There are many ways to make money with cryptocurrency such as trading and staking etc. These methods listed here in this guide vary in terms of risk/reward ratios.
In the last ten years, we have come a long way in terms of cryptocurrencies. We have moved from Bitcoin back in 2010 to over 2100 coins at the moment. These 2100 coins all perform various different tasks. Let’s take a look at all the many different ways to cash in on the money-making cryptocurrency craze.
Top 8 Ways To Make Money With Cryptocurrency
Please be advised that this is not investment advice and therefore it should never be considered as such. Yet this is how the vast majority, including ourselves, are cashing in on this amazing era of digital currencies. Enjoy!!
Mining Cryptocurrency is a great way to earn profits with little effort. You can mine many altcoins with a desktop computer or even a laptop. This offers an inexpensive way to mine cryptocurrency. Some coins, however, require expensive mining rigs that cost a lot of money to operate and maintain.
I’m not saying it isn’t profitable, but if you lack the capital to afford the equipment and maintenance, not to mention the electrical costs mining these coins is not a reality for you.
Mining coins on a home computer or a laptop allows just about anyone with the equipment and an internet connection to earn cryptocurrency while you aren’t using your computer. If you do choose to start mining with a home computer or a laptop make sure you keep an eye on the setup. Many times the mining process can cause a computer to overheat.
A few coins that can be mined on a computer are Monero, Ethereum, Bytecoin, Lethean, and Dogecoin just to name a few. For more info on how to mine cryptocurrency from a home computer or laptop use our new guide to learn more.
There are other methods one can use to mine altcoins for profit, such as buying a mining rig dedicated to mining cryptocurrency. ASIC mining equipment can be used to mine many coins and can be a profitable endeavor. Coins like Bitcoin., Komodo and Z-Classic among many others can be mined by the ASIC mining equipment.
These mining rigs can use a lot of electricity, which makes them costlier than you run of the mill mining operation you have set up at home on your computer. You need to consider this when setting up a mining rig. You should have a plan in place just in case mining becomes less profitable.
One way you can increase your profits is by joining a cloud mining operation or a mining pool. These allow small-time miners without the means of buying 10,000 ASIC mining rigs to pool their hash power together and actually get a better return than if they were to say mine alone. This is something you should definitely consider if you are not getting the profits you expect from your mining operation.
For more info on cloud mining see our article where we discuss cloud mining in full depth.
Staking cryptocurrency can be a profitable venture. Staking coins is not an option with every single coin out there. Coins like Dash, PIVX, and Neo offer coin staking as an option to hold. The way staking typically works is you deposit a certain amount of coins into a special wallet that is typically locked up for a period of time. These locked coins will be used for transactions and you will be reimbursed for each transaction you take a part in. Not to mention you will receive staking rewards for your participation.
Staking coins can be a great way to earn passive income. One of the benefits of staking coin is the cost is low when compared to crypto mining. Some coins payout differently than other coins so you need yo do some research when deciding which coin you want to stake.
When you decide to look into staking cryptocurrency you need to understand there is risk involved just like any other venture. If you are staking for a project that is likely to fail your coins may be worthless by the time you can retrieve them from the “staking wallet”. You should only invest in staking once you have done plenty of research on the coin you want to stake.
Coin staking is a great option for those of us that cannot afford mining equipment or simply want another source of income. Before you decide you want to stake you should certainly consider the risk vs reward ratio. For more info on staking and earning crypto using this method checkout staking labs platform here.
Long Term Investing
Long term investing is another option if you aren’t a fan of trading or staking. The way long term investing works is you buy an altcoin, preferably at a low cost, and wait for the price to rise before exiting your position. This may take days, weeks, months, or perhaps even years to achieve the desired return.
This method is popular because it requires little effort. I’m not saying there is not a risk involved with this method, but I am saying that there are ways to maximize your reward while mitigating your risk as much as possible.
If you decide that you want to take this route you should do research on the coin you want to invest in. Look at the coin’s daily volume and market cap. The liquidity should be a big deciding factor when choosing a coin to invest in. If there is not much liquidity when the time comes and you want to sell you may not be able to find a buyer!
There are ways to protect yourself from hackers that want to get there hands on your coins. If you decide you want to invest long term into any coin you need to consider security as well. Storing any coins on any exchange is very risky.
Just look at all the news about exchanges being hacked over the past 10 years. The number of compromised exchanges is astronomical. What does this tell you? It tells me that exchanges are not a safe place to store your coins. If you want to hold a cryptocurrency long term you need to consider that.
