How to Make Money on Cryptocurrency?
Anyone who tells you that you will not make a buck by going into the crypto field is hiding lucrative ideas from you. The current market capitalisation of crypto is US$1 trillion, and this value might double before the end of 2022. Hence, many people try to find ways to get rich through cryptocurrency trading and investment.
However, not everyone that has invested in crypto is making money from it. Some people have given up after several trials and errors. But if you want to learn the strategies experienced crypto investors use to make a lot of money from digital coins, pay undivided attention as you continue reading this article.
What is Crypto and How Does it Work?
Crypto, or cryptocurrency, is any form of decentralised digital coin. It is secured by cryptography, meaning that all crypto-based transactions are encrypted. No bank, central monetary authority, or government issues cryptocurrency. For this reason, there is no central control over it. Examples of cryptocurrencies are Bitcoin, Ether, Litecoin, and Dogecoin.
To buy crypto, you must create an account with a platform like Vexel or an exchange like Binance. These digital services allow you to convert your electronic fiat money to Bitcoin and other cryptocurrencies. For example, you can use your debit or credit card to buy Bitcoin on Vexel.
What can you do with crypto? You can use your digital coins for payment for goods and services, as assets for online trading and investment, or for both purposes. However, what you can do with your decentralised digital coins can be limited by the crypto law in your country or territory. For example, Bitcoin is a legal tender in El Salvador and the Central African Republic, meaning that cryptocurrency is an accepted payment method in these countries. But in the United Kingdom, cryptocurrencies are legally accepted as “property” like stocks and gold. UK residents cannot use crypto for payments like fiat money yet. Besides, in many countries where cryptocurrencies are assets only, the holders must pay taxes on their investment profits.
All transactions made with a cryptocurrency are recorded on distributed ledgers known as “blockchains.” A blockchain also helps ensure that the same unit of a digital coin cannot be used twice.
Get a Crypto Wallet for Buying, Trading, and Storing
When you buy any cryptocurrency, you will get a private key. While your digital coin stays on the blockchain, you should get a crypto wallet for the secure storage of it.
There are two types of crypto wallets: hot and cold. Hot wallets are online software or apps. An example of them is Vexel. You can download hot wallets from app stores free of charge. They make it easy for you to trade, spend, and invest in crypto. On the other hand, cold wallets are offline devices that can be in the form of flash drives — many of which cost money to obtain.
In terms of security, a cold wallet is a better option against hacker attacks than a hot wallet. However, since a cold wallet is a physical device, it can get lost or stolen. But can a crypto digital wallet be hacked? You can find the answer to this question in our previous post.
How to Invest in Cryptocurrency Safely?
Cryptocurrency is one of the riskier choices for investment today. But at the same time, digital coins are the hottest assets on the market today. So, how can you safely invest in crypto?
Here are some tips from Echri Thompson, Corporate Magazine Editor at Vexel:
- Research exchanges:
Do online research on safe, secure, and reliable crypto exchanges where you can buy and sell digital coins. There are about 600 of them in the market. However, you only need one of them for a start.
You can check our list of the best crypto apps and exchanges and read online reviews on many of them on AskWallet.
- Join crypto-discussion forums:
Another way to obtain reliable information about investing in cryptocurrency is to join online discussion platforms. They include several channels on Telegram, groups on Facebook, and forums on many other social media platforms like Quora. Ask questions about cryptocurrency trading, crypto wallets, and many other topics there. You will receive good answers and learn from the practical experiences of others.
- Diversify your investments:
Any successful investment strategy must include diversification. To be a good crypto investor, you should not invest in only one cryptocurrency. The fact that Bitcoin is the most popular digital coin does not mean that you should ignore others. In the cryptocurrency market, prices go up and down every now and then. The price of Bitcoin also fluctuates. Therefore, you should diversify your crypto investment by purchasing multiple digital coins.
- Savings accounts:
Consider locking your digital assets based on a fixed or flexible term to start earning interest on your investments. This way you are letting your crypto assets work for you and earning passive income.
- Crypto loans:
Get access to more funds by using your crypto assets as collateral. This gives you extra buying power when making investments and the ability to deposit more funds into a savings account.
13 Best Ways to Make Money with Crypto
1. Mining or Cloud Mining
Cryptocurrency is created through “mining.” What is mining? It is the process of using powerful computers to solve complex mathematical problems in order to create digital coins. So, miners receive new cryptocurrencies as rewards for their work. Mining also involves verifying crypto payments. It is one of the oldest methods of making money with cryptocurrencies. However, it requires some technical expertise.
