Everyone is talking about cryptocurrency, and surely many people are jealous of those who once bought bitcoin for $10 a long time ago and are now in the sweet spot. Below we’ll talk about the most interesting and popular ways to make money from the newest technology.
1. Investment in digital currencies
Investments in digital currencies are considered the riskiest, yet the possibility of high returns often drowns out the voices of doubt in the minds of investors. When asked which cryptocurrency is the most promising in 2021, the answer is obvious. Bitcoin is your must-have, especially since the forecasts for this currency until the end of the year are positive. In order not to miss the wave of growth, investment funds are rapidly increasing bitcoin’s share in their portfolios.
In addition to Bitcoin, promising digital currencies include:
- Ethereum: the currency is moving to the second version of the network (Ethereum 2.0), which will result in a stacking feature; investors will be able to generate income by simply storing Ethereum in their wallet;
- Binance coin: the asset is released on the Ethereum blockchain and is developed on the universal ER20 protocol. The exchange rate rose to almost $400 in 2021 and continues to rise.
In simple words, a trader is a user of an exchange that makes money on the fluctuations of digital currencies. Before you begin the process itself, you need to understand the basic exchange terms. For example, you must know what volatility is. It’s the change in the rate of a cryptocurrency per unit of time. It can rise over a period of two to three days and fall as well.
With trading, making money from cryptocurrencies is very simple. To do this, you need to:
- buy the digital asset at the beginning of growth;
- sell the currency at the end of the rise;
- wait for the fall and buy the asset again.
- The scheme can be repeated in a circle an unlimited number of times. With the right approach, you can increase your savings by up to 20-30%. It happens that cryptocurrencies show rate jumps of 100-200% within a few days. It is realistic to double or even triple your capital in a month.
By far the most reliable exchanges are Binance, Poloniex, Bittrex, and Exmo.
3. Cryptocurrency staking
Steaking is a way to make passive income from cryptocurrencies on the PoS algorithm and its variations. What do you need to do to make money from the newest technology? First and foremost – keep the coins in your wallet. This will entitle you to participate in crypto-asset mining.
Validators on PoS are chosen by the number of coins that are in the stack. The more coins you have, the better your chances of becoming the next validator.
- Choose a suitable cryptocurrency.
- Read the instructions on how to set up your wallet.
- Buy the currency via a cryptocurrency exchange.
- To stay connected to the blockchain, you need to keep your computer on at all times, your internet access active, and your cryptocurrency wallet open.
The user who receives the reward is determined at random. Stackers say that even a 5% return is enough incentive to leave the wallet open.
4. Buying and selling cryptocurrency on different exchanges
The hardest way to earn tokens is to buy them on one exchange in order to sell them on another one. This method is complicated and time-consuming. You need to look at cryptocurrency quotes on several exchanges at once and compare them with each other. For this purpose, there is special software, which will make the task easier. However, such programs are expensive.
Another disadvantage of this method is that you have to create an account on all exchanges you’re planning to work with. Although this method is quite difficult to implement, it can produce a stable income.
5. Mutual fund analogues
The increased interest in cryptocurrencies has prompted the application of time-tested financial instruments to this market. For example, mutual funds. Such funds will help reduce the risks from self-investment and lower the entry threshold into the cryptocurrency market.
The point of such investing is simple. You entrust your funds to a fund manager who will use them, and other participants in the mutual fund, to create an investment portfolio. But instead of stocks and other securities, it contains tokens.
We have looked at the main ways of making money from digital currencies. Most of them require serious time and financial investment. For those who have a keen interest in the crypto world and want to try investing part of their capital in the newest technology, experts advise studying as much information, forecasts, and feedback from other investors as possible. The main thing is to approach the matter in a balanced manner and diversify risks.