Despite Bitcoin being over 10 years old, the cryptocurrency space has only recently entered the scene and has found itself on the lips of almost everyone around the world.With that, many people want to know how to make money with cryptocurrency.Cryptocurrency has become so attractive because it is a multi-faceted ecosystem that offers broad financial freedom that allows people to invest, accumulate dividends, spend money, day trade, send value across borders, and many other things.
Also, the reason cryptocurrencies have become so popular is because they allow people to make money with Bitcoin.There are many better ways to earn by investing in Bitcoin such as mining, holding, day trading, staking, lending, earning commission and many more.
We will analyze 10 different ways of making money with cryptocurrency that prove that not only is it easy for people to make money in the cryptocurrency industry, but it is possible that almost anyone will succeed when deciding to invest in the crypto ecosystem.
1. Buy & Keep
Arguably one of the most popular methods of making money in the cryptocurrency space, buying and holding, also known as "Hodl," is also one of the simplest methods that can lead to profits.The idea of buying and holding is not exclusive to cryptocurrency as it is common to other assets, such as stocks or shares.It's simply a matter of buying a cryptocurrency, such as Bitcoin, Ethereum, Ripple, or Litecoin, and holding on to that asset until it appreciates in value.From there, you can decide to sell it and take the profit.
The reason why this method is so popular is because Bitcoin is the best-performing asset of the last decade.Bitcoin, as the oldest and largest cryptocurrency, has made gains of 9 million percent in 10 years; There is no other good on earth that has competed with that.
Overall, Bitcoin's trajectory, especially over longer periods, has been upwards.To put this into perspective, if you had decided to buy Bitcoin in early 2017, when it started to be mentioned in the mainstream media and was valued at $1,000 USD and then sold a year later, you could have gotten up to $19,000 USD in pure profit!
Of course, buying and holding as a method of making money still has a lot to do with timing.It all depends on how long you want to hold Bitcoin because you haven't made any profit or loss until you sell.But buying and holding is a good way to make money by selling Bitcoin.So, if you decide to sell and make a 100 percent profit on your initial investment, you could lose 200, 300 or even 3,000 percent profit if you hold on a little longer!
2. Mining
Mining is not just an avenue where a person can make money in the cryptocurrency space, it is an important part of the ongoing and ongoing success of some cryptocurrencies, such as Bitcoin.Mining cryptocurrency is considered a form of passive income as, after the initial setup, it becomes a slow accumulation of cryptocurrencies through the operation of mining equipment.
Mining involves both verifying transactions on a blockchain, and solving algorithmic problems to unlock new blocks and earn rewards.Both of these practices result in a way to make money for a miner.
Each Bitcoin transaction comes with a fee that is paid to the miner who verifies that the transaction is true.After verification, the miner receives the commission and that miner is paid passively to do this work.However, the most traditional method of mining involves trying to solve unlocking a new block.
Mining requires specialized and often expensive equipment with high processing power to try to solve the equation that unlocks a new block.If a miner gets the right combination to unlock a new block, he is immediately rewarded with 12.5 BTC which shows how profitable this method can be.
Of course, it's hard to be the one unlocking a new block, and setup fees in terms of buying mining equipment are expensive at first.It is also important to take note of the cost of electricity since Bitcoin mining is intentionally resource-intensive and there are margins of profitability to consider in this passive form of income.
3. Trading
If "Holding" is a popular method of making money with cryptocurrency, and mining is a passive method of making money with Bitcoin, then trading is probably the most profitable way to make money.But there are many ways to make money by trading cryptocurrency.
Cryptocurrency trading has become extremely popular in recent times because traders have realized that there is a lot of money to be made while trading and has even started pouring into traditional institutional trading settings.
Part of the reason why trading is so profitable is because Bitcoin, as an example of a cryptocurrency, is very volatile and therefore the price can fluctuate a lot up and down in a single day.Therefore, good traders are able to look for patterns and predict when the price of the coin will rise – and buy before then, and then notice when the price is about to fall – and sell – which leads to large profits.It is clear that with proper operations a person can make a lot of money, but also that they can quickly earn that money.
