Making money with cryptocurrency: easier than you think!
Photo by RODNAE Productions on Pexels
One of the biggest myths about cryptocurrency is that it’s only available to wealthy people or institutions and not average, everyday folks like you and me. The common wisdom goes that if you’re not Mark Zuckerberg or Bill Gates, you’re out of luck when it comes to making money with cryptocurrency . . . and that just isn’t true! The truth is that anybody can start making money with cryptocurrency — you don’t have to be an insider or have an extra special education to participate in this exciting new financial frontier.
What is cryptocurrency?
Before we get into how to make money with cryptocurrency, we should first discuss what it is. Cryptocurrency is digital currency that can be sent from one user to another on a decentralized network. Instead of using banks or intermediaries to verify transactions, cryptocurrencies use cryptography for security and control of each individual unit of currency. Cryptocurrency relies on blockchain technology for creation and transfer of currency units (cryptocoins).
Making money with cryptocurrencies can be frightening for the average person, but I’m here to assure you that it doesn’t have to be costly. The truth is that even a tiny investment can get you going.
Let’s look at a few of the ways individuals have made extra money.
1. Buy and hold
No, it’s not as sexy as day trading; that’s for sure. But if you do want to own a bit of bitcoin or other cryptocurrencies, but don’t want to deal with exchange fees and volatile markets, buying and holding might be just what you need.
Bitcoin grew in value from about $5 per coin in 2013 to more than $16,000 per coin in 2017— but those who held on to their coins through that period reaped huge rewards.
Holding is a practical, comparatively low-risk approach that has the potential to provide significant gains.
All you have to do is decide which cryptocurrency you want to buy (ideally when its value is low, hold onto it, and then sell it when it reaches a price you find appealing.
But keep in mind that the greater your investment, the greater the risk.
This method of gaining money with cryptocurrency is long-term and comparable to regular investing.
This method is easy and slow.
2. Loan your cryptocurrency
As with lending money at a fixed interest rate, you can also make money with cryptocurrencies by lending them out. Which cryptocurrency can be lent or used as collateral depends on the platform you choose.
Users can choose between centralized and decentralized finance platforms for lending cryptocurrencies. With centralized platforms, operations are managed and supervised by a single entity, and user identities are confirmed.
While decentralized systems are managed by computers, they give users some degree of autonomy. Since all transactions on the blockchain are publicly available, it is up to the community to verify the transactions since these operate on that platform.
Regarding interest rates, you can expect that they will either be fixed or variable. A variable interest rate changes in accordance with changes in the market, whereas a fixed interest rate is a consistent rate applied to the loan amount.
This method is easy and fast.
3. Buy and sell
The majority of cryptocurrency traders earn their money through trading digital assets. The concept is straightforward: you purchase cryptocurrencies for a bargain price and then quickly sell them.
If the value of the coin has increased, you can make an instant profit. And if it decreases, you can always buy it back at a lower price and wait until the value rises again.
If you can’t devote your time to buying and selling, you can also automate your trading by using bots that trade cryptocurrency. These bots keep a close eye on the market and can be set up to buy or sell cryptocurrency when a predetermined condition is satisfied.
For example, you might want to set one bot so that it buys every time Bitcoin’s value reaches $8200. Or another bot might take profits off the table when Bitcoin climbs above $10k per coin. You could even create a bot that sells all of your Bitcoins when they hit $25k each. This method is fast with a medium difficulty!
Things to keep in mind
Fear, uncertainty, doubt, sometimes known as FUD, and the fear of missing out, or FOMO, are what most people advise against. In the cryptocurrency community, they aren’t just amusing sayings; they need to be taken seriously. You can consider these as signs that you are not as well-informed as you ought to be. For this reason, both newcomers and seasoned members of the cryptocurrency community are frequently urged to conduct their own research.
Another thing to keep in mind is the abundance of online resources available to you for assistance with cryptocurrency. For instance, the Fear and Greed Index can be used as a kind of social thermometer to assist direct traders’ trades.
Using cryptocurrency to make money depends on how skillfully you play your cards. Contrary to popular belief, starting a cryptocurrency investment or trading business doesn’t have to be expensive, and the time is always right to start.
You don’t need much to get started in investing in cryptocurrency — some cash, an internet connection, and interest. You can even do it as a side hustle while working another job! And if you don’t want to take any risks at all, there are plenty of other ways for someone without any initial cash outlay to still earn cryptocurrencies.
If you want to learn all about cryptocurrencies; how they work, how their value is determined, what they are used for, etc…, then download this free eBook.
Making money with cryptocurrency: easier than you think! was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.