There are several ways to make money with cryptocurrencies beyond buying and selling digital currencies with the intention of increasing their price over time.
The objective of this guide is to explain to you the most important proven methods that exist to make money with cryptocurrencies in 2022.
Can you make money with cryptocurrencies?
The answer is yes, you can earn money with cryptocurrencies in different ways like trading, investing, mining or with Airdrops to give some examples.
But you should keep in mind that since cryptocurrencies are a relatively new financial asset, all the methods that exist to earn money carry risks, mainly due to the high degree of volatility of cryptocurrencies.
Also, in most cases, a certain degree of knowledge is required, so this guide is just a first step to being able to start investigating on your own.
8 ways to make money with cryptocurrencies
Among the methods available, we must choose those that best correspond to the knowledge and experience that we have, since each type has a different degree of difficulty.
We must also value the time we have, since some methods generate money completely passively (such as cryptocurrency mining) and others, on the contrary, force us to take active steps (an example is intraday trading).
Then we will see how to make money with cryptocurrencies through 8 different strategies.
|Method||The description||degree of difficulty|
|Investment||The best way to get long term profits||Low|
|Commercial||Trade short and medium term cryptocurrency pairs||High|
|Mining||Get rewards by mining bitcoins and altcoins||High|
|stake||Keep cryptocurrencies in a wallet and get rewards||Low|
|ready||Cryptocurrency loans in exchange for interest payments||environment|
|NFT||Invest in digital art||environment|
|airdrops||Get tokens distributed for free||environment|
|Stocks and ETFs||Invest in stocks and funds related to Blockchain technology||Low|
Investing is a long-term strategy that involves buying cryptocurrencies with future potential and storing them safely in the hope that they will increase in value over time. Later, I would sell them to make a profit with the operation.
This method is the best option for beginners and is known in the crypto world as «hold» or «accumulate».
This way, we don’t have to worry about short-term price fluctuations, especially when investing in solid cryptocurrencies like Bitcoin and Ethereum.
For example, throughout 2019 and part of 2020, there was an opportunity to accumulate Ethereum (ETH) in a price range of around $80 to $450.
At the end of 2020, Ethereum began an upward trend until November 2021, when it reached $4,800, a revaluation from lows of over 5,000%.
During this period, there have been numerous price drops, in some cases by more than 60%. If we had just focused on accumulating and holding ETH for those years, we would have made a huge profit quite efficiently.
How to invest in cryptocurrencies
Cryptocurrency trading involves trading on the movements that occur in different cryptocurrency pairs, taking advantage of opportunities over short periods of time.
The main differences with investing are:
- In trading, deals remain open for shorter periods of time than if we are investing.
- By trading, we can make profits both if the price goes up (go long) and if the price goes down (go short).
- The advantages compared to the investment can be much greater but the difficulty is also greater, among other things in view of the strong fluctuations in the price of cryptocurrencies in the short term.
To make money trading cryptocurrencies, it’s important to develop a strategy with a positive long-term expectation, manage risk, and control emotions so you can consistently make a profit.
The main tool that traders rely on for trading is reading charts using technical analysis.
How to trade cryptocurrencies
3. Cryptocurrency mining
Cryptocurrency mining is a proof-of-work process that involves validating and recording transactions on the blockchain or Blockchain.
Basically, if you mine a cryptocurrency, you will be rewarded with new coins for your contribution to the network.
To carry out this activity, it is necessary to purchase special computer equipment for mining, which requires an investment of money and knowledge to configure them.
Currently, mining is a highly professionalized industry that requires a lot of investment. For this reason and in my opinion, it is the least recommended option when it comes to making money with cryptocurrencies, since it is increasingly difficult to find cryptos that can be mined profitably without making a large investment in equipment.
4. The challenge
Staking involves receiving rewards for leaving locked cryptocurrency on deposit in a wallet or purse. This method offers double earning potential by appreciating in price and paying dividends for your locked coins.
Staking is another way to validate cryptocurrency transactions other than mining.
We basically keep our crypto locked away in a wallet that lets you earn extra coins to secure that crypto network.
Some examples of coins that can be blocked are Ethereum (ETH), Tezos (XTZ), and Cosmos (ATOM).
One of the easiest ways to stack is through centralized exchanges like Binance that facilitate this service.
Cryptocurrency Staking Guide
Cryptocurrency lending or lending is the process of depositing cryptocurrencies to be loaned to other users in exchange for regular interest payments.
There are two types of crypto lending platforms: centralized and decentralized.
Decentralized platforms require more advanced knowledge as opposed to centralized platforms which are easier to use in exchange for being the custodians of our cryptocurrencies.
In both cases, a «collateral» must be presented as collateral by users wishing to apply for loans.
NFTs, or non-fungible tokens, are a special type of indivisible and unique cryptographic tokens.
One can imagine an NFT as a work of art. An example would be a painting that can be found in an art gallery: it would be unique and one could buy and sell it, i.e. transfer the original work from one person to another .
Therefore, when we talk about NFTs, we are generally talking about unique digital works stored on the blockchain.
Although NFTs are developed with different uses, today their main use is speculative. Therefore, the way to make money from NFTs is to invest in them by buying them while waiting for them to revalue.
How to invest in NFTs
An Airdrop is a method by which you can get free cryptocurrencies without having to deposit or spend any money.
The main idea is that a new project distributes cryptocurrencies directly to the wallets of interested people.
The main reasons for Airdrops are two:
- As a marketing technique to make the project known to as many people as possible
- Put a token in circulation and start being used by people.
Although at first glance it may seem that earning money in this way cannot be true, we must remember several cases of Airdrops that have become multi-million dollar projects since their realization.
An example is the Uniswap (UNI) decentralized exchange token airdrop in 2020.
Another older example is the Bitcoin Cash (BCH) Airdrop in 2017. This project sent tokens to all wallets that held Bitcoin units in a 1:1 ratio. In other words, for every 1 Bitcoin you had in your wallet, you received 1 Bitcoin Cash.
8. Stocks and ETFs
Finally, we will see how we can expose ourselves to the cryptocurrency market without having to buy or hold them. The two most common ways would be publicly traded companies and ETFs.
About stock companiesthe clearest example is the Coinbase (COIN) exchange, which has been The first global crypto company in US history to go public. Other companies exposed to cryptocurrencies include Riot Blockchain (RIOT), MicroStrategy (MSTR) and Square (SQ)
On the other hand, we have AND F (Exchange Traded Fund)a kind of exchange-traded index fund, making it a hybrid between a mutual fund and a stock.
To simplify as much as possible, buying units of a Bitcoin ETF means exposing yourself to the vagaries of its price without having to buy it.
However, there are currently various Bitcoin ETF proposals under consideration, but none have been approved, so we still have to wait to invest in this type of product.
In both cases, stocks and ETFs (once approved) are purchased from traditional brokers, so investing in them is very simple.
In this article, we have explained how to make money with cryptocurrencies using the most common methods.
However, there are many other ways to invest in NFT games, using decentralized finance platforms with all the options they offer us, or through purchases in launch platforms and private sales groups. most of them are more advanced, so I’ll cover them in future articles. .