How To Make Money With Cryptocurrencies
A Big Picture Overview
Some people believe that the only ways to make money with cryptocurrencies are to trade them or to simply invest, but there are more ways you can earn crypto than that. This article will go over a few of the different options you have when it comes to earning crypto.
There Are 4 Main Ways You Can Make Money With Cryptocurrencies.
- Investing
- Trading
- Mining and Dividends/Staking
- Developing/Working/Creating
Let’s go into each of them.
1. Investing
This is what nearly every single person who has gotten rich off of crypto has done. It’s also the easiest way to make money in crypto. Investing also usually yields the biggest returns over time. Not only that, but investing is also the least stressful way to make money when it comes to any financial markets and it requires the least amount of time.
As you can see, there are so many benefits to investing in cryptocurrencies, especially if you choose the right ones.
Investing simply means that you invest your money into a cryptocurrency and you just wait and hold onto that cryptocurrency for an extended period of time. This can be anywhere from 6 months to literally decades. For example, you could have invested into Amazon when it was trading for $100 a share back in 2009 and simply held onto it. Currently (2019) it’s trading for roughly $1800 a share. That is an 18x return on your investment in just 10 years. Personally, I believe that Bitcoin will 18x from its current price of roughly $9000 in around 5 years, but that’s all speculation. Some coins 18x in literally weeks in the cryptocurrency space when things really start moving.
Investing works because as the average amount of money in the marketplace continues to go up, so will the average price of quality coins. You can say the same thing for quality stocks, houses, and other assets; Throughout an extended period of time, quality assets rise. The natural direction of the market is up. Unless something drastic happens with the cryptocurrency you invest in, such as the team breaking up or the project running out of funding, then it will more than likely rise up with everything else as more and more money gets put into the market. This is why if you are going to invest in something, you need to do your own research and really believe that the team behind the crypto can deliver. Sometimes, even when the team completely stops working on the coin and the founder himself calls the crypto a “joke coin,” the coin can still go up; This is exactly what happened with Dogecoin, which is the coin with the dog’s face on it. Despite the creator of the coin calling it a joke coin, it still goes up in value. That is the wild west of crypto.
2. Trading
Another way to make money in crypto is to trade it. Trading means that you buy a coin and hope to sell it at a higher price than what you bought it for. Along with investing, most people have gotten incredibly rich by trading it. However, most people have gotten rich by swing trading crypto long term.
There are actually 3 different ways how you can trade.
- Swing trading — Swing trading is when you buy a coin and then you wait for a big upswing and then sell it when it gets really high. This is pretty easy to do. It doesn’t require much time or effort. And you can make a lot of money doing it. The big swings in prices can take anywhere between a few weeks and a few months, so you have to keep that in mind. Also, it’s more than likely that you won’t catch the absolute bottom of the price, so you should be comfortable holding and waiting even if the price moves against you for a short period of time while you’re in your swing trade. Many times I will enter a swing trade and the price might drop 10% from my entry, only to turn around and move up 50%, yielding me a 40% gain. A good strategy for swing trading is to keep track of the news, or fundamentals behind crypto, along with the price of the coin, and follow the motto “buy low, sell high.” If you are interested in trading cryptocurrencies and want a step-by-step course to take you by the hand and teach you everything you need to know, I created the Crypto Mastery Course that you can get here.
- Day trading — Day trading is when you buy and sell a coin within a single 24 hour period. The regular stock exchange closes each day at 4 pm, but cryptocurrencies are global, so they never end. You can easily get sucked into day trading and have it take over your entire life. An important statistic to remember is that over 90% of people who day trade end up losing money. So if you aren’t dedicated to really mastering the art of day trading, it isn’t recommended. A good analogy to compare day trading and swing trading is to think of them as different difficulty levels of the same video game. Swing trading is level 4 and day trading is level 8. You use all of the same techniques and indicators, but the action is much faster, so you have to be able to think and act quickly. If you don’t know what you’re doing, I don’t recommend day trading. However, if you do know what you’re doing, and you have the time and it’s your career and you track your trades and you end up going on a winning streak, you can definitely make a lot of money day trading. Once again, if you’d like to learn how to trade, here’s a link to the Crypto Mastery course.
- Scalping — If swing trading is level 4 and day trading is level 8, scalping is level 10 difficulty. Scalping is when you get in and out of trade really quickly, within minutes. Scalping is for very advanced traders and is not recommended.
