Much has been said about cryptocurrencies promoting financial freedom, easing cross-border transactions and so forth. But being new in the space, how can you make money from crypto assets? Well, it’s possible, and there are many ways to profit from crypto and bitcoin investments.
Similar to any other form of investment, you have to understand the potential risks and rewards of investing in cryptocurrencies. As a lady, you don’t want to blow your savings on an unrewarding venture only to suffer afterwards.
That said, crypto investments can be hugely profitable if you take the right approach.
What is the Difference between Crypto and Stocks and Shares?
In stock exchanges, you need lots of paperwork and will incur several expenses before executing the first trade. Making profits is even harder. You will need capital to fund margin and trading fees, as well as spend loads of time analysing factors that affect the price of the stocks, such as political trends, economic situations, and news and so on.
Crypto trading, on the other hand, requires lesser time and resources. In fact, you can start off with as little as £100. Crypto markets are typically more volatile than the stocks markets; a characteristic that offers the potential to earn great profits or incur massive losses in equal measure.
Another significant difference between trading shares and trading cryptos are their availability. Stock exchanges usually have designated trading sessions, meaning that you can only transact within a specific timeframe. In most cases, such exchanges are inaccessible during holidays and weekends.
Contrarily, crypto trading platforms are available throughout. Also, most of the crypto exchanges are online platforms that are accessible from any location provided you have an internet connection.
You can conveniently trade as you tend to your do other things!
What is Blockchain Technology?
Every time someone mentions Bitcoin or other cryptocurrencies, you are likely to hear them reference blockchain technology. This is because technology is the basis of digital currencies.
The concept of blockchain is based on computer science – cryptography and data structures to be precise. A blockchain is essentially a peer-to-peer network of computers where all connected nodes participate in the validation of data so that integrity is maintained.
With regard to cryptocurrencies, blockchain technology maintains a distributed ledger that keeps unalterable records of all transactions. Every transaction must be verified and get a timestamp before confirmation. The network is decentralised and free from government censorship.
Profit From Bitcoin and Altcoins
Bitcoin is the world’s first cryptocurrency, introduced by an anonymous figure called Satoshi Nakamoto in 2009. It was designed in such a way that the maximum total supply would be 21 million coins. As of now, there are 17 million Bitcoins in circulation.
Because it is an electronic form of money, Bitcoin can be used as a substitute for paper money. You can use it to shop for jewellery, cosmetics or even household appliances. Its advantages over fiat currencies include anonymity, transparency, security, and low transaction fees.
Altcoins is a collective term used to refer to cryptocurrencies other than Bitcoin. The most popular altcoins include Ethereum, Ripple, Monero, TRON and many more. An altcoin can differ from Bitcoin in different ways, such as its intended use cases, its economic model or the way the coins are distributed. For instance, Ethereum is aimed for decentralised applications, while Ripple aims to solve the problem of cross border transactions. There are also some altcoins that have non-monetary uses such as data storage.
Related Crypto Reading
- The Ultimate Guide to Bitcoin Wallets and Crypto Security
- How I Saved £40k From Crypto Hackers and Still Lost £10k
- How To Buy and Trade Crypto, Bitcoin & Alts Coins
Ways to Make Money from Cryptocurrencies
The following are some of the ways to earn profits and make money from cryptocurrencies.
1. HODLing and Day Trading Cryptos
HODL (Hold-On-for-Dear-Life) is a slang term used to refer to buying and holding crypto assets, with the aim of profiting from a price surge in the long term. The increase in value comes from the increased adoption of the asset you are holding onto. This approach, however, requires patience because of the constant fluctuations in the value of digital assets.
Trading is probably the most common way people aim to make money from crypto. This includes day trading crypto. You keep a close eye on the market trends, knowing what to buy or sell, timing transactions well for profit on each trade. This approach is best-suited for experienced traders, so it is advisable to keep off if you are still green. If you’re interested in learning more about trading, you can get started here!
2. Cryptocurrency Mining for Profit
Crypto mining is the process through which new coins are generated. To make crypto money through mining, you require a powerful computer that can solve complex cryptographic puzzles. The computer can either be personal or you can opt to lease processing power from cloud mining services.
The majority of people involved with crypto mining don’t rely on it as their primary source of income. For example, you could use the proceeds from mining to settle small bills and pay for your small expenses like a visit to the salon. If you wish to make substantial money from mining, you have to invest up to £3,000-4,000 to acquire dedicated hardware. Still, this will only make you around £50 a day.
Initial Coin Offerings (ICOs) is a hugely popular method for raising funds to finance start-ups. They are also a means of distributing tokens, which equate to the project’s shares, to as many investors as possible.
Making money from ICOs is similar to earning from buying established cryptocurrencies – you can either HODL or sell immediately. Most investors, however, prefer to HODL. This is because as the project grows, the value of the coins (tokens) will eventually soar, allowing the holders to sell at a profit. The main problem with ICOs is the difficulty in telling apart scammers and genuine platforms.
In the crypto world, airdrops refer to events where a project distributes tokens for free to early adopters. Besides having a wallet, airdrops may require participants to have a certain amount of a particular digital currency.
The main objective of distributing airdrop is creating awareness about a new project and secure the loyalty of early adopters. Initially, the airdropped tokens are either worthless or have negligible value. As the coins gain popularity, you can sell them on exchange platforms. Alternatively, you can opt to HODL and sell when the value grows.
5. Staking Cryptocurrencies
Crypto staking involves the purchase and holding of cryptocurrencies in a digital wallet for a specific period. It works in a similar way to fixed deposit accounts in conventional banks, where you get a fixed interest after the defined period expires.
If your chosen cryptocurrency uses the proof-of-stake consensus algorithm, you can mine or validate new blocks proportional to the number of coins you have staked. Thus, a higher number of staked coins gives you more power to validate new blocks. Also, staking for longer periods increases the amount of interest you receive.
So, how will you make money from crypto?
Cryptocurrencies might be undergoing a rough patch (it has been the case since the start of 2018), but this should not discourage you from investing in them. As highlighted, there is many ways to make money in crypto – and they all suit different market cycles.
Different ways to make money in crypto suit different market cycles.
Always keep in mind that they are an emerging asset class that is still struggling with creating awareness to enable their mass adoption. As the world embraces a paperless economy, it’s only a matter of time before the use of cryptos becomes mainstream.
That said, you must be wary of scammers. Only buy cryptocurrencies from trusted exchange platforms. Lastly, you must be prepared for frequent fluctuations in the value of digital assets as well as the possibility of theft through hacking.
Don’t forget to check out the best places to buy bitcoin, crypto and altcoins.