The Ways to Make Money on Cryptocurrency
If you are interested in making money on the crypto market, you must ever think can I earn with cryptocurrency? How can I make this? What is the best way to invest in cryptocurrency? Today, let’s deep into these questions.
There are many ways to increase your savings using Bitcoin and other digital assets. For example, investing, trading, mining, and other methods.
2020 can become the year when interest in cryptocurrencies reaches the end of 2017. Bitcoin, according to forecasts, is again torn to historical highs, and altcoins are also growing in price. It’s time to remember the most popular ways to invest and make money on cryptocurrencies.
Trading cryptocurrency for profit
Trading involves short-term speculation, making a lot of transactions. Exchanges are best suited for this. Here, the easiest way is to quickly buy or sell cryptocurrency. However, it is suitable only for professionals, since it is much riskier.
Cryptocurrencies are extremely volatile, so it’s better to start trading them with a trial account. It allows you to get acquainted with the exchange and its instruments, get an internship on a virtual balance dashboard. Then it is better to start with a small amount and, as strange as it may sound, experience the first losses. This will help you to understand if you are able to remain calm and make decisions in a stressful situation.
It is worth reading specialized trading literature, listening to lectures, taking courses. This will help you to better understand the market situation and learn different trading strategies.
Algorithmic trading
There is also algorithmic trading. Most transactions on world exchanges are carried out using high-frequency trading instruments — a method of trading in which special programs automatically look for opportunities to earn money, sell and buy positions in a split second. Due to strong fluctuations in cryptocurrency rates, bots in this area are becoming more and more popular.
Algorithmic trading systems are used by both professionals and amateurs. Programs vary in the complexity and principles of the device. There are three main categories of software for working with crypto-exchanges:
• Simple bots with pre-written logic
• Trainable trading robots based on AI and machine learning technologies;
• Robots-advisors (do not make deals, but give recommendations).
This option is hardly suitable for beginners. System performance is difficult to predict and impossible to guarantee. It is not necessary to completely outsource exchange operations to the software, but you can try robot advisors and independently evaluate their effectiveness.
Earnings on referral programs of crypto exchanges
A referral program is a type of cooperation in which a company pays its client (referral) for attracting new users (referrals). As a rule, both the one who brought and the one who was brought receives bonuses. Each organization chooses the method and amount of remuneration independently.
Investment
The alternative to trading is hodle or investing. This approach implies the execution of long-term transactions. It is more suitable for non-professionals since it does not require knowledge of technical analysis, trading ability, and other skills.
Investing has less potential than trading. The price of cryptocurrencies can change by tens of percent every day, and the investor, accordingly, misses the opportunity to make money on these fluctuations. The “hodl” has one more essential nuance. It is extremely important to find the right moment to purchase an asset, it is better to wait for a strong decline in its rate. For example, users who invested in bitcoin in 2017–2018 at a value above $ 14,000 have still not been able to close the deal with a profit.
Stablecoins
Stablecoin is a cryptocurrency backed by traditional assets like US dollars. Such tokens are often used on crypto exchanges as a convenient trading pair and an adaptation tool. For traders, they are one of the main tools for taking profits. Having made a successful transaction, the user does not have to withdraw funds to fiat.
Mining
One of the most popular ways to make money on cryptocurrency is mining. For beginners, mining the first cryptocurrency is hardly suitable. Large companies that have a large amount of necessary equipment, access to cheap terms for renting premises, electricity, and maintenance are more likely to make money on it. It makes sense to mine digital coins only if there is an opportunity not to sell most of them to cover transaction costs.
It is better for beginners to start mining altcoins. It is cheaper and makes it possible to resell video cards in case of failure. An ASIC after the operation is much more difficult to implement. It is even more profitable to work in a pool, that is, together with other miners. In this case, due to the total capacity of the pool, you can get a small but stable income.
Staking
An alternative to mining is staking. This is a way of mining cryptocurrency but without farms or ASICs. Coins that work on the Proof-of-Stake algorithm are stored in the wallet, and while it is running, they bring a certain income. The amount of earnings depends on the account, the annual interest rate for PoS, and, a little, on luck.
