Cryptocurrencies have become popular financial assets that were valued at over $3 trillion at their peak. As a result, the number of people interested in cryptocurrencies has been growing. Recent studies estimate that there are over 300 million crypto holders globally, and the number is estimated to hit 1 billion in 2023. In this article, we will look at how to make money with crypto.
Crypto Investing
Investing is the process of buying and holding an asset with the goal of making money when its price rises. Crypto investing is commonly known as “hodling” and is characterized by acquiring one or more cryptocurrencies and then waiting for their value to increase.
Investing in cryptocurrencies has its pros and cons. The main benefit is that popular digital coins have rallied sharply in the past decade. BTC has rallied from less than $1 in 2009 to a peak of near $70,000. It has outperformed popular indexes and assets like the S&P 500, Dow Jones, and gold in the past decade.
The only drawback to investing in cryptocurrencies is their volatility. Historically, coins like Dogecoin and BTC have been among the most volatile assets. For example, ETH soared to almost $5,000 in 2021 and then crashed to $800 in 2022.
Investing in cryptocurrencies is an easy process. You need to first create an account with a good crypto exchange, make your deposit, and then buy your preferred coin. You can then decide to store it in a cold or hot wallet.
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Crypto trading
Crypto trading is another popular method of making money with crypto. It involves buying and selling cryptocurrencies within a few minutes, hours, or days. Crypto traders use the tools that centralised exchanges like XBO and decentralised exchanges like Uniswap and PancakeSwap offer.
Cryptocurrency trading involves the use of leverage to maximize profitability. Some exchanges have also introduced assets known as leveraged tokens, which are ERC20 crypto derivatives. Additionally, one can take long and short positions when trading, meaning that they can make money regardless of market conditions.
Cryptocurrency traders use different strategies to take advantage of the market. For example, some use algorithmic trading strategies that take advantage of robots. Others use scalping, arbitrage, and swing trading approaches.
Crypto Staking
Proof-of-Stake (PoS) cryptocurrencies like Avalanche and Cardano use validators to verify transactions. As a result, these networks have a feature known as staking, where you lend your coins to the network to facilitate this validation. You will then receive a payment every month for doing this.
Staking is a relatively easy process. Simply buy a PoS cryptocurrency from a credible exchange that offers staking services. After this, you will receive a small staking reward every month. The chart below shows the rewards offered by some of the leading PoS cryptocurrencies.
Source: stakingrewards.com
Liquidity provision or yield farming
Decentralized Finance (DeFi) is an important concept in the cryptocurrency industry. It is revolutionizing the financial industry by making it possible for entities to be governed by decentralized autonomous organizations (DAOs).
These platforms require people to provide them with liquidity. They then use this liquidity to provide their services, which are backed by smart contracts. For example, platforms like Aave use these funds to lend to other people. They then pay a reward to the people who provided this liquidity.
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Mining
Another way of making money in crypto is mining. This is the process of producing new coins using advanced computers that solve complex mathematical calculations. Some of the top proof-of-work coins that you can mine are RavenCoin, Kadena, and Ethereum Classic. To mine, you will need a good computer with fast processing power.
Move-to-earn
You can also make money in crypto by just doing simple exercises like walking, running, and jogging. Some move-to-earn platforms like StepN and Sweatcoin use GPS to track their users’ steps and then compensate their users. These users are paid using GMT and SWEAT coins, which they can sell in crypto exchanges.
NFT trading
Non-Fungible Tokens (NFTs) became extremely popular in 2021. They make it possible for people to sell blockchain products that cannot be replicated, on platforms such as OpenSea and Magic Eden. While the volume of NFTs traded has dropped, there are still enthusiasts who are making money trading these products.
File storage
Another way to make money is to share the free storage in your computer, smartphone, tablet, and data centers. Blockchains like Filecoin and Theta make it possible for you to share your storage and then earn money when it is used by other companies and individuals. Participants are then paid in tokens like FIL and THETA, which they can sell at crypto exchanges.
Summary
There are numerous ways to profit from cryptocurrency. Some of these methods, such as trading and investing, are extremely risky and necessitate extensive training. Before embarking on such a risky venture, ensure that you fully understand how cryptocurrencies work and how blockchain technology works, as well as that you employ the necessary risk management strategies.