How to make money on a cryptocurrency fork
The fork is attractive not only from the point of view of the technical improvement of the blockchain. Experienced crypto investors can profit from forks. It is only important to know how to do it.
Fork earning algorithm
Experienced crypto investors profit from the process of forking cryptocurrencies in several ways:
- Participation in the process of distribution of new coins. After branching, the creators of the new chain distribute coins among the holders of the main crypt in proportion to their assets. As a result, you can make a profit on the subsequent growth of the rate without additional purchase costs.
- Profit from the price difference. As a rule, before the fork and during the forking process, the base coin falls in price due to negative expectations of the holders. After the update process is completed, if it was successful, the cryptocurrency rises in price relative to fiat. Therefore, holders can profit from the difference in value.
- Purchase before branching. If users are aware of the upcoming modification and are sure that this event is necessary, they can purchase coins in advance for subsequent participation in the distribution of new tokens.
Consider the situation on the example of a hybrid fork, when a new blockchain appeared after the merger of two existing ones. We are talking about a scheme with Bitcoin Private and ZClassic. In the standard case, after the appearance of two blockchains from one, two coins remain on the market, which can be bought and sold.
In the case of the hybrid fork, it turned out to be 3 coins at once. Moreover, the owners of the two coins that were before the merger received a new crypt at the established exchange rate. That is, they can buy ZClassic, and then sell new coins. As a result of rush demand, the price then increased by more than 100 times within 7 days.
Note that the price then dropped as the attractiveness of the coins to investors was low. But “smart” investors managed to skim the cream off the branching process.
Earnings for miners
Another option for making a profit is the possibility of fast and efficient mining. If the fork is successful, the coin will increase in price. But in the initial stages of the formation of the chain, it is easy to mine in it, since the hash is calculated without much effort. That is, you can install wallets of the new blockchain on your mining farms and quickly “get” expensive coins for yourself.
However, all of the above methods of earning only work if the fork is successful. Otherwise, it’s just a waste of money and time