How to Make Money With Cryptocurrency

Cryptocurrency has proven to be a lucrative investment and has helped elevate many to a new level of financial stability. Not only is it a sound investment, but the technology behind it can also change the course of the world. However, being in its early stages, there are also a lot of risks involved. You have to know the best ways to make money with cryptocurrency and understand the risks.

Buying and Holding

The simplest and most popular way to earn money in crypto is by buying and holding. The most well-known crypto, Bitcoin, has a value of over $30,000 during the creation of this post. If you had invested three years ago, your money would be up 4x. If you had invested six years ago, you would be up 140x.

Data has shown that crypto appreciates at a faster rate compared to other markets. Because it is a relatively new market, it is subject to some fast appreciation. However, it’s also a very volatile market. You can see the value of your crypto drop anywhere from 20%-60% before it goes back up and doubles your investment.

In the worst-case scenario, you can buy at the peak of a bull market and have to trudge through a two-year bear market before seeing the value go back up again. It also depends on how solid the crypto team is and the fundamentals of the project. Around 90% of the top 100 cryptocurrency coins from 2017’s bull run are no longer operational.

You have to decide if you want to invest in a slower but safer investment, like Bitcoin and Ethereum. On the other hand, you can catch a new crypto gem that is still on the way to becoming a future contender. It’s riskier, but you can end up multiplying your money much more than if you had put it in Bitcoin. There is also a chance that it goes to zero.

Trading Cryptocurrency

Another popular option apart from holding is trading cryptocurrency. Trading is all about finding optimal timing to enter the market and exit at a profit. Traders often look for short-term upward or downward movements and catch a wave. It can be a rewarding career and can also wipe out your bank account if you’re not careful.

Trading is not for everyone. It requires a lot of discipline and emotional control to profit consistently as a trader. It’s the reason why most traders fail, and some only see success after years of trying. Another issue with trading is leverage.

Risk Management

Trading with leverage is trading with money that you don’t own. If you lose money, it can take more from your account. You can get into a bad habit of overtrading because you can trade more. One mistake can turn into a mountain of them.

With that said, trading can be profitable if you are a part of the few who can profit from it consistently. However, you need proper risk management. Never risk anything more than what you are willing to lose.

Mining Cryptocurrency

Mining cryptocurrency is one of the first ways that people got into it. It’s a significant part of the distribution system; the market wouldn’t exist without miners. Mining is all about having a powerful computing setup. The setup is capable of solving cryptographic equations that reward cryptocurrency. Nowadays, to be profitable in mining, you’ll have to create a sustainable system that costs money most people don’t have.

To circumvent this, miners have joined forces to create mining pools. They join their resources together to mine and profit more from their operation. Another alternative is for people to invest in a mining company. The money they put in will be spent on machines. They get rewarded with mined cryptocurrency every month depending on their investment.

PLEASE Beware the Scams

Because of the interest in the space and the potential to earn money, it’s easy to attract people looking for gains. Many of these people have little to no knowledge about crypto, making them easy to target by scammers. The worst part is these scammers are using the identities of popular crypto companies or crypto personalities to try to fool others. They are using social media and pay-per-click advertising.

One of the most common examples of this is fake links or phishing links. They will convince you to use their link to a website, which has a malicious program to steal information. Others will fake an airdrop (a giveaway) of crypto and will convince you to deposit to their crypto address to enter. Many people have become victims of these scammers who disappear with their money.

There’s a Lot of Room to Make Money

Companies and various individuals are looking at crypto to improve their financial state. There are many opportunities, and the growth in crypto means that more avenues for income will come over time. However, with this increased interest also comes more risk.

Remember to use the proper channels when you are dealing with cryptocurrency. Be wary of links that could lead you to fake copies of a legitimate website. Avoid talking about how much money you have in your wallet, because that will only attract the wrong people. Do your research and always take extra steps to keep your money safe.

Opinion writer on 7trade7