Want to join the latest crypto trend? Or, are you looking for ways to make a profit investing in cryptocurrency? Then you have come to the right place. Yes, cryptocurrency is an easy way to make money, and you can make a profit if you make the right investment decisions.
With patience, you can reap the rewards of your investment in cryptocurrency in the long run. A person who invested in cryptocurrency in 2017 made a profit of 300% after three years. But, it is likely that many people give up or become a part of crypto scams.
Let us take a moment to acknowledge that cryptocurrency is yet in its development stages, attracting more investors after every price increase. Good News for you is that you can make substantial profits investing in cryptocurrency.
But, for that, you may need to follow some legitimate ways to make money in crypto trading. In my article, I shall talk about some essential methods that you can follow to profit in cryptocurrency trading. But, before we dive in, let us find out what cryptocurrency is.
What is cryptocurrency?
A cryptocurrency is a decentralized form of currency that people mostly use to make online transactions. Some of the most famous cryptocurrencies include Bitcoin, Dogecoin, and Ethereum.
It works on blockchain technology, having transactions processed in a network of machines. Blockchain is a public ledger that keeps a record of all cryptocurrency transactions. It is a peer-to-peer system that you can use to send and receive payments.
It gets created by a specialized method known as mining. During this process, heavy-duty machines solve mathematical problems to generate coins. You can also buy cryptocurrency from brokers who use Digital wallets.
So, if you own some cryptocurrency, you don’t own something tangible. In truth, you own a unit or a record from one person, and you then transfer it to other without any involvement of any centralized party in between.
Instead of using cryptocurrency for routine transactions, many people keep it as a form of investment. Like stocks, many users convert their dollars into cryptocurrency using digital wallets like Coinbase, Coinmarketcap, BlockFi, and so on, waiting for the value of the investment to increase.
Typically, there is an increase in the value of cryptocurrency when prominent organizations accept it as a form of payment. The value of cryptocurrency skyrocketed when it got recognized by the tech giant Elon Musk. Hence, the demand for cryptocurrency increased, resulting in a substantial increase in the value of crypto assets.
At the same time, cryptocurrency can lose its value if corporations fail to recognize it as a form of payment. This can cause a mass panic amongst the investors resulting in the selling of crypto assets. The ever-changing value of cryptocurrency makes it a reasonably volatile investment that can be high risk if you don’t deal with it properly.
Different ways to Make a Profit in Cryptocurrency
Now that you have a fair idea about cryptocurrency, we can discuss some of the different ways to help you make a profit in cryptocurrency.
No # 1 – Invest in Cryptocurrency
The first way to profit from cryptocurrency is by investing in cryptocurrency. You can do that by buying and holding cryptocurrency. Cryptocurrency indeed has a reasonably volatile nature in the short term, but it has a tremendous capacity for growth for long-term investment.
But, you need to make intelligent decisions when investing in cryptocurrency and recognize stable assets. Coins like Bitcoin and Ethereum are somewhat considered safe for long-term investments.
No # 2 – Cryptocurrency Trading
Another way to earn a profit is by trading cryptocurrency. Due to its highly volatile nature, it may seem challenging to trade in cryptocurrency. But once you know your way around the latest crypto trends and analysis, trading in cryptocurrency may help tap into short-term investment potential.
But, for that, you need to do a thorough crypto market research keeping a keen eye on the increase and decrease of the price of crypto assets. So, if you make an investment after looking at the long short-term price variations. This helps you earn profits no matter what direction the value of cryptocurrency is going either upwards or downwards.
No # 3 – Staking
In staking, you own cryptocurrency, but you don’t spend much of it. Instead, you tend to save or lock crypto coins in your digital wallet. You can then use your coins for transactions with proof of staking once you lend your coins to the network.
In this way, your coins remain secure, and you also get to earn a substantial profit on the number of coins. This process is somewhat similar to how a bank puts out a loan and makes profits on the interest it receives. Compared to traditional crypto mining, this method is relatively cheap to start from as you may not need to invest in specialized machinery for support.
No # 4 – Diversify Investment
Diversification is the key to lower the risk related to the volatile nature of cryptocurrency. Even though Bitcoin is considered the safest cryptocurrency that you can invest in. But, if you want to lower the investment risk, the best thing you can do is not to invest all your money only in one type of cryptocurrency. A much better and safe approach is that you diversify your investment and divide your money into different kinds of cryptocurrencies.
No # 5 – Check for Airdrops and Forks
Airdrops are where developers distribute free tokens to help develop awareness about relatively new cryptocurrencies. These also help create a large base for introducing a new project and give space for users to adapt to it. Since these come free, they come with an outstanding level of risk attached to them.
But, if you play your cards right and act safely, these can become a goldmine from an investment point of view in the long run. You can find out about airdrop from social media platforms, crypto news platforms, and the webpage of the company itself.
A fork is changes or amendments made to the existing blockchain, and these changes help generate new coins. So, if you are already a part of the current blockchain, you may also be rewarded with unique coins and tokens.
No # 6 – Crypto Mining
Crypto mining is an excellent way to earn money and profits. It is mainly related to the proof of work mechanism where different transactions get validated and secure on the proof of work network. For this, miners get new coins in the form of blockchain rewards. You may need to invest in a unique mechanism to mine new coins. Furthermore, creating a master node during network maintenance also helps generate profits. A master node is a wallet that hosts the entire network copy. It would be best if you had a certain investment and particular expertise to go for cryptocurrency mining.
No # 7 – Earn from Cryptocurrency Dividends
Another way to earn profits from cryptocurrency assets is from getting dividends. This is similar to stocks and bonds, where investors and shareholders make a special cash payment. These are paid when a company earns profits after completing a quarter. But, in cryptocurrency, initially, you may not be able to make a substantial amount, but it sure is a way to earn profits from crypto. To opt for this, you may need to do initial research to determine which cryptocurrencies are paying a dividend.
Long Term vs. Short Term Crypto Investment
Long Term Investment
A long-term investment is when you hold an asset for over a year. Long-term investors are more interested in earning passive income, and such investors make safe investments like stocks or certain types of funds. Long-term investors aim to achieve a steady profit over a long period.
So, if you are looking for a long-term investment in cryptocurrency, you should go for the ones with a reasonably low value right now but come with a promise of growth over time. You can even invest in those cryptocurrencies that give dividends to their holders.
Short Term Investment
On the other hand, a short-term investment is an investment that you make for a short period of less than a year. Daily trading of cryptocurrencies is considered a short-term investment where you buy and sell for short-term rewards. Short-term investors aim to earn profits almost instantaneously.
Whether you go for short-term or long-term investment in cryptocurrency, always make sure you do thorough market research. It ensures that your investment remains safe and can earn a considerable profit in return.
Before starting crypto trading, you must gather adequate information on the market dynamics. Also, make sure you have your digital crypto wallet ready if you want to make a future in cryptocurrencies.
Furthermore, you must evaluate all your investment strategies and choose those that come with a somewhat more minuscule amount of risk. Also, make sure that you study all the current and past trends to gather sound information about the performance of a particular cryptocurrency.