3. Mining And Dividends/Staking
Mining
Bitcoin uses a model called “proof-of-work,” or POW. POW means that computers with powerful CPUs solve difficult equations to validate transactions on the network. This is called mining and the computers are the miners. If you want to buy an advanced piece of hardware and start mining bitcoins, that is possible. However, because of the high upfront costs and continued electricity costs, it’s not recommended unless you can find a way to get access to extremely cheap electricity.
Dividends And Staking
Dividends are basically payouts that you get simply by holding crypto. For a cryptocurrency to work, it needs people to actually own it. In crypto, when you own a large amount of a specific coin, it is usually said that you are “staking” the coin. This is because almost all coins run on a model called “proof-of-stake.” This is different than bitcoin’s “proof-of-work” model that requires “miners” to solve complex problems on expensive computers in order for the network to work. With proof-of-stake, instead of miners, there are “validators” that own “nodes” or “masternodes” which are just large sums of a particular cryptocurrency. These nodes and masternodes validate transactions without expensive computing equipment or heaps of energy. The more of the crypto you own, the bigger your payout will be for helping to validate transactions and keep the network running. This incentivizes people to hold onto the cryptocurrency.
The great thing about this is that, as opposed to trading, you don’t have to sell your crypto to realize the profit. You automatically realize a profit when you receive your dividend payout. The payouts can range from 1% to 15% or more. They can get payouts each week, each month, each year, or on any predetermined time-interval that the creators of the cryptocurrency decide on. Some cryptocurrencies don’t even require you to be a validator in order to get paid. All you need to do is hold enough of the crypto in a specific wallet.
The general rule of thumb is that the bigger and the more popular the cryptocurrency is (usually in terms of market capitalization), the less they tend to pay out. This is because there is less risk and less volatility in bigger coins compared to smaller ones. However, just because particular crypto has a smaller market cap doesn’t mean that it is a bad project or won’t be around for years to come. Some of my favorite projects are actually small market cap coins with great teams and real-world use cases.
A few examples of coins that give out dividends include:
- NEO (NEO) — NEO is called “the Chinese Ethereum.” NEO pays out GAS, which is what is used to process transactions on the NEO blockchain. If you hold NEO in an eligible waller, it pays out about 4–6% per year.
- WAVES — Waves is a decentralized exchange. For holding WAVES, you get around 4–5% per year of what you hold in different cryptos that are on the WAVES exchange.
- KuCoin — Kucoin is an exchange that has a lot of low cap altcoins. For owning KuCoin Shares (KCS), you get about 7.25% in payouts per year.
Others include Other popular PoS cryptocurrencies for staking include VeTHOR (VET) Ontology (ONT), Tezos (XTZ), Waves (WAVES), EOS (EOS), Cardano (ADA), Pivx (PIVX), Dash (DASH), Decred (DCR), Livepeer (LPT) and Factom (FCT).
Some Other Ways To Get Paid
STEEM (STEEM)
Steemit is a social media website that pays out users who write articles and create content that gets upvotes and comments on the steemit platform. It’s not a dividend but it is a different way to earn more crypto.
KuCoin
KuCoin is an exchange that has a lot of low cap alt coins. For owning KuCoin Shares (KCS), you get about 7.25% in payouts per year.
Binance Coin (BNB)
Binance takes 20% of the profits that it earns and it uses those profits to buy back their own coin. As they buy back more of their coins, there are fewer in circulation, which tends to drive up the price. After Binance buys back their coins, they actually “burn” or destroy the coins, so there are literally less in circulation. This isn’t exactly a dividend per se, but it does help to increase the value without you actually doing anything.
4. Developing/working/creating
Probably one of the safest skills you can acquire today in terms of job-safety is a developer or programmer that understands blockchain technology. There are companies hiring left and right, paying 6 figures to people who know how to code and develop on blockchains. If you are a developer or engineer, or you just love technology and are interested in that field, I highly recommend looking into programs that teach you how to become a blockchain developer.
Blockchain companies need more than just developers. If you have any skillset that can help out a company, you can mix it with blockchain and crypto. Personally, I created CryptoRays to help traders, developers, and crypto enthusiasts protect their eyes while on the computer all day and night.
And there you have it.
Now you have a big picture overview of all of the different ways how you can make money in the cryptocurrency and blockchain space.
Now that you know all of this, choose one and give it a shot!
Thanks for reading,
Louis, aka Cryptolete