There is a method you can use to protect yourself from an exchange hack. Get yourself a cold storage wallet. This device plugs into your computer and allows you to secure your investment offline. This method is much safer than storing your investment into a “hot wallet” (a hot wallet is any wallet that is connected to the internet) I highly suggest getting one of these cold storage wallets such as Ledger Nano or a Trezor among others. Your future self will thank you.
Before you decide which coin you would like to hold long term, you need to do some research. Can the coin be moved to a cold storage wallet? Not all coins can at this time. This would be one of the biggest factors I would look at when deciding which coin I want to hold long term.
Trading Cryptocurrency For Profit
Trading cryptocurrency is another method you can use to make profits. Trading cryptocurrency is not the easiest method for making a profit, but it can be rewarding if you understand how trading works. This method may not be the best option for someone just entering the world of cryptocurrency, but if you learn to read charts properly and have a lot of patience you can be successful.
So when you trade altcoins you should follow the basic rules of any trade, buy low and sell high. This is easier said than done, but I personally use this method with mixed results. Nobody will be right all the time when trying to predict what a coin will do when you look at a chart. Looking at charts is the first step to learning to trade successfully.
I typically use TradingView to view charts. There is a free version for those that are just starting out. I stuck with the free version for about a month before moving on to the paid version, which allows me to use more indicators than the free version. TradingView is a great tool for those interested in trading cryptocurrency.
I wish I could explain all the aspects of technical analysis to you in this section, but that could be an entire write up of its own. A quick explanation of technical analysis is you are trying to predict future movements. You can accomplish this by using various indicators that can be added to a chart. In doing this you can make an educated guess on what the price will do in the future.
If you are looking at trading you need to consider starting small and working your way up. Try and get comfortable with the charts before throwing your life savings into an altcoin. At the end of the day, the goal of a trader is to make profits. If you dive in too quickly without the proper skill, you will end up wrecked.
When you are trading you will need to keep money on an exchange. I know, I just told you that this was risky a bit earlier. But trading can be fast-paced and trying to keep your coins in cold storage and trading is pretty tough. By the time you move the funds from your cold storage to the exchange of your choice the coin you want to trade might already have skyrocketed in price.
Trading is risky but there are ways to mitigate the risk as much as possible. You should only keep a certain amount of capital on any exchange. Do not load your exchange wallet with more money than you need for trading. If the exchange were to say get hacked and your trading funds were stolen you would not lose your entire investment.
I keep a certain amount on an exchange for trading purposes. This is not my entire investment by any means. Only the amount I am comfortable with on an exchange. This is important. Do not invest more money than you are prepared to lose. That being said the rewards involved in trading cryptocurrencies are too great to ignore.
There are numerous methods to ensure you do not wake up one day and see your trade in the negative. Set up stop losses and set sell orders that automatically trigger if a certain price is met. This will ensure you do not have to watch your trade 24/7.
Trading cryptocurrency can be a rewarding endeavor, but if you do not know what you are doing you can lose your investment very quickly. I would suggest you learn all you can about technical analysis before diving into the wonderful world of trading cryptocurrency.
Now if you don’t have the ability or the time to trade you can get on board with a trading bot that will facilitate your trading for a fee. These bots are designed by people to react to the charts and to buy and sell when a certain indicator or price is met. Each bot is different, but using a trading bot can be a rewarding source of passive income.
You can find people all over the internet that offer the use of their bot for a price. Some charge you upfront, and some charge you a percentage of your profits. Before signing up with a trading bot I suggest you do plenty of research. There are a lot of different trading bots out there, some are great and some are pretty bad. Depending on who created the bot, the rewards will vary widely.
You can also build your own trading bot. This method is not an easy route and should not be attempted unless you understand how to trade in the first place. After all, these bots only do what they are programmed to do. At the end of the day, a bot is only as good as the trader that created it.
Utilizing a trading bot is a fantastic way to earn some extra income. It is not without risk, but if you can find a dependable bot built by a good trader you can mitigate a lot of the risk that accompanies investing in a trading bot.
Another great way to get your hands on cryptocurrency is to participate in “airdrops”. What is an airdrop? Well some coins will offer free cryptocurrency to someone for simply visiting a website or for performing some menial tasks (sharing their content on your social media is often a prerequisite for obtaining the airdrops)
The airdrops are typically not very much in terms of US dollars, but they are free. There are a few that I have done in the past that was pretty rewarding. If you get in on some of these airdrops at the right time you can see that free money multiply. Who doesn’t appreciate free money?