Alternatively, you can try cloud mining. This method requires using cloud computing power instead of installing hardware or software. You open an account on a cloud mining platform and pay a small fee to mine cryptocurrencies remotely.
2. Run Cryptocurrency Master Nodes
You can make a profit from starting cryptocurrency master nodes. Like mining, it also requires technical expertise. What is a master node? It refers to a digital wallet used to host a copy of an entire blockchain network, such as Ethereum or Bitcoin. It keeps a real-time record of the activities on a blockchain. Cryptocurrency platforms pay master node operators for their services.
3. Buy and HODL
Buy and HODL is another way to make money with cryptocurrency. In fact, it is now the most common method. HODL is an abbreviation for Hold On for Dear Life. So, this option requires buying and holding on to your cryptocurrency for a long time. For example, you can buy Bitcoin, Ether, and any other cryptocurrency on Vexel and keep them for a long time until their market prices have significantly risen and sell them for a profit.
Moreover, with a forthcoming highly profitable digital product like Vexel Savings, you can earn up to 14% from weekly interest
on your crypto holdings. It is a smart way to generate income regularly. Besides, you will be able to use your income on your Vexel Savings account to make payments on the platform. To make regular profits from buying and HODLing, you need to invest in digital assets that you think will increase in value in the future.
4. Earn Cryptocurrency Dividends
Apart from buying and holding cryptocurrencies to sell them at a higher price later, you can also purchase them to hold for dividends. Anyone familiar with investing in stocks or bonds definitely knows the meaning of dividends. In case you are new to investing, we strongly recommend that you take a few minutes now or later to read our previous post on “Investing For Beginners.” Meanwhile, it is helpful to know that there are some digital currency exchanges that will pay you extra money in the form of a dividend for holding their cryptocurrencies. Examples of such platforms are Crypto One-Stop Solution (COSS), NEO coin, and KuCoin exchange.
5. Stake Cryptos
Through price appreciation and the payout of dividends from selected cryptocurrencies, you can stake your digital assets and earn money. Now, staking involves using a wallet to lock your crypto in a particular blockchain network and earning more coins for keeping it secure. You make money when a Proof of Stake network pays you for using your locked coin to verify transactions on the blockchain. It is similar to the interest you get from a bank when you maintain a certain balance.
6. Day Trading
Buying and HODLing is a long-term investment strategy, while day trading is for the short term. Since the crypto market is highly volatile and quite difficult to predict, you can take advantage of the frequent rise and fall of the prices of digital coins. If you have the proper analytical skills to predict the changes in asset prices, you can buy/sell as prices rise/fall daily, making a profit. Besides, you can use an automated trading platform for this purpose.
7. Earn from Cryptocurrency Microtasks
You can help cryptocurrency exchanges or similar platforms to perform small tasks and get paid. For example, you can participate in testing their new apps or viewing their ads. You can also watch their videos or take part in their surveys for financial compensation. An example of a site where you can earn money from crypto microtasks is Bitcoins Rewards.
8. Create Cryptocurrency Content
Since most crypto projects are virtual and a bit technical to explain, many companies now rely more on digital content experts for effective marketing. They pay content creators, graphic designers, copywriters, and editors to help them communicate in clear ways to their customers and followers. You can use this opportunity to work as a freelancer for crypto brands if you love digital content creation or are proficient in copywriting.
9. Work for Cryptocurrency Companies
Today, many people work full-time and part-time on diverse projects for cryptocurrency companies. The blockchain industry is growing, and it needs various kinds of skilled workers. You are likely to secure employment and get regular pay from crypto firms if you have the sort of skills that they need. So, this is another way to earn money with cryptocurrency.
10. Crypto Arbitrage
All crypto exchanges do not charge the same prices for their coins. When you check the market, you can find the price spread from 5% to 30%. For this reason, arb traders buy their coins from cheap markets and sell them at expensive rates at overpriced exchanges. They open accounts with different exchanges and capitalise on meaningful price variations. You can go into crypto arbitrage if you understand how it works and you would like to make money through this means.
11. Cryptocurrency Faucets
Another means of generating income with cryptocurrency is crypto faucets. This method is not so popular and comes with the advantage of being less technical in requirement. Moreover, people can participate in this activity with little or no experience.
Faucets are a system of rewards from websites or applications of crypto companies. For example, a Satoshi, which is a hundredth of one million Bitcoin, can be given as a reward for fun tasks like playing games, viewing ads, watching videos, or completing captchas. So, for every task you complete for a crypto company, you will earn a small unit of a cryptocurrency, such as Bitcoin.
