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.
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.
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.
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.
1. Investing
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.
2. Trading
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.
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.
5. Mining
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.