of the success stories – people making millions of dollars by getting in early and selling when the prices are high. Or perhaps you have friends who make a steady income by mining cryptocurrency.
Everyone gets into the cryptocurrency field to make money, but not all end up doing that. A lot of people either simply give up along the way, or lose money because they do not properly understand how to make money with cryptocurrency. buy primers
The cryptocurrency industry is still in its early stages of development. As the crypto-assets increase in price, more people come into the industry. These newcomers are always trying to figure out how to make money from cryptocurrency.
The good news is there are many ways of making money with cryptocurrency. Since 2011 there has been consistent growth in developer activity, social media activity, and the number of start-ups created in the cryptocurrency industry.
Here we take a closer look at how to make money with cryptocurrency.
Table of Contents
- Can You Make Money With Cryptocurrency?
- 6 Strategies for Making Money with Crypto
- Other Crypto Considerations
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 more well-known cryptos like:
- 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:
- Staking and Lending
- Crypto Social Media
- Airdrops and Forks
Each of these strategies is explored in more detail below.
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.
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’s 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.
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.
Other Crypto Considerations
Knowing and understanding the strategies above will be really helpful — if you have a good grasp of the concepts around cryptocurrency. But if you aren’t clear on some of the basics, like understanding how crypto gains value, how to read the crypto charts, what an ICO is, or how to pay taxes on your crypto gains, you might want to take a beat before diving in.