Developers use airdrops to generate support for their new coins. Crypto exchanges also use airdrops to pull many users when they have launched a new project. What is an airdrop? It is a free token given to customers to encourage its adoption. Crypto companies promote airdrops on their websites and social media platforms when they want to run them. Therefore, when you participate in airdrops, you can gain new digital coins in your wallet as rewards. However, this method is riskier because it involves testing a new product. Also, be mindful of fake airdrops that hackers use to defraud people.
13. Play-to-Earn Crypto Games
In simple words, this means earning rewards for playing crypto games. For example, you can play a game like Decentraland and get rewarded. This game allows players worldwide to chat with other people, create an avatar, and even buy plots of land. Hence, you can use your plot of land to build a real estate project and use it to create a unique non-fungible token (NFT). What next? You can go to an open market and sell your real estate NFT at an extremely high price.
Long-term and Short-term Investment: Which One is Better?
Crypto investors use long-term investment strategies to hold a digital coin for more than one year. An example of a long-term strategy is buying and holding Bitcoin and other digital coins for a long time expecting their values to appreciate and their prices to go up on the market. When they later sell at high prices, they make meaningful gains.
On the other hand, crypto investors use short-term investment strategies to buy and hold their crypto for not more than a year. They engage in day trading and other activities that allow them to make quick gains within a short while.
Since cryptocurrencies are profitable for long-term and short-term investments, the best way to make money from them is to use any method that best meets your financial goals. Besides, the level of risk you can manage is another factor to consider here. Long-term investing is riskier and will not be ideal for investors afraid of what might happen to their assets in the future. Short-term investing involves less risk but do not expect to earn so much from it. So, think carefully and make a choice that works best for you.
Decentralised finance (DeFi) platforms are becoming more popular today. They create lasting solutions to problems investors face with traditional financial systems by ensuring that things work in a decentralised way. DeFi uses blockchain technology to remove financial middlemen like banks and brokers to create “trust-less” banking. Presently, DeFi platforms allow you to earn between 30% and 50% on your blockchain-based investment yearly. Therefore, a suitable time to invest in DeFi could be now.
Crypto Investments vs Bank Deposits
Despite their volatility, investments in Bitcoin, Ether, Dogecoin, and other cryptocurrencies can yield returns that are far larger than those from a deposit with a bank. Nevertheless, unlike crypto platforms, banks provide insurance for your deposits. Therefore, only a small percentage of your wealth should be invested in cryptocurrencies since they are riskier than bank deposits.
However, if you invest a small amount of money in crypto regularly, the investments can provide much more revenue than bank savings. Moreover, there are crypto-friendly banks that offer you the opportunity to easily invest in fiat money and decentralised digital coins today. You can read about the ones available in the United Kingdom on our website.
Yes, for real, you can earn money with cryptocurrency. Many people have invested in Bitcoin, Ether, Litecoin, Dogecoin, and other digital coins and made money from them. There are short-term investment options, like day trading, and long-term options like buying and HODLing, which you can try to use to make money with cryptocurrency.
The best way to make money off cryptocurrency is to choose a strategy that aligns with your financial or investment goals. Also, you have to be careful not to take any risk that is beyond your level of tolerance. In this article, we listed and explained more than 10 ways you can make money with cryptocurrency. You will find the strategy that works best for you among them.
You will need to do research and analyse the crypto market to find the digital coin that will be most profitable for investment. Nevertheless, popular coins that are worth considering in 2022 include Bitcoin, Binance Coin, Ethereum or Ether, Litecoin, Dogecoin, Tether, and Cardano.
Yes, you can. However, this depends on your ability to predict price fluctuations on the crypto market. But since trading is a short-term investment strategy, you can expect to make only small gains from it.
You can read blog posts like this one or download free books online to learn about crypto trading. Another option is to join free groups and channels on social media platforms like Facebook and Telegram, where you can learn from past and ongoing discussions or ask your questions and get enlightening responses. When you have gotten the basics of crypto trading, you can create an account with a crypto platform like Vexel, and start trading with small money. With time, you will increase your knowledge and experience of crypto trading.
Make Money with Crypto!
There is no investment without risk. Nevertheless, the higher the risk involved in an investment opportunity, the higher the reward if you succeed. In this article, we discussed 13 strategies to make money with cryptocurrency. You can use any of them according to your skills and understanding of how they work. Don’t forget that the first step to investing in crypto is to use your fiat money to buy any digital coin. Vexel is a reliable platform and digital wallet for fiat/crypto trading and investment. You can create a Vexel account for free and use Vexel Savings in line with your investment objectives. It is suitable for long-term and short-term investing.