The Best Ways to Earn Crypto
Can you really make money from Crypto? Yes. Yes, you can.
Short-term vs Long-term Investment
When it comes to earning Crypto, it pays to have a plan. And time is a very important part of that. You should always know roughly how long your investment is going to be.
“Exit strategy” is a crucial part of any investment: any Venture Capitalist will tell you that, probably by shouting it from the window of their volcano lair. Like a football match: if there’s no end, you can’t tell who won!
Short-term Investment/Trading
Short-term investment in Crypto requires you to actually do things: such as trade and swap Crypto at an exchange.
Here’s what happens to most people who try to do that:
Day 1: THIS IS SO EXCITING! BUY LOW, SELL HIGH! THAT ALTCOIN IS SO EXCITING!
Day 2: The price of that coin keeps going up, every time I put an order in, it chases away from it! So exciting to buy into growth!
Day 7: Damn, that was unexpected. I just bought some of that as well.
Day 12: How come every single coin except mine went up?
Day 13: How come every single coin except mine went up?
Day 14: How come those experts on Twitter can’t agree?
Day 17: OH NO, A POLITICIAN WANTS TO BAN Crypto!
Day 20: How can everything crash 20%? How is that even possible?
Day 21: I’m sure the market will spring back.
Day 36: I don’t think the price is going back up. I suppose I’d better make this a long-term investment. I wish I hadn’t lost half of it.
Why is this?
Lots of our previous blog articles tell you that to be a successful trader you have to analyse charts. That’s really difficult and there’s a big learning curve. Do you know what the other problem is? The charts don’t work to predict the future (though they’re excellent at re-explaining the past, which isn’t hugely helpful). In traditional finance, charts tend to work because volatility is smaller and the market is much bigger. Did you know 12% of people trading in Crypto (or, indeed, short-term share trading!) lose money after a year?
In fact, there are automated trading bots that know every single rule of charting and investing and they’re much more efficient at turning your short-term plans into long-term ones.
- Turn on Bot
- “Wow! It traded something!”
- Makes 2% in 10 minutes
- “If this goes on, I’ll be a millionaire by the end of the week”
- Crypto goes crazy for five minutes and everything plummets
- “Oh well. I guess they’re long-term investments now”.
Long-term Investment
Give yourself a year or more and you have a “set it and forget it” long-term investment. Instead of you having to do the hard work, someone else will!
It’s much nicer to have the luxury of time. You can leave your Crypto to luxuriate in a bath of passive income. If you have a Crypto that changes in value against real (“Fiat”) currencies, then you can choose whether to cash out if there’s a sudden unexpected increase in value (don’t forget the maths: will you make more in a trade than you would from interest?)
Buy and Hold
This isn’t a way to earn Cryptocurrency, it’s a way to earn real currency. If you buy 1 Bitcoin and just hold it, it will still be worth 1 Bitcoin when you come back to it. However, if you buy it and hold it until there’s a profit you like (without panic selling), then you will profit.
There are exceptions to this no-interest rule. Some of the more alternative coins reward you with extra tokens just for holding: for instance, the NEO token gives you GAS tokens. It’s not much, but it’s something (and requires no effort).
Fun fact: some Crypto enthusiasts don’t care about Fiat currencies, believing that they will collapse and that Crypto is the currency of the future.
Mining
The idea that with some powerful hardware you could just find Crypto lying around is quite attractive. For coins that allow it, you set your computer to work solving maths puzzles, and you stand a chance of getting a big reward! Basically: you’re swapping electricity for Crypto. This is called “Proof of Work”.
Pros: You don’t have to buy any Cryptocurrency or invest it anywhere, and the rules are set by the coin you’re mining.
Cons: Any coin worth anything is going to require specialist hardware to mine, and a lot of electricity to mine it. The alternative is renting processing power from a company such as shamining.com so they can mine on your behalf. That’s a substantial investment and mining equipment does date very quickly. If you’re not using cheap renewable energy like 70% of miners, then the cost of the electricity will make the whole venture unprofitable. And did we mention that the equipment is noisy? And that it needs cooling?
Staking
Staking in its purest sense is when you voluntarily lock up your coins in its “Blockchain” (its global shared database) so that you can’t use them.
Why would you do that? Because the Blockchain rewards you with the chance to process transactions, and you might receive a share of new coins. A “Proof of Stake” Blockchain chooses to reward existing coin-holders rather than random computers solving arbitrary puzzles.
Pros: It’s just you and the blockchain. No one has to trust anybody. Rewards can be bigger than traditional investments.
Cons: The minimum investments can be quite high for “pure” staking – for instance, you need 32 ETH (Ethereum) to stake on Ethereum 2.0. This is about $96,000 worth, and you have to leave a computer on 24/7 in case it’s needed to process transactions. The rate will also vary often and in an unpredictable way.
One big drawback: On Ethereum 2.0, as of the time of writing, they haven’t written the code for “unstaking” yet!
If you must stake, then there are “staking pools” where bigger companies take all that risk and you just give them your money… which isn’t fundamentally too different from interest-bearing Crypto accounts except that the rate isn’t guaranteed.
I WANT FREE STUFF
There are ways you can earn Crypto by doing things, like watching videos and ads, doing surveys, etc. Search for “Crypto faucet”. Don’t try and earn in Ethereum: the transaction fees for withdrawing your earnings would be bigger than your earnings.
Pros: It does actually work.
Cons: If someone paid you that much for doing a job in the real world, you’d be insulted.
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