With the crypto market on the rise, the bullish sentiment is taking over and is sure to break into the mainstream any time now. As more newcomers take an interest in the crypto world, a lot of them will be wondering how to make money with cryptocurrency. In this guide, our team will introduce you to the sheer variety of ways and methods that can grow and boost your cryptocurrency investing.
Key Takeaways
- There are plenty of ways how to make money with cryptocurrency, either by taking profits from the rising prices timely or increasing the overall value of the crypto portfolio.
- Methods that will require some initial investment are trading cryptocurrency, using DeFi lending platforms and protocols, finding presales and projects in the early stages of development, and staking.
- If you are okay with starting small or even from scratch, look for free opportunities such as airdrops, bug bounties, and giveaways. You can also find work that pays in virtual currency or play blockchain games to receive crypto for the time investment.
How to Go About Earning Crypto?
Cryptocurrencies are supported by a technology known as blockchain, which maintains a tamper-resistant record of transactions. Gone are the times when crypto was known in certain online spaces only, because now even large financial institutions want a piece of the novel financial technology.
Is it too late to start a foray into the crypto market? Not at all if you exercise the necessary caution and don’t lose your cool. Some of the methods we will cover would not require an initial investment at all but don’t go expecting to make a fortune with them.
There are two major approaches to earning in cryptocurrency: you can work to raise the fiat-denominated value of your crypto portfolio. Alternatively, you can expand it so the value of it grows as there are more and more crypto coins in your balance. Both of those strategies cover multitudes of methods, which we will cover below, and come with their strengths and downsides.
Earn by Extracting the Value of Your Crypto Holdings
When someone talks about earning in the crypto market, most likely, you are thinking about capitalizing on the value fluctuation and volatility of these digital assets. These days, it goes beyond simply trading cryptocurrency: the decentralized finance (DeFi) sector gives plenty of opportunities to make use of digital currency.
The success of this strategy often comes down to being in the right place (market) and time (to take profits). Therefore, avoiding failure requires certain expertise and even a bit of plain simple luck. Increasing the value also implies some starting capital, and the more you can afford to gamble, the more noticeable the return, provided you even get it in the first place.
With that being said, let’s look at how to make money with cryptocurrency by trading, using DeFi, and taking part in presales.
Cryptocurrency Trading
Trading cryptocurrencies can be boiled down to buying and selling cryptocurrency on a crypto exchange. However, there is a world of difference between simply using an exchange to buy or sell and doing it for profit. Successful crypto trading requires a good understanding of market trends and the ability to respond quickly to market changes.
Crypto trading can be done through centralized or decentralized exchanges that facilitate buying and selling of cryptocurrencies. Crypto exchanges offer a range of market pairs to trade cryptocurrencies with varying levels of security and fees. The highlighted factors will be different for each platform, so it is best to choose a trading platform while being sure you know what you sign up for.
Speaking of centralized platforms and decentralized exchanges, also known as DEX, they also have considerable differences. For one, the interfaces and user experience tend to be more user-friendly on centralized crypto exchanges (also abbreviated as CEX) but DEXs often trump them in market pairs. Another crucial difference is that a CEX usually holds your crypto coins in its custody on your behalf, while DEXs tend to be non-custodial.
The “buy low, sell high” maxim is too vague: traders use technical analysis to identify buying and selling opportunities. Technical indicators like the MACD or RSI often inform trading decisions but there are way more indicators and patterns, which can get quite exotic. Indicators are believed to provide hints into entry and exit (buying and selling) but are also useful for stop-loss orders to manage risks during trading.
For some, trading is as good as a job, and doing it for extended periods is known as day trading. A common strategy for day trading is to enter and exit several positions throughout the day. Day trading requires a trader to actively buy and sell digital assets to take advantage of market volatility. Like all involved traders, day traders also dedicate time to researching trends and how current pricing levels might dictate a pair’s future direction. To be profitable, crypto day trading requires continuous market monitoring and quick decision-making.
Decentralized Finance (DeFi)
Trading cryptocurrency including day trading is not too different from the same activity in stock markets and forex. The only major difference is crypto markets stay open 24/7. However, if you have the skills to go further, you can delve into the world of decentralized finance protocols and apps, or DeFi.
Trading on DEX can be viewed as an intermediate step between classic trading and DeFi. For instance, traders would have to pay attention to things like slippage and be more aware of the liquidity. The best part of using a DEX, however, is that you can also earn rewards for contributing liquidity to pools. By engaging in it, you no longer simply trade cryptocurrency but start yield farming, or maximizing opportunities to profit from DeFi protocols.
Decentralized finance platforms can offer competitive interest rates compared to traditional savings accounts. The average annual percentage yield (APY) in American savings accounts is 0.57% while one of the most popular lending platforms on Ethereum, Aave offers 6.80%–6.96%.
Protocols like Aave facilitate liquidity provision through borrowing and lending cryptocurrencies. Lending provides a way to earn income from cryptocurrency holdings without selling them, although debt mismanagement can lead to liquidation. Keep in mind that higher returns imply higher risks involved. Furthermore, strategies like yield farming, which combine multiple methods such as staking and lending in several sources simultaneously, compound the associated risks.