For people that have little or no capital to invest in cryptocurrency, airdrops are a great way to get your foot in the door. I have done airdrops that you can only do once, for one payout. There are some airdrops that allow you to claim coins daily or every 8 hours etc.
Consider this option whether you have the capital to invest or not. Free money is rare and most people are so skeptical of the words “free money” they automatically discount airdrops as an elaborate scam of some sort. While some airdrops are likely a scam there are plenty that actually pays out.
I have been doing an airdrop for Horizen coin for ages. The payouts are minimal and to the average person, the reward isn’t worth the effort. But I have taken that Horizen I have obtained and converted it to BNB. The effort is actually pretty modest.
Free money is rare. Do your homework and always be suspicious of any offer of free money for your own protection. But I can tell you from personal experience that there are airdrops that do work.
Just like the subtitle states, gambling is another way you can either make or lose cryptocurrency. There are many websites that offer cryptocurrency gambling. Everything from sports to making bets on the gender of a famous person’s baby. Some coins are strictly designed to facilitate gambling. While other gambling websites offer to gamble with many coins.
Augur is a platform where you can use the native token they offer and make bets on pretty much anything you can think of. While it is an interesting project with a lot of promise, it also comes with risk. You should understand that before you start gambling.
Other platforms offer gambling on sports etc. with Bitcoin and certain other altcoins. This method is pretty popular due to the fact that you do not necessarily need to schedule a trip to Las Vegas to enjoy gambling. These platforms are not as secure as having your coins in cold storage so you need to consider that before you deposit any cryptocurrency on a platform. Think of these gambling platforms like a cryptocurrency exchange as far as security is concerned. It is predicted that roughly 80% of all cryptocurrency exchanges will or have been hacked at one point.
These gambling platforms are the same way. They can be hacked and you will never see your cryptocurrency again if it gets stolen from most of these platforms. So if you do decide to try your luck on one of the many gambling platforms out there I suggest you start small.
If you are successful and double your money I suggest taking it off the platform and placing it in a cold storage wallet. You will mitigate some of the risks if you can do this. Make sure you consider the transaction fees involved when sending the cryptocurrency off of the gambling platform. Some are likely higher than others and may require a minimum amount before allowing you to move the funds.
Gambling may be fun, but you should understand that it is likely the riskiest option I have written about in this article. Gambling can be addictive and can leave you broke. Make sure you consider these risks before you dive into the scene.
Arbitrage is a pretty simple concept. In layman’s terms, you basically look at the price differences between the same coin on different exchanges. Sometimes the price difference is quite significant. In cases like this, you can pull off what is known as “arbitrage”.
The way arbitrage works is best explained like this. Let’s say you are buying a particular cryptocurrency for a certain price on a certain exchange. You then send the cryptocurrency you just purchased to another exchange (this exchange will have a higher cost per coin than the one you buy from).
So let’s say you find Some Ethereum for $200 per coin on Binance. You also notice that Bitfinex has a rate set for Ethereum of $230 per coin. You would buy the Ethereum on Binance and send it over to Bitfinex and sell it there.
Arbitrage is great and I personally know many people that have done it successfully. Arbitrage is not the easiest game to play as you need to have a good understanding of fees and other factors that can turn a seemingly simple operation into a losing endeavor. If you play an arbitrage opportunity the wrong way you can lose capital.
Also, it should be noted that certain exchanges flat out refuse to allow customers to send certain coins off the exchange. The reason for this is the excessive price difference. For instance, when I first started messing around with altcoins I saw the Bitcoin Diamond was approximately $20 on Binance but it was trading for approximately $80 on Kucoin. Binance suspended the ability to send Bitcoin Diamond off the exchange to ensure the arbitrage did not get out of control.
Although Arbitrage is a great way to make some quick profits, it is not without risk. Ensure that you can send the coins you are about to purchase off the exchange. You should also look at the fees involved and make your choice after you have considered the risks.
Final Thoughts About Making Money With Crypto
I have covered 8 different ways you can turn your cryptocurrency into another source of income. Learning these methods can greatly increase your profits however as I stated in every scenario making money with cryptocurrency is not without risk. But if you are smart and patient you can learn to mitigate a lot of the risk and walk out of your endeavors with some cold hard profits. Whatever path you choose to take make sure you do some research and set some goals. Be smart. Good luck to you all!