The need to make money with crypto has become a normal occurrence in the world today. This is because the world has leapt from the physical methods of making money to alternate methods.
Cryptocurrencies have over the length of years proven that it is a method that would stand the test of time.
Table of Contents
- A View of Cryptocurrencies
- How Does Crypto Work?
- How To Invest In Crypto Currency Safely
- Strategies To Make Money With Cryptocurrencies
- Long-Term and Short-Term Investment: Which One Is Better?
- Frequently Asked Questions (FAQs)
If you are still on the fence about the need to start earning from cryptocurrency, then you are not making a very good decision.
But by the end of this article, you would see reasons as to why you should engage in various ways to make money with crypto, and also gain more enlightenment about cryptocurrencies and how it works.
A View of Cryptocurrencies
Before this age, people used to keep their money in banks for months and years with little or no returns on the money they have saved for years. But with cryptocurrency, the reverse is the case and you would see why in the underlined headings:
Cryptocurrencies are run on a blockchain system. And what this means is that crypto is saved in blocks across the world.
If you save your money in a bank in the U.S., the record would reflect only from that particular bank, and since it is centralized, these records can easily be altered.
But with cryptocurrency, your digital asset would be stored on a list of entries across all networks of computers (nodes) and all records would be stored as a hash (code), which can “never” be altered.
- Use case
The reason why you can make money from cryptocurrencies is that every coin developed has a use case, and if the use case is standard or appeals to the public, you would easily make money from the growth of the coin.
For example, Ethereum serves as the catalyst for the growth of the crypto space, IOTA serves for use in the internet of things in the real world, and tokens are backed by assets that grant users ownership to assets like real estate, and various precious metals.
Unlike banks that require their users to be of a particular age, cryptocurrency has no age limit. Provided you have access to a smartphone and internet, then you can make money with crypto.
With this, even a five-year-old who is knowledgeable about crypto can easily become a millionaire at a tender age, hence eliminating the need for their parents to bother about his tuition and other financial needs.
How Does Crypto Work?
So many people do ask this question when they intend to make money with crypto. The mistake you would make is to envisage crypto as a big deal. Compiled with reading difficult materials, you would be forced to think making money with cryptocurrency would be hard.
Well, you are lucky to have stumbled upon this article because you would get a simplified explanation of how crypto works, and how to make money with crypto. And they are:
1. Study a coin
Before buying a coin, it would be in your best interest to study the coin. To do this, you need to know the market capitalization, vision, social presence, and purpose for which the cryptocurrency was created. And all this can be gotten from the white paper of the project.
2. Decide where to buy it
This is another criteria to look at when you intend to make money with crypto. You can decide to make use of a wallet (for long-term storage of cryptocurrency and you would not also have complete control of the wallet) or an exchange (where you can buy or sell cryptocurrency).
The issue with an exchange is that if you lose access to your account, you will lose access to all your crypto. Examples of exchanges are Binance, Coinbase, Crypto.com, etc.
While some examples of wallets are Metamask, trust wallet, etc.
3. Choose how to pay
To pay for crypto is the next step for you if you want to make money with crypto. To pay for crypto, you can either choose to pay with bank transfers or credit cards.
But in your best interest, you should make use of bank transfers or peer-to-peer for buying and selling cryptocurrency.
4. Buy the coin and then HODL or Trade
After making payment for the purchase of a stable coin such as USDT, you can then purchase a coin. After buying the coin, it would then be up to you to either trade or hodl (a drunken form of hold for dear life).
How To Invest In Crypto Currency Safely
To make money with crypto, you need to understand spoken criteria before investing. And they are:
Diversify Your Investments
The mistake most people make when they intend to make money from crypto is to invest hugely in one particular coin or token.
This is not considered a wise move as that token could be rug pulled or crash, and when this happens, you would lose most of your funds (though you don’t lose in crypto; unless you withdraw during a dip less than what you bought the coin.)
Prepare for Volatility
The price of cryptocurrency usually fluctuates, and this is because it is controlled by demand and supply, government regulations, investor and user sentiments, and media hype.
In your best interest, it would be good to study these factors to know when to buy or sell cryptocurrencies.
Strategies To Make Money With Cryptocurrencies
To make money with crypto, you have to strategically fit into the ways money is made with it. And they are:
To make money with crypto, you can lend or borrow cryptocurrencies to big firms that utilize it to make huge money and pay you back your crypto with interest.
This is not done directly, but with a middle man (company) that connects the borrowers to you (the lender).