In addition, there are a number of products and processes that allow traders to be even more agile and profitable from traditional trading environments.This includes margin trading that incorporates leverage.
Margin trading with cryptocurrency allows users to borrow money against their current funds to trade cryptocurrency "on margin" on an exchange.In other words, users can leverage their cryptocurrency or existing dollars by borrowing funds to increase their purchasing power.
It is clear why this method can provide such profit as it allows traders to invest more money than they have in hopes of getting a return on that increased amount.For example, put down $25 USD and leverage 4:1, or 4x, to borrow $75 USD to buy $100 USD worth of Bitcoin.Now you can bet whether the price of Bitcoin will rise, call long or fall, call short.
In this form of trading, you can leverage short or long.When you go short you bet on the price going down (and if it goes up you lose money on the card).When you go long, you bet on the price going up (and if it goes down you lose money on the card).
The position does not close until you close the position manually or at a set price, or the exchange calls your position.
4. Cryptocurrency staking
Cryptocurrency staking is another way to make passive gains in the ecosystem, but it also has the added benefit of being a 'Buy and Keep' strategy.To understand staking, it is important to understand the different types of cryptocurrencies; proof-of-work and proof-of-stake.
A proof-of-work coin is a coin like Bitcoin that requires proof of work, in this case mining, to operate its network and depends on the processing power you have.The alternative, which is proof-of-stake, implies that an individual's power over the network is determined by the number of coins he holds.
This means that the more coins a person has, the greater the impact and effect they will have on the network.It also means that they get paid more for their stake since this comes in the form of dividends, essentially.Staking is the process of holding funds to receive rewards while contributing to the operations of a blockchain.
So, by holding these coins you passively earn money thanks to rewards, but you are also holding on to an asset that is fluctuating in price so you can sell them when you want to make a profit.
5. Currency and foreign exchange arbitrage
Arbitrage is a method that allows you to take advantage of different prices on different cryptocurrencies and exchanges and buy at lower prices in one place and sell higher in another for profit.The price of cryptocurrencies depends on one market and therefore can vary by a few percentages on different exchanges, which means that there are small margins to be made here and there.
Different exchanges, different currencies and even different countries with their forex, can present arbitrage opportunities where a person can buy low and sell higher, but this requires a lot of time, effort and planning for not very large profits.
There are some cases where a huge premium is evident in some countries or exchanges where arbitrage can make large profits, but these are rare events.For example, Korea has often seen what has been called a "Kimchi Premium" where, for a variety of reasons, Bitcoin has traded up to $1,000 above normal market rates.
If you bought 1 BTC at $10,000 USD for example Coinbase, and then sent it to a Korean wallet and sold it on one of their exchanges for the premium price of $11,000 USD, you will get an easy profit of $1,000 USD.
6. Masternodes
A Masternode is a vital part of the cryptocurrency network, and while it may not seem like an obvious place to earn money, it's possible, though not exactly easy.A masternode is a computer that stores the entire blockchain ledger of cryptocurrencies and therefore has a record of every transaction that has ever happened on that blockchain and is constantly updated.
By deciding to host a masternode, the network will pay you a certain number of coins of that cryptocurrency, however, to host a masternode you are often required to hold a substantial amount of the cryptocurrency to be considered.
It is also a rather complicated configuration as it requires a lot of technical know-how regarding the configuration of a server and the inner workings of the blockchain.More information on how to set up a masternode can be found here.
7. Acceptance of cryptocurrency
In recent times, the adoption of cryptocurrencies has grown steadily.It is not only the individuals who are interested in them, who use them and who invest in them, but it is also the retailers who are now happy to receive them.This once again presents an interesting way to make money with cryptocurrencies, and it's a way to earn cryptocurrency, and all without even having to buy Bitcoin.
If you have some sort of store, or sell goods or a service, you could always offer a payment option in Bitcoin or another cryptocurrency, the advantage of this is that you can open your payments to be more global as there are no boundaries on where you can receive cryptocurrency from.