In PoS, the operation of the network is provided by remote servers running software. They are also called masternodes. In fact, this is a home computer or laptop with a special wallet installed and a certain amount of coins.
In order to earn money on staking, you need to fund your wallet with coins. Then wait for the blocks to appear, usually this process takes 1–2 days. After that, install the software client on the computer and start the storage. It must be active and synchronized, and coins must not be used for transactions for a long time.
Staking is like a bank deposit, where a user deposits funds into an account at interest for a specific period of time. The more money in the account, the higher the profit. The power of the computer in the case of staking does not affect income in any way, only the balance of the wallet and the shelf life are important.
To search for coins on the PoS algorithm, there is the StakingRewards service. The portal has information about the approximate income that can be obtained for storing certain coins. Now more and more altcoins are appearing on the market that supports staking.
Earnings on masternodes
Masternodes are needed to ensure that transactions take place as quickly and anonymously as possible. Each owner of such a server, as in the case of staking, must be the holder of a certain amount of cryptocurrency. Earnings consist of a portion of the miners’ remuneration.
The most profitable and risky option, in this case, is to look for new projects in which the masternode mechanism is implemented, and become the owner of the node in them. This does not require large investments, but, in the case of successful development of the startup, it allows you to get a high income. At the same time, you need to be constantly online and be able to negotiate in English.
What Not to Do
Newbies make a lot of mistakes and they usually cost money. In this regard, it is better to familiarize yourself with someone else’s experience in advance in order to avoid unnecessary losses. To do this, we have prepared several rules that every novice user should follow.
Don’t buy cryptocurrency on the news. As a rule, if the user found out about some news that should lead to an increase in the price of the coin, then this has probably already happened. If you bought it, be sure to use stop-loss orders. These are bids to sell coins at a specific price. For example, if a user buys Bitcoin at $ 9000 and the price rises to $ 9100, a stop-loss order can be placed at the point of purchase. In this case, the exchange will automatically sell the asset at the specified price, and the trader will not lose anything.
Don’t be greedy. If you managed to buy bitcoin at $ 9000, after which its price rose higher, it is safer to sell some of the coins and put the rest on a stop loss.
Be very careful about or not at all trust other people’s signals to buy and sell assets. At the moment, Telegram and other social networks have many channels that publish cryptocurrency predictions. Their authors are not responsible for their subscribers’ money.
Do not give capital to anyone, especially unfamiliar people, for trust management. And if you do this, then only with the conclusion of a contract approved by a notary. This practice has been popular in the crypto world for several years and often has a negative result for inexperienced traders.
Don’t give in to emotions. Most losing trades are made precisely because of the loss of control.
Do not trade with the last money or borrowed money. It is difficult to make money on the cryptocurrency market, but for novice traders, it is almost impossible. For this reason, you should invest only those funds that you do not mind losing. And definitely not invest capital, which may suddenly be required due to the prevailing crisis in the world caused by the coronavirus infection Covid-19.
Always have funds in case the price of an asset falls below the level at which you bought.
Do not neglect training. Trading in the cryptocurrency market is not a casino, but hard, nervous work. It can take years to understand how asset prices behave in a given situation.
Record your trades. This will help to evaluate and correct the trading strategy, as well as to identify the mistakes made.
Learn not to lose and recognize a loss. If you are not sure about the deal, it is safer to close it and wait for another, good moment. It is better to donate a small share of the capital to the market than to be stuck in a bitcoin bought for $ 20,000 for several years and miss the opportunity to buy it for less than $ 4,000 twice.
Conclusion
You need to take digital assets trading seriously, calculate every step, and think about the possible negative consequences.
There can be different effects on the crypto market. Some take the winnings, others leave the market empty-handed, and sometimes with debts. A novice user should first decide on a strategy: investing or trading. Determine an amount for this that he does not mind losing. Then buy cryptocurrencies on it and transfer to an exchange or to a cold wallet. Previously, you can practice on a training account, read thematic literature, and take courses.
