Today, we are well-versed with the terms cryptocurrency and bitcoin, but there was a time when most central and federal banks nullified the idea of having virtual currency completely. Despite all the initial challenges, the crypto industry had seen significant growth since 2008, when Satoshi Nakamoto published the original Bitcoin whitepaper. The last decade has been great for cryptocurrency.
Everyone’s interest in cryptocurrency peaked in 2017, and the most searched Google phrases were ‘how to buy BTC,’ ‘how to invest in cryptocurrency,’ ‘how to earn money from cryptocurrency, and so on.
Crypto offers a highly volatile market with continuous price fluctuations. However, the market has increased from $10bn in 2013 to $237 in 2019. In addition to that, there has been a 60% annual growth in Bitcoin unique transactions and accounts.
The crypto space has been offering steady gains since 2009 to its early investors and adopters. People like Chanpeng Zhao or Winklevoss twins have sued this opportunity and invested their crypto earnings into building successful businesses. Changpeng Zhao created Binance, which is the largest exchange for crypto in the world. The Winklevoss twins, on the other hand, founded the Gemini exchange.
There are many more crypto success stories. For example, Valery Vavilov started a bitcoin miner, Bifury, with the early interest that he received in the blockchain. His company now sells and produces Bitcoin mining hardware and generates a revenue of over $400m. Anthony Di Lorio is amongst the early financers of Ethereum blockchain development projects. He has also invested in crypto projects like Zcash, Vechain, and Qtum.
How to make money with cryptocurrency?
To make money from cryptocurrency, you can try the following ideas:
- Invest in long-term cryptocurrencies (buy bitcoin, or buy ethereum, etc.)
- Trade cryptocurrencies for profit using CFD (forex brokers)
- Make money using lending and staking services
- Use crypto social media to earn money as a content creator
- Earn money as a crypto miner
- Get airdrops and forks (Airdrops are free coins that are sent to your wallet.)
Investing in cryptocurrency can still make investors skeptical, mostly because it is still not regulated in several currencies. However, if we look at the statistics, crypto is one of the fastest-growing financial markets. Yes, you might have skipped the boat for making early gains; this market still has plenty to offer as it is still in its initial stage. For example, the internet was developed in 1969, but the World Wide Web was not introduced till 1990. If we consider these comparisons, crypto is just over a decade old. There is still so much potential for development.
A venture capital form recently asserted that the crypto space grows in cycles. The cycle begins with the price rise of crypto assets, generating traditional media and social buzz. The media’s attention and excitement act as a pull, and more people join the race. They contribute in terms of ideas, new projects, new codes. This ultimately makes way for the next cycle.
As of 2021, we have witnessed three cycles of cryptocurrency – 2011, 2013, and 2017. Even though each cycle saw a price fall, the growth in social media activity, the number of start-ups, and developer activity has been steady. The next cycle will likely peak when there is advancement in technology.
As institutional investors are becoming more willing to invest in cryptocurrency, we predict that long-term investment in the crypto space will be beneficial. If we compare trades made in the crypto space with those made in the Forex market, it is just one percent of that. Even though the market has a capitalization of over $200bn, its global equity market fraction is still just $71tr (2019), and the global debt market is a little over $100tr (2018). Global real estate should also be considered here.
Six Strategies You Should Consider to Make Money With the Help of Cryptocurrency
There are a plethora of strategies that you can adopt if you want to make gains using cryptocurrency. One must keep in mind that the crypto space is the most volatile compared to other financial assets and commodities. Therefore, you must keep an eye on the news and trends continuously. Here are 6 strategies that you can use to make profits in this world:
Invest in Crypto
When we talk about investing, we refer to long-term investments by holding an asset for a long time. Generally, the buy and hold strategy is the most suited for crypto. In terms of the short term, crypto can be very volatile but shows tremendous potential in long-term investments. The investment firm, Fundstart has done extensive research showing that higher gains with Bitcoin can be expected when trading it 10 best trading days within a year. Missing these days, in fact, can decrease your gains by 44%.
This proves that cryptocurrency investment should be long-term. Also, it would help if you considered crypto in the portfolio context. It would help if you looked at your risk tolerance and investment goals before initiating anything.
Trade crypto for profit
Many believe that trading and investing are synonymous when, in fact, these two are different. The main difference here is the time horizon. Investing is done for a longer period of time, while trading is all about making the best of short-term market fluctuations. If you plan to trade crypto, you need to level up because it requires certain experience and skills.
One doesn’t require an in-depth knowledge of how the blockchain and related projects work, but you have to be a master of reading charts and understanding technical indicators. If you wish to trade, you must focus more on price action and relate it to its historical context. This will allow you to predict the future movement of crypto prices.
Online cryptocurrency trading can be done by directly buying and selling crypto coins or using its derivatives like CFDs. CFDs allow you to focus on the underlying asset’s price direction, which is comparatively easier than chasing crypto coins directly.
You can either take a short or a long position based on whether you expect the asset’s prices to fall or rise. CFDs are favored by many because they allow you to profit irrespective of whether the market is bullish or bearish.
Another benefit of trading CFDs is that it allows you to trade on margin, thus, offering greater liquidity and smoother execution. One thing that you need to keep in mind is that CFDs are leveraged products. This means that both profits and losses will be magnified.
Lending and Staking
These two ways are quite similar, and investors can make money with the help of altcoins. Staking refers to the act of locking coins inside your crypto wallet and subsequently receiving rewards that are used to validate your transactions of the PoS (Proof of Stake) network. You are not required to mine coins, but the PoS algorithm is responsible for choosing transaction validators. The basis for this selection is the number of coins that can be committed to the stake. PoS is energy-efficient and does not need expensive hardware. Cold staking is another option that allows investors to stake while keeping coins in an offline wallet. You can stake NEO, Stellar (XLM), and Tether.
Staking and lending happen simultaneously. While you are staking, other investors are lending crypto to the network. This is done to verify transactions and to maintain security. You can also make money by lending your crypto to other investors who will pay you interest for your asset. You will find several platforms where crypto lending can be found.
Crypto Social Media
The last two years have taught us how to make a profit using social media platforms. If you have skills and knowledge, you can make a profit with it in the virtual world. Dan Larimer, in 2016, launched the first blockchain-based channel, Steemit, on the social media platform. Users get rewarded with their domestic currency for creating content on it. The platform went into some trouble in 2017 and has witnessed a steady decline in users since then.
Steemit might not have been the best example; it surely turned out to be the pioneer and made others realize the potential of using social media for making money. Now there are other similar platforms as well, like Scorum, that are continuously growing.
One of the oldest ways of making money is through mining. It is an important component of the PoW consensus or the Proof of Work. Through block rewards, miners are rewarded new coins for undertaking these functions. Unlike the early days when mining was possible through a desktop, you now need specialized hardware for it.
Talking about supporting a network, you can make money by running master codes as well. Master codes are nothing but wallets where a copy of your entire network is hosted.
Both ways require technical expertise along with upfront and ongoing investment to support the system. Mining is not something that a layperson can perform.
Airdrops and Forks
You must have heard of the benefits of being at the right place at the right time; airdrops and forks are the equivalents of this saying in the crypto world. Sometimes, an exchange distributes free tokens, known as Airdrops, to generate awareness about their project. On the other hand, forks are changes or upgrades that take place in a protocol while creating new coins. Holders of the original blockchain coin get free tokens whenever the blockchain forks.