Is it possible to make money on cryptocurrency? Risks and ways of earning
Are cryptocurrencies and making money compatible? This is one of the main questions for any person who first encounters the phenomenon of digital money.
Cryptocurrency is a risky way to make money. However, in skillful hands, you can earn a lot of money on cryptocurrency. Let’s see what are the ways to increase your capital. We will identify the most risky options and answer the question: is it really possible for beginners to make money on cryptocurrency , or is it only for professionals?
How to make money on cryptocurrency : is the game worth the candle?
When a person first hears about cryptocurrencies, most often it is about bitcoin and crazy growth. How much money could you earn if you buy bitcoin in 2009 or even 2017. Immediately there is a desire to repeat the success of those people who have earned millions of dollars on the growth of bitcoin and other cryptocurrencies. And it’s really possible! Cryptocurrency opens up a huge space for earning. There are many options to increase your capital, in addition to just buying and selling cryptocurrencies. However, where there is big money, there is also big risk. Now we will try to analyze the main options for making money on cryptocurrency and understand if the game is worth the candle.
What are the risks?
Before talking in detail about the possibilities of earning on cryptocurrency, I would like to emphasize once again the associated risks. Remember, any money transactions and investments (even in ordinary stocks) are always risky. You can lose all your money invested in cryptocurrencies. For example, you may be unlucky, or you did not follow the security rules when working with cryptocurrency.
From the start of working with cryptocurrency, it is recommended to adhere to the diversification rule. You can read more about diversification and security rules in cryptocurrency in one of our previous articles.
Diversification is the division of money. If you are completely new, then allocate only a part of your free money to cryptocurrency. So that, in which case, you do not remain bankrupt.
Remember one simple thing. Cryptocurrency, like absolutely any other investment, can bring you money, but also take it away.
What are the ways to earn money?
There are many different ways to make money with cryptocurrencies. From the simplest methods: bought cheaper – sold more expensive, to the most complex ones: staking and landings. This article will be divided into two parts. In the first part, I will talk about mining, trading and investing.
Mining is a way of earning in which cryptocurrency is mined. Mining is based on solving computational problems with a computer or special equipment, followed by a reward for solving them in the form of a network cryptocurrency.
This is one of the most difficult ways to make money on cryptocurrency for beginners. In addition to understanding cryptocurrencies and blockchain technology, you will also need to make large investments.
Of all the earnings, mining is most similar to a traditional business. You need to purchase expensive equipment, connect the desired program. Constantly pay for electricity and maintain the desired temperature at the mining device.
This type of income is not considered effective today. On an industrial scale, entire “mining farms” are being built for tens of thousands of equipment. In this case, this way of earning will bring tangible income.
If we are talking about “room” placement of mining, then the percentage of profit that you will receive is much easier to earn in other ways. Only you will not need to bother with the purchase of equipment, its installation, configuration and constant monitoring of processes.
Of the pluses include the least risks of such earnings. The only risk has nothing to do with the cryptocurrency itself. Your equipment may break down and you will need to buy a new one.
The most understandable way to make money on cryptocurrency is trading. It consists in buying one or another cryptocurrency at a lower cost and selling at a higher one. The difference is your profit. I would also like to note that trading is about short and quick purchases. Buy fast, sell fast, make a profit. Etc.
However, this method is also not as simple as it seems. First, the buying and selling of cryptocurrencies takes place on a cryptocurrency exchange. You need to understand how the exchange works, its functionality and capabilities. These are easy enough to deal with.
The problem is different. The essence of trading lies in the constant presence in the market. In the use of all available tools for the realization of profits. Basically, trading can be considered a full-time job that you need to be involved in 24 ⁄ 7.
Also, as in any job, in order to get big profits, and not constant losses, you need to be a professional in your field. You need to have very good knowledge in the analysis of the cryptocurrency market, have an analytical mindset and know perfectly everything related to cryptocurrencies. Otherwise, you simply won’t know which of the thousands of cryptocurrencies you need to buy right now so that it grows in the near future. And also when exactly it needs to be sold in order to make a profit, and not incur losses.
If you are a good analyst and have been familiar with the world of cryptocurrencies for a long time, this method is clearly for you. In this way, you can earn hundreds and even thousands of percent of profit per year. The risks here are very high, because there are tools that, in the case of a correct forecast for the growth of a coin, can give a huge profit. And in case of failure, completely withdraw your funds. It’s like a casino. And only those who know how to earn here.
Investing is, like trading, buying a cryptocurrency at a lower price and selling it at a higher price. With one important caveat. Investments are long-term investments. If traders usually buy and sell different cryptocurrencies daily, then investors buy, for example, Bitcoin, and store it in the medium or long term: six months, a year, three, ten.
This method is ideal for beginners. It is not profitable here and now, but it is safer. You can always buy bitcoin. This is the most valuable asset, and it will only grow over the years. Therefore, even if you bought it for $60,000 and it went down by $20,000, do not rush to sell it. This is the essence of investment, you need to be able to wait. And believe me, over the years you can get no less percentage of profit than traders who work every day.
A striking example
In 2017-2018, Bitcoin reached its peak positions, and someone was buying it right before a hard drop at $18,000. After bitcoin fell by $3,000, inept investors sold it, thereby making huge losses. And those people who simply waited until 2021, when Bitcoin reached $67,000, made a profit of almost 400% in 4 years. 100% per year is a very nice profit.
Investments are suitable for beginners
You can join different chats, groups, verified crypto communities, receive different buy signals from there and just hold coins until you get a certain profit. You do not need to be a pro in cryptocurrencies, it is enough to understand the basics of cryptocurrencies and blockchain, and how to work on exchanges. The main thing is to follow the rules of security, diversification and take advice and recommendations from really experienced analysts.
The only negative is that you will not receive a quick and constant income. This type of income is a long game, so it may not be suitable for many people. However, in the future, you will thank yourself for starting to invest in bitcoin and cryptocurrencies.
Are there other ways to earn money?
Any way of earning from those that I described in this article can be both profitable and unprofitable. It all depends on the right strategy that the person has chosen.
However, trading and mining is a rather difficult option for a beginner to make money on cryptocurrenc . And investments alone may not be enough, because we should adhere to the principle of diversification, and we cannot invest all the money in one way.