3 easy ways to make money with cryptocurrency
The hype around Bitcoin and cryptocurrencies in 2020 has drawn many to the crypto world. And the important question on a lot of people’s minds remains, “how can I make money with Bitcoin?”
Because Bitcoin is heralded as the solution to the current shortcomings of fiat money, it only makes sense to be curious about how to achieve financial success with what is now widely regarded as the “new gold”.
Having shared the importance of Bitcoin in a previous blog, we will now discuss the top three ways you can make money with Bitcoin or other cryptocurrencies easily.
You should note that these are not the only ways to make money with crypto, but these three are those that we believe are the easiest for anyone to implement.
1. The “HODL” strategy
The term "Hodl" was coined back in 2013 on the BitcoinTalk forum as a misspelling of “Hold”. Since then, it has come to mean “Hold On for Dear Life” in the crypto community.
Hodl is not a complex strategy; it simply means to hold onto something.
The hodl strategy is a passive investment strategy where traders or bitcoin enthusiasts buy bitcoin assets and hold for a long time.
How to hodl
Usually, hodling involves buying bitcoin regardless of the current price and keeping it. The idea behind this strategy is a long term time frame that the price or entry point does not eventually matter because bitcoin appreciates the more it is adopted and its utility grows.
And this has been proven over time with the price of Bitcoin steadily rising since its launch in 2009.
This strategy is based on the fundamental analysis of bitcoin, which considers the long-term benefit of holding the digital asset. Hodling frees you from having to constantly check your bitcoin asset or monitor its performance.
The buy and hold strategy has proven to be one of the most effective and successful bitcoin trading strategies.
We saw the price of bitcoin surge from $4,916 in April of this year to $24,000 in December have proven that the buy and hold strategy is an effective way of making money with bitcoin.
If you’re a newbie in the crypto world with no vast knowledge of how the market operates, or you have low risk tolerance but still want to invest in Bitcoin, hodling is a good way to start. You should however note that because of the relatively short time that cryptocurrency has been around, it is still considered a volatile asset, thus, risk management is advised.
Here are 3 things you should pay attention to when utilising the hodling strategy.
• Bitcoin Wallet
A wallet is a software program that allows you to store and send your bitcoin. There are many bitcoin wallets around. If you intend to hold your crypto asset for a long time, you need to use a wallet that is secure.
• Crypto Exchange Platform
A cryptocurrency exchange platform is an online platform that allows you to exchange one digital asset for another. Some crypto exchange platforms allow you to buy or sell crypto assets with your local currency. This is useful to easily and quickly buy cryptocurrency and hodl without worrying about how to convert or buy with the dollar.
• Secure Account
It is advisable to secure your password and private key to prevent loss of bitcoin assets. It is also advisable to activate 2-Factor Authentication so as to add an extra layer of security to your account.
2. Commission Strategy
To make money with the commission strategy, you hold your crypto asset on a commission wallet. In return, you receive a daily commission or monthly commission on those assets. There are a number of commission wallets out there that offer different interest rates. Nexo wallet, for instance, offer compound interest of up to 12% APY
It is important to note that your interest rate is dependent on how long you Hold on to your bitcoin asset on their platform.
3. Staking Strategy
Staking is a process for actually participating in transaction validation on a cryptocurrency’s blockchain. Staking is, however, done on the "proof of stake" blockchain. If you have a minimum required balance of a specific cryptocurrency, you can validate transactions and earn staking rewards on this blockchain.
What is DeFi Staking?
DeFi (Decentralized Finance) is a way of providing financial services to users through smart contracts. Existing DeFi projects aim to provide a user with higher annualised earnings for specific currencies.
What are the advantages of DeFi Staking?
1. Easy to use: You do not need to manage private keys, acquire resources, make trades, or perform other complicated tasks to participate in DeFi Staking. The Exchange service allows you to obtain generous online rewards without having to keep an on-chain wallet.
2. Funds are safe: the exchange service selects only the best DeFi projects in the industry and monitors the DeFi system in real-time while running to reduce the risks associated with such projects.
3. Higher earnings: DeFi Staking does away with the exorbitant fees that come with trading capital. With a consistent level of risk, users can earn the highest possible returns in the best way.
These three strategies may favour those who intend to invest for the long term more but it can be useful to anyone, regardless of duration -- if properly implemented. As you may well know, trading cryptocurrencies in the short-term is also a good way to make money.
However, as with any investment, it is always advisable to do your own research before committing any asset to a strategy. This will further enlighten you about how the strategy fits your requirements.