Cryptocurrency has been neglected for a long time, but those times are over. The times when those who were interested in Bitcoin and spent their money to purchase and store them were considered nerd and naif are over! Today, those nerds have become rich, and those who neglect what a huge opportunity crypto is for investors of any kind and possibilities are just blind!
If you are among those who are just discovering more about crypto and want to learn how to start making money with them, you’ve just landed in the right place!
The truth is that, today, you can make money with crypto in more than one way. There are many ways, even though not all of them have the same level of complexity and security. If you’re just approaching the world of crypto and you want to learn how you can make money, and what are the risks and the required investments, in this article we’re going to provide all the information you need.
Hodling is the easiest strategy to start to make money with crypto. However, it’s not risk-free and it can provide only a long-term ROI (Return of Investment).
How do you HODL crypto?
Hodling consists in buying a cryptocurrency (as you know, the times when Bitcoin was the only cryptocurrency available are long over), storing someplace secure, and waiting for their value to rise or for the day that you’ll be able to spend them on Amazon or at the grocery store.
What do you need to know to make money by hodling crypto?
To start hodling crypto, make sure:
- pick solid and promising projects. You want to make sure those cryptos will still be around in ten or twenty years. This is why hodlers usually invest in Bitcoin or Ethereum, because they are the biggest and most solid projects.
- make sure you can store your crypto somewhere safe and secure. What does it mean? As you may already know, crypto wallets are identified by a couple of keys, a public and a private one. If anyone gets access to your private key, they’ll be able to steal all your money (crypto-money). The most secure ways of storing your crypto are mainly two:
- you can write down your private key on a piece of paper, and hide that piece of paper somewhere safe (make sure you won’t lose it!)
- You can use a hardware wallet. They look like USB pens, you can plug them into your computer to check your account, and they are the safest and most convenient way of storing cryptos.
- Wait. Hodling is a long-term investment. Being able to wait before selling your crypto and collect your revenue will be one of the hardest aspects of this type of investment!
To understand how you can make money with crypto dividends, let’s take a step back first and discuss what traditional dividends are. When you invest in dividends on the traditional financial market, you are providing money to a company. In return, you will receive a part of their profit, say, once a year. The risk of this type of investment is connected to the profits of the company you pick: if the company goes well, you’ll be earning a lot. If it goes bad, you’ll lose money.
How do dividends apply to crypto?
There are some crypto projects that allow you to earn dividends simply by buying and storing the cryptocurrency itself. With this method, you can make money in a double way: on one side, when the cryptocurrency’s value goes up, you’ll be earning a profit. Plus, you are paid dividends periodically.
Not every crypto allows you to earn dividends, so you want to make sure you pick the right projects. The most known are NEI, COSS, CEFF, and KUCOIN.
If you have computer knowledge, you can also start making money with crypto by running a master node. Cryptocurrencies are based on blockchains and nodes are what maintain the blockchain “alive”. They are computers that are responsible for running all the algorithms and calculus that run transitions, payments, and more within the blockchain.
However, don’t think that you can leave your computer on and earn cryptos like that. Masternodes require great power: you’ll need to provide yourself with the required hardware (and it isn’t always cheap!) and have the technical knowledge to maintain its functioning.
So, running cryptocurrency master nodes is not for anyone. But for those who have the resources and knowledge, it can become a great source of passive income.
When you want to earn crypto by staking them, you need to rely on a staking platform. There are many of them available, and some of them are also very easy to use. Their functioning is based on the concept that are users that provide liquidity to the platform. On the other side, there are borrowers who can require loans. When borrowers pay back their loans, they’ll pay a percentage of interest. If you have provided liquidity (in other words, if you’ve staked your cryptos) you’ll be receiving a part of those paid interests.
The percentage that you can earn when you stake your crypto is expressed in APY. For example, if you can earn 8% APY, it means that you’ll earn 8% of the amount of crypto stake in one year.
APYs can vary a lot and they go from a minimum of about 3% to even 50-60%.
Staking becomes very interesting because of the existence of stablecoins. With stablecoins, you are not exposed to the volatility of cryptos so that you can lower the risk of your investment even more.
What are stablecoins? Stablecoins are crypto assets that are tied to the value of FIAT, mainly dollars. One USDC, for example, will always be worth one dollar. This is why when you stake stablecoins, you’re not exposed to volatility.
When you stake cryptos you are exposed to volatility and higher risk, but you can also be exposed to a greater opportunity for profit: other than earning the APY percentage every year, if the crypto’s value goes up, your investment will be growing exponentially.
Trading is one of the most popular ways of making money with cryptocurrencies. There are many platforms, called exchanges, that you can use to buy and sell crypto.
The principle behind crypto trading is simple: you buy a cryptocurrency, you wait for its price to go up, and you sell it. However, things aren’t always that easy.
Risks are high with trading if you don’t know what to do and you’re not an expert. The risk is of course to invest in cryptocurrencies that, instead of going up, lower their value. Losing all your money this way is simpler than you imagine.
While trading is experts’ favorite way of making money with crypto if you are a beginner make sure you learn as much as you can before spending your money on any project.
Crypto faucets were more popular some years ago, but if you’re a complete beginner you can still find some faucets online.
What are faucets?
Faucets are simple web platforms that pay a very small amount of crypto in exchange for a click on a banner, or for visualizing an advertisement. Faucets are no longer a way of making real money with crypto. You can earn some cents worth of crypto and nothing more. It can be a way of starting to understand what crypto is and how to use a crypto wallet. But if you want to earn money, you’ll need to invest some of your own at the beginning.
If you run a business of any kind – but especially if it’s an online business – you offer your customer the possibility of paying in cryptocurrencies.
This is a way of making money with crypto because, with time, the value of the crypto can go up and you can increase your profit, but it’s also a risk: just like the value of any crypto can go up, it can also go down.
As we’ve just seen, every way of making money with crypto includes a certain level of risk for your investment. There are ways of lowering that risk, for example by staking stablecoins, but the higher you risk, the higher you can earn.
In other terms, we can conclude that the amount of money you can make with cryptocurrency is tied to the level of risk: when the possible profit is huge, the risk is also high. When you limit the risk, you’re also limiting your profits.
Finally, one last recommendation: we’ve seen many ways of making money with cryptos, but you don’t have to pick only one of them! On the contrary, by differentiating your investing you’ll be lowering the risk of losing your investment. Find the right balance between risk and possible profit and start making money with crypto now!