From success stories of overnight millionaires, to harrowing tales of insane amounts owed in back taxes, the crypto market is a place where fortunes can be made and …
From success stories of overnight millionaires, to harrowing tales of insane amounts owed in back taxes, the crypto market is a place where fortunes can be made and lost in the blink of an eye.
The lure of easy money and massive returns has gotten punters and investors scrambling for a piece of the pie. Defined as a digital or virtual currency which acts as a medium of exchange between two parties, it goes without saying that cryptocurrencies are here to stay.
Bitcoin or BTC is the most popular form of cryptocurrency with the 2017 crypto rush driving the value of Bitcoin up to absurd values. Created by Satoshi Nakamoto, Bitcoin offers users anonymity in making payments and conducting business online which makes it a popular choice for those who value their privacy.
In recent times Bitcoin has become increasingly accepted as a medium of exchange with many online merchants and even some countries recognizing Bitcoin as legal tender. From speculation to investment, there are many ways in which one can make money of cryptocurrencies.
Getting Started
Before you get started, you’ll first need to get your hands on some cryptocurrencies. Signing up with a cryptocurrency exchange allows you to purchase different types of cryptocurrencies with cash.
The most reputable crypto exchanges offer wallet services for storing your crypto currencies. However, several high profile online heists that have resulted in stolen crypto currencies means that you may want to invest in a wallet for greater security.
Turning a Profit with Cryptocurrencies
- Mining Bitcoins
We won’t pretend to understand the complexities behind Bitcoin mining, so we’ll keep it simple. Essentially, Bitcoin mining is the process of solving a series of equations which are then added to a blockchain. With each successful transaction, the miner is rewarded with Bitcoins.
When Bitcoin was still in its infancy, it was relatively easy for miners to turn a profit. As time progressed however, Bitcoin mining became increasingly resource intensive requiring large amounts of processing power. Coupled with the recent crash in the price of Bitcoins, mining may not be the best method of making money.
However, all hope is not lost, as at the time of writing, Bitcoin prices have been steadily increasing which means that mining may indeed be profitable.
- Price speculation
Price speculation is one of the simplest ways of earning money with cryptocurrencies, much and much more stable than betting on horse racing results. All you’ll need to do is to purchase a basket of different cryptocurrencies and hold them until they increase in value.
Ideally, you’ll want to purchase more established cryptocurrencies such as Bitcoin and Etherium to provide your portfolio with a measure of stability with a small set of more volatile coins.
You can expect the cryptos held by you to appreciate against fiat currencies such as the US Dollar or Pound Sterling over time. When that time comes, you’ll be able to sell your cryptocurrencies at a profit having made money from the price differential.
It is a good idea to keep a close eye on the valuation of your cryptocurrencies in order to capitalize on any sudden opportunities. Also, having a good understanding of real world events is essential to staying ahead.
This investment method is a great way for you to get started in the world of cryptocurrencies with minimal input on your part.
- Holding onto cryptocurrencies for dividends
For the inexperienced investor, dividend paying cryptocurrencies are a great way of earning a steady passive income. Dividends are described in corporate terms as a percentage of the company’s earnings paid out to shareholders.
In the case of dividend paying cryptocurrencies, you’ll receive a regular payout for holding said cryptocurrency in your wallet. Such cryptocurrencies are a great way of parking funds whilst receiving a steady return.
However, you may not want to invest your entire portfolio on such currencies. This is because, on top of the typical risks associated with cryptocurrencies, there’s also the risk that you may become the victim of a scammer looking to solicit funds from unsuspecting investors.
Along with this, such cryptocurrencies typically have a lock-up period which prevents you from removing your funds for a specific period of time. Thus, leaving you exposed to the risk of said currency crashing in value.
- Staking funds
The practice of staking funds has become increasingly popular in the wake of the longest bear market in crypto history. Staking requires an investor to place his/her own cryptocurrencies into a hot wallet for a set amount of time. In return, the investors receive a payout as a reward for their time.
Similar to how banks make use of funds invested into fixed deposits, cryptocurrency received from staking is used for the purpose of validating new block chains. From receiving a fixed income of cryptocurrencies to eliminating the need to invest in costly mining equipment, staking has its fair share of benefits.
However, this investment method does have its downsides. Firstly, staking requires that cryptos be stored in hot wallets which are constantly online. This means that you may find yourself becoming the victim of a hack attack and subsequently losing everything.
Secondly, staking requires your cryptos to be tied down for a significant amount of time thus exposing you to the risk of a downwards price change. Cryptocurrencies are the new frontier of investment and for the savvy investor, opportunities abound are everywhere.
Read more at: https://www.nuwireinvestor.com/4-ways-make-money-cryptocurrencies/
