7 ways to earn money on cryptocurrency
The article discusses the main ways to make money on cryptocurrency: buying and storing cryptocurrencies, cryptocurrency trading, staking, P2P crypto loans, cryptocurrency mining, masternodes and liquidity pools.
Some call cryptocurrency digital gold, others believe that it is not worth a cent, or do not trust it. However, it can no longer be denied that cryptocurrency represents absolute value. It makes people rich or poor. You can buy, store, sell and simply pay with cryptocurrency.
You can earn an incredible amount of money on cryptocurrency simply because it is associated with extremely unstable investments with high risk. Fluctuations in the value of cryptocurrencies by 50% per day are no exception at all.
When you buy a cryptocurrency at a low price and then sell it when the price rises, you can earn good money. There are many more ways to make money on cryptocurrency. In this article, we will tell you about the best ways to earn money on cryptocurrency and how to do it.
We recommend Binance – the best cryptocurrency exchange in the world.
1. Buying and storing cryptocurrencies
This is the easiest way to earn cryptocurrency. Buy a cryptocurrency that you like, and in which you are sure that it will become more valuable in the short or long term, and relax.
The most remarkable thing is that such investments require very little time and energy, and that your investments can bring significant profits in the future. On the other hand, it may happen that your investments are worth much less, and as a result you will lose money.
For example, there were quite a few people who sold Bitcoin in 2014 at the then peak at a price of $1,000. At that time, no one dared to assume that Bitcoin would be worth 50 times more today than in 2014.
There are also many people who sold their bitcoins in 2022 for $50,000. But who knows how much Bitcoin will cost in a few years - $ 100,000 or $ 250,000?
Nevertheless, buying and storing cryptocurrencies for a longer period is one of the least aggressive ways to earn money on cryptocurrency. However, keep in mind that it is also possible that the coin you bought will become much cheaper.
If you want to actively work with your assets, then passive cryptocurrency storage (also known as HODL) may not be the best solution for you. In this case, cryptocurrency trading may be suitable for you, which we will consider below.
2. Cryptocurrency Trading
Cryptocurrency trading is very similar to buying and storing cryptocurrencies, but a much shorter cycle. An active crypto trader often opens and closes several positions per day.
A crypto trader is basically looking for a good moment to buy or a good moment to sell, in other words, a good entry and exit. For example, you have identified the right time to buy a cryptocurrency, the price has risen, so you can sell it again and earn a lot of money.
This way of earning money can also be compared to stock trading or Forex trading. The only difference is that the cryptocurrency provides an opportunity for more profit due to sharp price fluctuations.
For a crypto trader, it does not matter what a crypto project entails, who participates in it, and what benefits it will bring to humanity. The crypto trader looks only at prices, charts, trading indicators and tries to determine the optimal moments for entering and exiting a trade. Of course, you will not be able to make only profitable trades, no one can do this. You need to ensure that there are more profitable trades than unprofitable ones.
See also what tools to use to analyze cryptocurrencies.
Cryptocurrency staking is a bit like placing your money in a savings account. You get a certain interest rate on coins that you invest in staking. But why do you get money for staking?
You support the functioning of the blockchain network, and since the network can use your cryptocurrency for the maintenance and functioning of the network, you receive compensation for this.
4. P2P Crypto Loans
With the help of P2P crypto loans, you are, as it were, lending your cryptocurrency to someone else. For this, you are paid interest on the loan, so you can get a good additional income. P2P Crypto loans are also known as Yield Farming.
Depending on the term, the type of loan and which cryptocurrency it belongs to, P2P crypto loans usually give a little more profit than from staking. But you run the risk that someone will not be able to repay the loan or the price will fall, and you want to sell the cryptocurrency, but you will not have access to it, and you will have a loss at the end of the loan.
See also how to buy and sell cryptocurrency on Binance P2P.
5. Cryptocurrency mining
Another popular way to earn money is mining cryptocurrencies. You use the power of your graphics card to perform complex mathematical calculations. For each solved block you get a reward. The more powerful the graphics card, the faster the blocks are solved, and you can earn more cryptocurrencies, which can then be sold on the stock exchange.
The main disadvantages of mining are the high costs of electricity required for the operation of video cards, the constant increase in the complexity of new blocks, as well as the high cost of video cards and specialized mining equipment, for example, ASIC.
Currently, cryptocurrency mining is big business, and you are competing with huge companies that do nothing but create huge platforms for mining cryptocurrencies. Therefore, it is hardly possible to start mining as a private person now.
If you still want to start mining, then join the cryptocurrency mining pool to do something together.
There is not much difference between mining and masternodes, except that during mining you are looking for new blocks, and with masternodes you manage existing blocks. As a masternode, you guarantee that all transactions on the network are verified in real time, and you receive compensation for this.
The disadvantage of this earnings is that you will have to invest a lot to run the masternode. How big these investments are largely depends on the cryptocurrency. As a rule, this amount is from 50,000 to 150,000 dollars. On the other hand, you can earn about 10% of this amount per year, which is pretty good.
7. Liquidity pools
Liquidity pools are a relatively new way of investing. With the help of liquidity pools, you help replenish the balance of certain cryptocurrency tokens. You deposit a certain amount of token and the same amount of stablecoin (for example, USDC). Then other users can use this liquidity to exchange tokens, that is, to exchange one token for another.
Every time someone makes such a deal, you get a percentage for the deal. Well-known platforms where you can contribute to liquidity pools are Uniswap and Trustswap.
See also, how to choose a bot for cryptocurrency trading.
There are quite a few different ways to make money on cryptocurrency. The possible risks and profitability of each of them can be completely different.
If you are new to the cryptocurrency world, then it would be wise to buy some cryptocurrency and see how prices develop. You can trade on the stock exchange by buying cryptocurrency at a low price and selling it after the price rises. You can also invest some cryptocurrency in staking and receive passive income. Always make sure to invest only the money that you can afford to lose.
If you have been working with cryptocurrency for some time, then perhaps it's time to look at more advanced ways of earning money, such as masternodes or liquidity pools. Also make sure that you invest only the money that you can afford to lose.
Read also the article "The 10 best cryptocurrencies for investment in 2022".