Invest in Crypto Projects Early
Despite being extremely popular many years ago, Initial Coin Offerings (ICOs) are still around. These presales involve buying or pledging to buy a cryptocurrency token before its release to the public markets. New cryptocurrencies still often launch via presales before becoming publicly available.
Investing early in innovative crypto products can provide first-mover advantages and favorable entry prices. The tricky part is identifying new cryptocurrency projects with the potential to capture value. In this regard, early investing in crypto is not too different from angel investing in general.
Many ICOs pose inherent risks and scams are common. Research is critical before investing in cryptocurrency, especially in new tokens and ICOs. Things you can pay attention to and research include the team and their track records, use cases, and even other backers.
Staking
At its core, staking is a system of incentives to get more users to verify transactions on a blockchain protocol and make it secure. In addition to running a validator node, which might have some extra requirements in comparison to ordinary ones, it also implies contributing some funds to prove the dedication to performing the work. Therefore, a larger stake translates into higher rewards from transaction fees secured by that particular node.
For the less tech-savvy users, staking cryptocurrencies means investors can earn passive income from their investments. Staking can provide a lower-risk way to grow crypto investments compared to trading.
The interest earned from staking depends on the cryptocurrency and the size of the stake. Some cryptocurrencies offer higher staking rewards than others. Some staking platforms offer fixed terms, allowing investors to earn interest over a set period. Flexible crypto staking options allow investors to reclaim their tokens at any time. For the DeFi savvy, there are even liquid staking and restaking protocols.
Many cryptocurrency exchanges offer staking services for various tokens. If you seriously consider this method of increasing your crypto holdings, solo staking might be the more secure option. However, using the staking services provided by a crypto exchange is more economical than just letting your virtual currency sit in its balance.
Earn by Getting More Cryptocurrencies
Trading cryptocurrency is definitely not the only way of making money with cryptocurrency. How about starting to earn crypto directly?
Unlike the previously described methods, some of the approaches we will cover next can be started without an initial investment. It bears repeating that starting from nothing is most likely to be slow but if you play your cards right, you will be able to make it work.
What kinds of activities can get you paid in crypto?
Mining
Mining is a common way to earn cryptocurrency even these days. Cryptocurrency protocols that rely on Proof-of-work (PoW) have miners solve cryptographic problems to propagate the blockchain network.
Specialized hardware is typically required for cryptocurrency mining, although lesser-known crypto coins can still be mined on GPUs and even CPUs. The profitability of mining can be influenced by hardware costs: even if you do not intend to upgrade it, the wear and tear caused by intensive work will force your hand anyway. Mining cryptocurrency consumes a significant amount of electricity, so include the utility bill in the equation.
If you are lucky enough to have functional processors you can dedicate to it, and your electricity expenses won’t eat away a lot of the revenue, you can start mining cryptocurrency at almost no cost at all. However, this is not usually the case, because mining profitably more often than not requires significant expenses.
Mining rewards largely vary depending on the cryptocurrency being mined. A lot of PoW coins inherit Bitcoin’s model which reduces miner rewards over time, and cryptocurrency mining can become more complex over time as the network grows. Bitcoin mining is now often performed in large facilities due to high resource demands.
Even mining small-cap coins can be competitive, making it difficult for individual miners to succeed. Joining a mining pool can increase the chances of earning rewards. Cloud mining allows users to mine without owning hardware, which also makes you dependent on the provider’s integrity.
Passive Income
Some newcomers to the crypto market seek a method not just to earn money with cryptocurrency but to secure passive income from it. After all, earning without being actively involved sounds pretty good!
You can earn passive income with staking, which we have already covered before. Some parts of DeFi are described as such: for example, yield farming generates rewards by having you lend idle cryptocurrencies to a decentralized exchange. Some might argue that DeFi is not exactly a passive income generator because the positions still need risk management and trader’s involvement.
Online marketing programs sometimes turn to crypto assets because it is often easier to implement than fiat payment options. Crypto payouts also benefit from being globally accessible and less dependent on middlemen. Affiliate programs allow individuals to earn commissions on referred customers: did you know that ChangeHero also has an affiliate program that gives you over 50% of the revenue?
Play-to-earn Games
Play-to-earn games enable players to win rewards in the form of cryptocurrency. Also known as blockchain games, they use blockchain to tokenize in-game rewards and assets to let players trade them freely on open markets.
Some of the best-known play-to-earn games are pet battler Axie Infinity, open-world fantasy battler Illuvium, and metaverses The Sandbox and Decentraland. Some game development companies focus exclusively on the space: Gala Games and Yield Guild Games (YGG) are just a couple.
A spinoff of play-to-earn is move-to-earn apps. These applications track your physical exercise such as walking and reward you with points, tokens, and NFTs based on your performance. The first apps to introduce the model are STEPN and Sweat Economy.
Get Paid in Crypto!
If you can afford to invest the time and effort, why not look for job opportunities that pay you in crypto? Places to look vary from freelance job boards to crypto companies.
