Before you’re ready to burst into the cryptocurrency world, there is one more thing you need to know: how to earn cryptocurrency.
There are several ways to earn income in the cryptocurrency market. First, you should carefully familiarize yourself with them and choose the one that suits you, depending on your lifestyle, financial standing, preferences, etc. You can even choose several coins and combine them skillfully. In such a case, you will have a better opportunity to diversify risks and earn more.
Nowadays, there are the following ways to gain profit in the cryptocurrency market:
- Long-term investment
- Trading
- Mining
- Participating in ICO
- Re-selling cryptocurrency.
Here is a brief overview of each of these methods. Then I will give you a more in-depth look at each strategy.
How to Earn Cryptocurrency
Long-Term Investment
If you choose this way of making a profit, then you should have:
- A period of 1 to 2 years (invest a sum of money you can easily “freeze” for several years)
- A substantial amount of money (if you can invest in parts only, this too can be viewed as a long-term investment)
- Readiness for risks (which are higher than in the banking sector).
You make money through significant capital gains in the long term.
Trading
If you prefer this way of making a profit, you should have:
- Time (not the time for waiting as with long-term investment, but free time you can devote daily to trading)
- A small amount of money
- Perseverance and diligence
- Mechanical intelligence (as you have to work with numbers and charts)
- Possibility to stay tuned and monitor developments.
You make money by beating the market and taking risks (the higher the potential gain, the higher the risk),in order to potentially make money quickly and gain recurrent income.
Mining
Mining is the process of producing new cryptocurrency or bitcoins. If you are interested in this type of making profits with cryptocurrency, you should decide whether you’d like to be a hobbyist or dive into professional mining.
For hobbyist mining, you need to have:
- Mechanical intelligence (or a friend/advisor with mechanical intelligence)
- Startup capital (usually up to six mining farms)
- Readiness for technical problems and interruptions
- Protection of equipment from external factors (pets, children, etc).
You make money through a small but constant profit in mining. You also enjoy the opportunity to not only to trade in the market but to manage it.
In case you decide to do professional mining, then you need the following essentials:
- Mechanical intelligence (or a friend/advisor with mechanical intelligence)
- Startup capital or investments
- Premises (with electricity, ventilation, cooling installations, security)
- A team
- Readiness for bearing responsibility (for equipment, premises, team).
By running your own mining farm, you can make a stable and constant profit; You will also manage the market, not just trade in it. In addition, this gives you the chance to own something real and sell your business in the future.
ICOs (Initial Coin Offering)
To date, a lot of people participate in so-called ICOs (Initial Coin Offering). Roughly speaking, this is another interpretation of a crowdfunding model, similar to an IPO. The participants finance the development of a project in return for future benefits but without any guarantees. ICO is the issuance of coupons or tokens by a certain project to be used to pay for site services with cryptocurrency in the future.
ICO has a lot in common with a venture fund, i.e. an investment fund focused on working with innovative enterprises and projects (startups). A venture fund invests in securities or shares of enterprises with high or relatively high risk and expects extremely high profits. As a rule, 70%-80% of such projects do not bring returns. However, the profit from the remaining 20%-30% makes up for all losses.
If you think you are brave enough to sponsor a project without guarantees, first ask yourself:
- Am I ready for extra risks?
- Do I have a capital cushion for diversification?
You make money with ICO by taking big risks with the chance to make super profits.
Re-Selling Cryptocurrency
Re-selling cryptocurrency has a lot of resemblance to trading. Here you also make money on currency fluctuations, but unlike trading, it’s about the game between the wholesale and the retail price rather than the market or exchange price.
If you are interested in this way of making a profit, then you:
- do not take risks
- operate in small sums only
- understand that income depends on your turnover.
So far, we have a superficial knowledge of the basic ways of earning income in the cryptocurrency market. Now let’s dive deeper into each method.
