A brief history of the crypto industry
More than a decade later, most people are familiar with Bitcoin and cryptocurrency. In 2017, when interest in cryptocurrencies peaked, “how to buy BTC” was the third Google search query “how to…”.
Although the market value of the crypto asset class fluctuates sharply with price fluctuations, it still increased from approximately US$10 billion (£8.1 billion, €9.1 billion) in 2013 to US$237 billion at the end of 2019. As a result, individual Bitcoin accounts and transactions have grown by nearly 60% annually over the past five years.
Is It Possible To Make Money With Cryptocurrencies?
The Internet, for example, was developed in 1969, and the World Wide Web appeared in 1990.
A recent study by venture capital firm a16z shows that the crypto space evolves in cycles. The cycle usually starts with a rise in the price of crypto assets, causing a stir in social and traditional media. Lighting and excitement attract more people to the space, bring in new code, ideas and create new projects.
Long-term price increases are likely supported by increased institutional investor interest in cryptocurrencies as an asset class. The average daily cryptocurrency trading volume is only 1% of the forex market.
Even though the market capitalization of cryptocurrencies has grown and exceeded $ 200 billion, they still represent only a tiny fraction of the global stock market ($ 71 billion at the end of 2019) and the international debt market (over $ 100 billion at the end of 2018). but not to mention international real estate. Paul Tudor Jones recently disclosed Bitcoin’s position as an inflation hedge and the rapid growth of Grayscale Investments’ assets under management are early but positive signs of institutional adoption.
This environment offers investors and traders the opportunity to make money in the crypto space. There are many different ways to make money on cryptocurrency and generate income in crypto.
These ways can help you earn money through cryptocurrency.
Investment usually focuses on the long-term, buying and holding assets for some time. Crypto assets are generally a buy-and-hold strategy. They are very unstable in the short term but have substantial long-term potential.
Like any investment, cryptocurrency should be viewed in the context of a portfolio based on your investment goals and risk tolerance. The main difference between trading and investing is in the time horizon.
Although investment is a long-term endeavor, trading uses short-term opportunities. Specific skills and experience are required to trade cryptocurrencies.
Trading cryptocurrency for profit
To make money through online cryptocurrency trading, investors can buy and sell real cryptocurrencies or use derivatives like a Contract for Difference (CFD) instead. When trading cryptocurrencies using CFDs, you speculate on the underlying asset’s price direction without actually owning it. Whether you expect the asset’s price to go up or down, you can go long or short.
Staking and Lending
Betting and lending are very similar and allow investors to make money with altcoins. Basically, staking means blocking coins in a cryptocurrency wallet and receiving a reward verifying transactions on the Proof of Stake (PoS) network.
The PoS algorithm is not mining, but the transaction verifier is selected based on the number of coins sent to the equity by the transaction verifier. PoS does not require expensive hardware and is more energy-efficient.
Cold staking is also an option that allows investors to place bets on coins while storing them in a secure offline wallet.
Crypto social media
In 2016, Dan Larimer launched Steemit, the world’s first blockchain-based social media platform. The platform rewards users with its own currency, STEEM, for creating and curating content. Steemit ran into some problems after 2017, and the number of users has been declining since then. However, many other platforms were built on the original idea of rewarding users for creating content.
Mining is an integral part of the Proof of Work (PoW) consensus mechanism, and it is also one of the oldest ways to make money with cryptocurrencies. This is the process of verifying transactions and protecting the PoW network. To perform these functions, miners receive new coins in block rewards. In the early days of Bitcoin mining, it could be done on a desktop computer. Today it requires specialized mining hardware. Speaking of network support, it can be profitable even if the master node is started.
Airdrops and forks
Airdrops and forks are the cryptocurrency equivalent of being in the right place at the right time. Airdrops are free tokens commonly distributed by an exchange to raise awareness and build a large user base for the project. Forks are essentially protocol changes or updates that create new coins. When a blockchain forks, the coin holders in the original chain usually receive free tokens on the new network.