There are many ways to increase your savings using Bitcoin and other digital assets. For example, investing, trading, mining and other methods. We tell you about all the options
2021 could very well be the year when interest in cryptocurrencies reaches the end of 2017. Bitcoin, according to forecasts, is again torn to historical highs, and altcoins are also growing in price. It’s time to remember the most popular ways to invest and make money on cryptocurrencies.
Trading involves short-term speculation, making a lot of transactions. Exchanges are best suited for this. Here, the easiest way is to quickly buy or sell cryptocurrency. There is also an option for margin trading with leverage. However, it is suitable only for professionals, since it is much more risky.
Cryptocurrencies are extremely volatile, so it’s better to start trading them with a practice account. It allows you to get acquainted with the exchange and its instruments, get practice on a virtual balance sheet. Then it is better to start a small amount and, no matter how strange it may sound, survive the first losses.
There is also algorithmic trading . Most transactions on world exchanges are carried out using high-frequency trading instruments – a trading method in which special programs automatically look for opportunities to earn money, sell and buy positions in fractions of a second. Due to the strong fluctuations in cryptocurrency rates, bots in this area are becoming more and more popular.
Algorithmic trading systems are used by both professionals and amateurs. Programs vary in degree of complexity and principles of the device. There are three main categories of software for working with crypto-exchanges:
Simple bots with predefined logic;
Trained trading robots based on AI and machine learning technologies;
Robots-advisors (do not make deals, but give recommendations).
This option is hardly suitable for beginners. System performance is difficult to predict and impossible to guarantee. It is not worthwhile to completely surrender exchange operations to the outsourcing of software, but you can try robots-advisors and independently assess their effectiveness.
Earnings on referral programs of crypto exchanges
A referral program is a type of cooperation in which a company pays its client (referral) for attracting new users (referrals).
It happens that companies launch “one-time” referral programs, for example, as part of an IEO or in honor of a major update.
The alternative to trading is hodle or investing. This approach implies the execution of long-term transactions. It is more suitable for non-professionals, as it does not require knowledge of technical analysis, trading ability and other skills.
Investing has less potential than trading. The price of cryptocurrencies can change by tens of percent every day, and the investor, accordingly, misses the opportunity to make money on these fluctuations. The “hodl” has one more essential nuance.
One of the most popular ways to make money on cryptocurrency is mining . Now, after the May halving, bitcoin mining has become even less profitable. For beginners, mining the first cryptocurrency is hardly suitable. Large companies that have a large amount of necessary equipment, access to cheap terms for renting premises, electricity and maintenance are more likely to make money on it. It makes sense to mine digital coins only if there is an opportunity not to sell most of them to cover transaction costs.
It is better for beginners to start mining altcoins. It is cheaper and makes it possible to resell video cards in case of failure. ASICs are much more difficult to implement after operation. It is even more profitable to work in a pool, that is, together with other miners. In this case, due to the total capacity of the pool, you can get a small but stable income.
An alternative to mining is staking . This is a method of mining cryptocurrency, but without farms or ASICs. The amount of earnings depends on the account, the annual interest rate for PoS and, a little, on luck.
In PoS, the operation of the network is provided by remote servers running software. They are also called masternodes. In fact, this is a home computer or laptop with a special wallet installed and a certain amount of coins. For example, in order to participate in staking ETH 2.0, which can be presented as early as this fall, you need to keep at least 32 ETH.