In terms of earning from this, receiving cryptocurrency gives you access to a number of other methods explained above.If you take the payment in cryptocurrency, you can hold on to the currency and wait for it to appreciate and earn profit on that payment.However, if you are experienced, you can turn that cryptocurrency you received into a lot more money by trading with it, especially through margin trading since you don't need as much cryptocurrency to guarantee higher profits.
8. Work for cryptocurrency
In the same way that you can accept cryptocurrency for goods, or in an online store you have, you can also work for Bitcoin.Taking Bitcoin as a paycheck is still pretty niche, as there aren't many places yet where you can pay all your bills with cryptocurrency, but it's still an option.
There are some companies that allow payroll management in Bitcoin and allow employees to agree to receive all or part of their salary in Bitcoin.Bitwage is an established platform that provides payroll and human resources services for this day and age, when the use of digital currencies in payments is rapidly growing worldwide.
Again, the advantage of taking Bitcoin as part of your salary is that you can use it immediately as a savings investment in the traditional buy and hold method.Also, you can use this part of your salary to trade Bitcoin in order to try to increase your monthly payment with some expert margin trading.
9. Loan
Because things like Bitcoin work both as a currency and as an asset and because it is digital and very liquid, it is an ideal asset for lending.If you are in a position where you hold a substantial amount of certain coins, there are a number of peer-to-peer marketplaces that allow you to lend these coins and receive interest from them.
By lending your coins you not only receive interest to do so, but you can also set terms that see you accumulate the gains that come with appreciating the price of a certain cryptocurrency.
However, since the cryptocurrency space is still relatively poorly regulated, this can be a risky idea as an opportunity for recourse if things go wrong with the loan agreement.
10. Commercial bots
Due to the popularity and profitability of trading, there have been a number of cryptocurrency trading robots that have been developed to try to make the process a little easier and less energy-intensive.
Trading requires a lot of focus and attention, can also be time-consuming, and requires mastery of skills to be particularly successful.There is a lot to learn in trading, and for starters, it might be a good idea to invest with a trading bot.
Crypto trading robots will automatically execute buy and sell orders in the market at the right time using algorithms and data points.It looks more attractive, but it's fairly simple and there's a distinct lack of human nuisance that's hard to bottle or digitize.
Trading robots also do not have the opportunity to use margin trading and cannot have the instinct for a trade that a human can have.Also, if you use one when you start, it can lead to a lack of opportunities to learn how to be a good trader.
At a glance
Of course, all these methods aim to make money through cryptocurrency, but they are all very different from each other.Some require much more time and effort, but can give much more profit and return on that effort.Others, especially passive ones, are fairly easy to do, but do not offer the same earning potential. The best cryptocurrencies to invest in.
The table below tries to make it easier to figure out which method might work best depending on how much time you have available, how difficult it is to do, and what the profitability of each of the methods is.
Of course, there are other things to consider.For example, mining is relatively difficult as a means of earning, but this is partly due to the fact that it involves a high installation cost.In addition, while it is passive and therefore does not take too much time, it is necessary to monitor the price of the currency and the costs of electricity, to ensure profitability at all times.
| Method | Difficulties | Time and effort | Earning potential |
| Buy & Keep | Low | Low | Average |
| Extraction | Average | Average | Average |
| Trading | Average | High | High |
| Stake | Low | Low | Average |
| Arbitrage | Average | High | Low |
| Masternodes | High | Low | Low |
| Accept Crypto | Low | Low | Low |
| Working for Crypto | Low | Low | Average |
| Loan | Average | Low | Average |
| Commercial bots | Average | Low | Average |
Conclusion
It is quite clear that cryptocurrencies offer a multitude of ways to earn money, and each method is very different from the other.Some methods are quite popular and easy to perform, while others require some work.What has become more evident over time, however, is that one method stands out above all others, especially when it comes to profitability.
Trading has become one of the main methods that people use to make money in cryptocurrency.There's a bit of a learning curve, but it's open and available to everyone, even without experience.There are platforms out there, such as PrimeXBT, which offers new traders a free account to begin with that is meant to help beginner traders, as well as experienced heads.
If you've at least heard of cryptocurrencies, and maybe even bought some of them and kept it as the most basic method of making money, it's worth exploring new ways to increase your profitability in this exciting and ever-growing space.