The cryptocurrency explosion propelled Bitcoin and a whole host of other cryptos into the mainstream consciousness. Ever since the 2017 crypto boom, we’ve been inundated by various experts and pundits who’ve both extolled or put down the virtues of cryptocurrency.
From mining to trading, there are a multitude of ways to get in on the gold rush of this millennium. To help you get in on the whole game, we’ve prepared a simple how-to-guide which shows you how you too can make money of cryptocurrencies.
Before we get started, here are some of the basics you need to understand when investing in cryptocurrencies.
The essentials
Get a digital wallet set up
Digital wallets are essential if you are to invest in Bitcoin or any other cryptocurrencies. This is because, e-wallets function by storing your cryptocurrency on either a cloud-based online server or a hard-drive.
Because of this, digital wallets are divided into both hot and cold wallets. Hot wallets are always online, easy to set up and provide you with quick access to your cryptocurrencies. However, hot wallets are not always secure and can be hacked into which can result in you losing everything.
On the other hand, cold wallets are usually hardware based and can be carried around with you in the form of a hard disk or pen drive. Cold wallets do not need an internet connection and are significantly safer from hacking attempts. But they still can be stolen physically so always ensure that your cold wallet is stored in a secure area.
Identify a reliable crypto exchange
Cryptocurrency exchanges or digital currency exchanges allow you to exchange cryptocurrency for cash or vice-versa. These exchanges buy and sell cryptocurrencies online at their own localized exchange rate.
When buying from these exchanges, you’ll be able to get cryptocurrencies transferred directly to your digital wallet. Besides Bitcoin, exchanges offer a wide variety of cryptos that can be bought and exchanged.
Do take note that not all exchanges are entirely safe, the decentralized nature of cryptocurrencies means that you could be vulnerable to scams or theft. Fortunately, there are dozens of online resources that list down safe and reputable crypto exchanges.
To be on the safe side, consult with investors who regularly deal in crypto and they’ll be able to point you in the right direction.
Earning money with cryptocurrencies
Now that we’ve got the basics down, here are just some of the ways that you can make money by buying, trading or investing in cryptocurrencies.
Mining
For the uninitiated, Bitcoin mining involves the solving of blockchain transactions in order to earn a reward i.e. Bitcoins (BTC). This requires one to have an impressive set of hardware and access to cheap electricity. In the early days, BItcoin mining could be done with a single module but given the competitive nature of the market, mining has become a commercial enterprise.
However, it’s still quite possible to cobble together a makeshift rig that’ll earn you a steady stream of income.
Trading cryptocurrencies
Just like the share market, it’s also possible for a savvy investor to make money by trading cryptocurrencies. The key to success is simple but difficult to pull off; buy low and sell high. From punting on cryptocurrency valuations to investing in an unknown currency, there are a multitude of ways to make it big.
This method is extremely risky given the volatile nature of cryptocurrencies. When trading, always keep an eye on market conditions in order to capitalize on any opportunities. Pay attention to trading companies that offer KYC policies, which make sure the user is safeguarded, like this eToro review explains.
Buy and hold cryptocurrencies for dividends
Just like how you can buy dividend paying stocks, some cryptocurrencies pay you a dividend for holding on to their coins. Building up a portfolio of dividend paying cryptos are a great way to build up your passive income stream. Before you pump all of your cash onto the first dividend paying coin you see, take the time to invest in the right type of coin lest you end up with nothing.
Gamble with cryptocurrency
Casinos have been some of the first businesses to start accepting cryptos. From the anonymous nature offered to their widespread use amongst the tech-savvy, the benefits of gambling for cryptocurrency are innumerable.
When you gamble with cryptocurrency as a form of exchange, you’ll be able to earn cryptos and benefit from selling them on the market.
