Welp MagazineCryptocurrencies and related investments have been around for more than a decade now. However, some people are only looking to venture into it now as it’s increasingly becoming a promising way to make extra income. As volatile as it is, the cryptocurrency market is also quite lucrative and there are many ways you can earn an income, be it your main or side income with digital currency.
Some people prefer to go to the deep end with high risk and high rewards of trading or speculating. Others stay by the sideway by creating exchange platforms through cryptocurrency exchange development to earn from the fees and commissions. As an average person without deep crypto knowledge, knowing the best way to get started can be an uphill task for many. Follow this simple guide to help you dive in and thrive with crypto investment.
Ways to earn income with crypto
All investments come with a level of risk and crypto investments are even riskier but more appealing in profitability. In 2022, the crypto market was valued at $4.67 billion, and the growth is expected to keep soaring at an annual rate of 12.5% between now and 2030. If you’re looking to invest in the digital currency market, look at the ways you can get into it, as elaborated below.
Crypto mining
This is arguably the oldest way of acquiring and earning from digital currency and is also quite common. Mining involves solving cryptographic problems on a blockchain network and getting rewarded for it. Basically, you’ll be validating blockchain transactions and adding new blocks. Crypto mining uses the Proof Of Work (PoW) consensus process and you get a reward for successfully the transactions you successfully validate.
However, crypto mining has evolved in various ways, including developing comprehensive coin mining services like the fault-tolerant multicoin mining pool. But in general, there are two main ways to mine cryptos; cloud and hardware mining.
Cloud mining: This is the easier option for most individuals as it mostly doesn’t include electricity bills or any recurring charges. There’s also no need to buy hardware, specialized app or software of mine. What you require is a one-time registration and contract fee. However, the rewards will be significantly lower than in hardware mining.
Hardware mining: In contrast with cloud mining, here you need to purchase mining hardware and deal with all the issues involved in operating it. These will be the normal operating costs, fees, and liabilities. This is the more exciting and profitable crypto-mining option but also more expensive. You also need quite a bit of expertise in setting up mining rigs.
As straightforward and enticing as mining sounds, you need to have a good knowledge of how it works before you get started. You need to know what you’re getting into before putting your hard-earned cash into a crypto-mining company. In addition, it’s good practice to check and verify the credibility of the company to avoid falling into scams and losing your investment.
Buy and hold
This works like any other speculative buying and selling. It works by buying digital currency when prices drop and selling when prices go up and it is suitable for people who generally like taking risks. It’s also a good option if you don’t intend to make quick money but rather hold on to your cryptos for a long time. This is because, typically, for an asset to have accumulated a significantly higher value than when you purchased it, it takes time.
While most established cryptos have a rise and fall graph, the general direction of the chart is usually a gain or an upward trend. As for newer coins, they might start at a high value due to the level of publicity and hype created around then and then drop, taking even longer to recover and stabilize enough to make you any profits. It’s always recommended that you go for more established coins if you want to use the buy-and-hold method.
But ultimately, you should properly research the coins you’re interested in to understand their background and measure their viability as an investment. Proper research will help you avoid the pitfalls of investing in coins that don’t have a future.
Crypto trading
While buy and hold is a strategy for those looking for a long-term investment, trading is where you leverage the short-term changes to make gains with your cryptos. If you have done any research on the crypto market, one obvious thing you’ll notice is its volatility. The prices rise and fall unpredictably and dramatically in short times. But that also gives an opportunity for traders to capitalize and make profits from these price fluctuations.
Notably, you need to be a good trader to avoid massive losses that are also highly possible. Your knowledge of the crypto market should be solid. Your analytical skills are up to par to enable you to evaluate and predict more successfully the price direction a coin will take in the near future and trade accordingly.
The good thing with trading is you can move both sides, that is either buying or selling. That means if you make your predictions well, you can avoid deep losses and enjoy profits from the price differences. There are a few ways you can enhance your crypto trading strategy to make the most profits and avoid losses.
- Go for diverse currencies: Instead of picking and relying on a single currency, diversify your trading portfolio with a combination of various currencies. This helps you lower the risk related to a specific cryptocurrency.
- Follow the news: You can’t afford to stay in the dark with crypto news if you want to successfully trade. Keep yourself updated so you know the best time to execute your moves.
- Use trading bots: It’s not always possible to trade manually and therefore, as much as possible, use the best available technology to assist you. Trading bots have been developed to be quick in helping pick the difference in prices and execute trades on your behalf as per your set goals.
- Choose your exchange wisely: You’ll be charged fees on an exchange but you can find trustworthy exchange platforms with lower fees to give you better profit margins.
- Know your limit: it’s recommended that you utilize stop-loss orders. Always set your stop-loss orders for each trade and know when you need to stop investing after a loss or even a profit.
Final thoughts
These are only a few common but straightforward ways to get started earning with cryptocurrency. If you want to get started, always do your research. Alternatively, find crypto experts to guide you on the best ways to venture to avoid losses and crypto scams.