How this works is:
1. The company or individual that intends to borrow visits the lending platform to request cryptocurrency.
2. On approval of the loan by the platform, the borrower would need to stake some cryptocurrency as collateral. This collateral would only be given back to him when he funds back the loan.
3. On the platform, the lenders can then get the loan. The lenders would not be aware of the information related to the borrower though.
4. After the borrower has been given the loan, based on agreement, the lender would then receive an agreed amount of interest at a time.
5. On completion of the loan by the borrower, he would receive his crypto collateral.
Traditional Buy and Hold
To make money with crypto, you can explore traditional buying and holding. This simply means that you would buy crypto at a particular time (probably during a dip), and then hold on to it for a long period.
This is a very good avenue to make money with crypto, but the downside is – most people who choose to take this route end up being impatient for the cryptocurrency they bought to pump.
And in being impatient, they may take out their money during a dip. Also, another downside to this is the fear of missing out.
Fear of missing out (FOMO) is simply a situation where an individual jumps on a coin that is already performing well (a pump). This is a very bad move that can cause one to wreck.
The third way to make money with crypto that you need to know about is trading. Trading is simply a situation in which you buy a coin at a low price, and once it makes a certain amount of profit, you sell-off.
The downside to this method of making money with crypto is that one could become greedy, and make an excess profit from a certain number of coins.
At the end of the day, the profit and capital may be short a little due to the volatility of the crypto space. So for your good, curb greed!!!!
Airdrops and Forks
This is another way to make money from crypto. Airdrops and forks are often mistaken to be the same. But they are not.
Cryptocurrencies are built with codes, and these codes are usually in line with the direction and use cause of the cryptocurrency.
Now when this cryptocurrency is created, some portion of it would be distributed to users for free (to sensitize them about the coin).
Now, forks are like airdrops, but the difference is that it is the same code for particular crypto, but with slight alterations in the codes.
This situation arises when the developers and miners of a coin want a particular coin to be used for something else (a fork is born). An example is Bitcoin and bitcoin cash.
Another way to make money with crypto is mining. This method simply entails you verifying the authenticity or validating a coin.
When investors see an upsurge in the number of people interested in a coin, they would be confident of the potential of the coin.
For you the miner, you would not invest a dime, but at the end of the day, you would get incentives for mining a coin.
When you buy some coins from exchanges and hodl them, you would be given a certain amount from their profit.
For example, Kucoin (an exchange) once gave out 50% of its profits to people who held its coin. So this is a passive way to make money with crypto.
All you need is to seek out coins that are been given out as dividends.
Crypto Social Media
This is the last method to make money with crypto. It is just like your regular social media posting of photos and videos on the pages of recognized exchanges and wallets.
The most interesting part about it is that you would be paid for posting too. Isn’t this great!!!
Long-Term and Short-Term Investment: Which One Is Better?
Like any investment, you need to decide which you would stick with, either a long or short-term investment.
When you intend to make money with crypto, this is a critical question that you should ask yourself.
What is a long-term investment in crypto?
In crypto, long-term investment is simply like your buying and holding of a coin. For long-term investment, you invest money you would not need for years.
All things being equal, your $10 could become $50 in a matter of years, depending on the coin you bought, and the market structure over years.
Strategies for long term investment:
If you intend to go long on cryptocurrencies, then you need to understand that:
- You should invest only what you can afford to lose
- Take profits at intervals
- Volatility is necessary for the pump of a coin, so do not panic when it happens, instead, buy more coins.
What is a short-term investment in crypto?
Short-term investment in crypto is simply the act of putting some amount of money in crypto markets, in a bid to remove it on the slightest profit made.
This is more profitable and can make you rich in a short while if you know what you are doing
Strategies for short term investment:
When you want to make money with crypto in short term, you should note the following:
1 You need to have a short term risk appetite
2. Large capital would yield you a large profit
3. Do not be greedy for so much in a short term
How to pick cryptocurrency for long-term and short-term investment
Before concluding short or long term investment, you should always
1 Analyse market charts of a particular coin
2. Check out the use case of the coin
3. Seek the opinion of those who are well versed in crypto coin
Frequently Asked Questions (FAQs)
Can You Make Money With Cryptocurrency?
Yes, you can make money with cryptocurrency.
Can I lose money with cryptocurrency?
This question has so many ifs but generally speaking, you don’t lose money in crypto unless you sell a coin for less than what you bought it.
To make money with cryptocurrency is the best decision you can make for yourself.
Coupled with the fact that it has no age limit, your kids can even start making money while they are tender.