If you are not looking for a steady commitment, participating in crypto social media can earn users cryptocurrency for their contributions. Bug bounties are an option for those who have the technical skills to ethically poke holes in the project’s code (just make sure they have an active bounty first and stick to the rules).
Look for Free Opportunities: Airdrops and Giveaways
Last but not least, some of the most popular methods to make money in the crypto community are nearly free to start. As we mentioned before, the returns get sizable the larger your initial crypto investments are, so don’t count on making a fortune from free tokens. Tokens can be held in anticipation of value appreciation or sold for immediate profit after receiving them through airdrops.
Crypto airdrops are a near-risk-free way of earning tokens. New projects typically offer crypto airdrops to boost their market exposure. Participants usually complete simple tasks such as following the project on social media to qualify for free tokens.
Both airdrops and forks can result in receiving new cryptocurrencies: airdrops can also provide free tokens based on holding a specific cryptocurrency at a certain time. To participate in airdrops, users often need to stay informed about upcoming events.
Crypto giveaways operate similarly to airdrops, requiring users to complete specific tasks to be eligible. Participating in giveaways can lead to receiving free tokens, potentially increasing in value. Users can earn a free ticket for a giveaway by following the project on Twitter or joining its Telegram group. Apropos of nothing, follow ChangeHero on X, Facebook, and Telegram to take part in our giveaways!
Once winners are selected in giveaways, the organizer distributes the promised cryptocurrencies to their respective wallet addresses. Legitimate giveaways should never require participants to send cryptocurrency or provide sensitive information.
Risks and Opportunities
To sum the article up, let’s recap the things to remember when you commit to earning with cryptocurrencies. Having the right mindset is half of the success, after all!
Cryptocurrency is often treated as a speculative investment, which adds to the associated risks. Investors should only invest what they can afford to lose in cryptocurrency projects.
New cryptocurrency investments have the potential for high returns but come with high risks. Many cryptocurrency projects are untested, increasing the risk of investing in them.
Cryptocurrency investments are inherently risky due to their high volatility. The cryptocurrency market is known for rapid price fluctuations that can lead to significant losses.
Investing in cryptocurrencies requires thorough research to understand market risks and potential challenges. Regulatory changes can affect the cryptocurrency market in unpredictable ways. In some jurisdictions, investors face tax implications on their cryptocurrency gains, which can affect their overall returns.
Scams and fraudulent projects are prevalent in the cryptocurrency space, posing a threat to investors. The lack of regulatory oversight accelerated the growth of the sector but also leaves investors without precautions and protection, unlike in the stock market.
Joining unsecured platforms or using unverified wallets can lead to significant security risks. It is recommended to take some time to learn how cryptocurrencies and crypto wallets work to understand how to secure your investment.
Finally, environmental concerns have been raised regarding the energy consumption of cryptocurrency mining. Even if you are not an environmentally conscious investor, government regulations that concern mining should still be of concern.
Conclusion
As you can see, there are multitudes of methods that can help you earn crypto assets, with some of them posing lower risks and not requiring a lot of starting capital. Remember to stay informed and dive into any of them only after learning about all possible pitfalls.
Read more articles in our blog to gain more knowledge about the crypto world! Once again, catch the updates and insights from the ChangeHero team on social media: X, Facebook, and Telegram.
Frequently Asked Questions
Can you make money with cryptocurrency?
Yes, you can earn money with cryptocurrency by various methods: trading, staking, lending, playing games, and taking part in giveaways, airdrops, and bug bounties.
Can you make money with $100 in crypto?
Yes, even $100 is enough to start making money with cryptocurrency. Check out this guide by ChangeHero that outlines how it can be done and what to expect.
Can cryptocurrency be converted to cash?
Yes, cryptocurrency exchanges and purchase providers let you sell crypto and send the resulting fiat currency to your bank account or card. Read this guide to learn more about selling cryptocurrency.
How can a beginner make money with cryptocurrency?
All of the ways of making money with cryptocurrency outlined in the article are accessible to newcomers as well as seasoned traders. The most important prerequisite to making any of them work is doing research prior to committing.
How do beginners trade cryptocurrency?
If you have no prior experience at all, try training with paper trading first to get a feel for the activity. After learning the ropes and informing yourself on how crypto and blockchain work, you can proceed to research trading platforms to make an account — or use account-free platforms such as ChangeHero.
How do crypto beginners make money?
Making trading and using cryptocurrencies profitable is a skill of its own that requires an understanding of the market trends, asset fundamentals, and economic factors. Do not neglect theory and rely on practice only! The ChangeHero Blog can be a good place to identify topics of interest and development vectors.
How do I start paying with crypto?
To initiate a crypto payment, you will need as little as a crypto wallet, some funds, and a recipient address. See the step-by-step instructions for this process in our guide to crypto payments for beginners.
Disclaimer
This article does not constitute financial or investing advice. When dealing with cryptocurrencies, remember that they are extremely volatile and thus, a high-risk investment. Always make sure to stay informed and be aware of those risks by conducting your own research. Consider investing in cryptocurrencies only after careful consideration and analysis and at your own risk.
