By Natalie Lord
We’ve all heard tales of wondrous wins in the cryptocurrency field. We’ve seen the volatile fluctuations in the coins and oohed and aahed. We may have dabbled with tokens or entertained the possibility at least. But at the end of the day the incentive to get involved is monetary: it’s all about profit. To this end, we look at how you can make money from cryptocurrencies, starting with investment opportunities.
The simplest method of making money through cryptocurrencies is through investing. The best time to buy is in a bear market, then wait and watch your investment grow. If you take a long-term view the chances that your investment will increase in value regardless of when you buy, but it goes without saying that you should avoid buying at a high.
A sound idea is to take a position in the more prominent cryptos like Bitcoin and Ethereum, then perhaps supplement that with a smaller placement high-growth altcoins. You then buy, hold and sell when the price is up. You could also invest in an initial coin offering.
Another option is to stake tokens and earn dividends. Staking is essentially when you lock your tokens in, meaning you can’t sell or trade them. In doing this you earn interest. Typically, this means you will earn more of the token you stake to start with. This is known as “passive income”.
The validation of blocks in the crypto sphere is done through two principle methods: Proof of Work and Proof of Stake.
Proof of Work is where computational power verifies blocks. In this model set-up costs and the cost of electricity are high. Proof of Stake is a far cheaper way of achieving the same result. You buy an amount of coin then stake it. A wallet is created alongside a node. The coins are then sent to the node which is used to verify transactions on the blockchain.
Popular currencies you can stake are NAV Coin, Neo, Lisk, Ark and PIVX.
If your investment in tokens is substantial, you could also set up a masternode. A masternode is at its simplest a cryptocurrency full node or computer wallet that keeps a full copy of the blockchain in real-time.
This process is similar to staking, but you need to set up a server with a certain number of tokens and you’ll have to verify transactions on your server to earn tokens. The minimum amount to get started with a masternode varies across the cryptocurrencies, but it is usually in the range of between 1,000 and 25,000 coins. With a masternode system you’ll be paid by the cryptocurrency networks.
If you want to take things to another level you could try your hand at crypto arbitrage. This is when you buy crypto on one exchange at a certain price then sell it for a higher price on another exchange and pocket the margin.
If you do your research and learn your market you can usually find a spread of between 5% and 40% in cryptocurrencies. Two exchanges to start looking at are Bittrex and Poloniex.
Day trading isn’t an easy way to make money from crypto. The market fluctuates greatly and whilst gains can be high, losses can be large too. If you are set on considering this option it’s worth starting with a practice account to learn the basics, like charting and drivers of price change, before moving to real crypto trading.
Telegram crypto signal channels have become increasingly popular and could help you on your crypto journey. The channels track market changes and employ chartists who indicate when the timing works to buy crypto for profit. Inevitably, there is much variety in the quality of the channels available. You have to pay for some channels whilst others are free.
If you are good at technical charting, day trading cryptos could be a good way for you to make money from various cryptocurrencies. You can trade on exchanges like Binance, Bittrex, KuCoin and BitMEX.
In summary, there are a number of different ways in which to invest in the cryptocurrency sphere and make money. Next week we look at other options for generating income in the space.