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| how to make money with cryptocurrency |
How to make money with cryptocurrency? Is it possible to make money with cryptocurrency?
These are some of the questions we most often hear and are searched on the web by those who are approaching this relatively new market, the cryptocurrency market, for the first time.
We will not talk about what a cryptocurrency is or how it works in this article, but rather focus on the ways, some better known, some less so, through which to profit from these virtual currencies.
Before we look at the most commonly used techniques for making money with cryptocurrencies, however, a few clarifications need to be made. First of all, we are talking about a new market, an innovative reality that, being still young, has both strengths and also some limitations, typical of innovations.
The advantages and disadvantages of investing in cryptocurrency
Among the advantages is certainly the capitalization, which has not yet reached very high levels. In fact, although 900 billion was exceeded in 2017, the figures reached in recent years are around 300 billion. Thus, it is still a young market, in a growth phase, and currently little affected by the traditional market.
Another advantage is the presence of regulatory and market gaps and holes that can be exploited to monetize. This is always due to the fact that it is still not very stable and efficient.
It is, however, one side of the coin: these characteristics of it in fact also determine some cons, which should be taken into account when deciding to invest in cryptocurrency.
as we have said, laws change often and furthermore, we are talking about a volatile and fragile market where a small indiscretion by an investment bank can determine a spike or a collapse in the value of cryptocurrencies.
Not only that, given its instability it is not a market within the reach of any investor. In order to make big profits, one needs to accept high risks, and not everyone can afford them. There is no such thing as a low-risk investment that generates big profits; if you hear this, you are probably looking at a Ponzi or a scam.
If you are tempted to invest some of your savings in cryptocurrency, it is good to rely on conservative operating strategies.
This market is suitable for those with a high appetite for risk and a well-diversified portfolio: those who invest in medium- to low-risk assets may consider putting some of it into the cryptocurrency world, which is a high-risk investment.
It is not wise to think about putting the entire amount you have into this economic reality alone, as, without other lower-risk investments, the possible loss could empty your pockets of everything you own.
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| how to make money with cryptocurrency |
The 9 ways to make money in the world of cryptocurrency
1. Holding
The holding strategy, also known sympathetically as HODL, is to buy cryptocurrency, hold it for a period of time (a drawer operation), and eventually sell it back at a price higher than the purchase.
From a more practical perspective, holding means investing materially in a cryptocurrency that you think will increase in value and storing it in your wallet in the hope that it will appreciate in value over time.
Those who opt for this mode very often buy several of them to diversify the basket and increase the probability of gain. So that if they should lose by selling one, there is a chance to offset the loss with the others.
In any case, it is recommended that less experienced investors limit themselves to buying cryptocurrency that has already demonstrated stability and confidence over the years.
The term trading refers to a multiplicity of very short speculative transactions. We are talking about the opposite behavior to that seen in the previous point, in fact, with trading one tries to make the maximum profit in the shortest time possible, owning crypto as long as it takes to make a profit.
One goes out and buys and sells even within the same day or month as many times a single coin in order to draw lower (1-3%) but repeated profits.
These are micro trades, however, which, done consistently over time, can guarantee a high profit.
To be able to trade with the lowest risk, it is a good idea to carry out a thorough technical analysis of the trend of the relevant market, using statistically sound strategies with a consistently favorable risk/return ratio.
Trading can be done through Exchange platforms or through derivative instruments.
The term mining means digging, or rather mining. This technique involves the extraction of virtual coins through a long and complex task that uses the computational capacity of computers.
It thus consists of buying machines that solve calculations to extract rewards, or coins, from the network.
Some coins are in fact released from the network whenever computational power is made available to solve particular complex calculations.
There are two best ways to profit through mining: the first is to directly purchase important hardware that is used in these calculations, obviously taking into account the maintenance price of the former and the actual reward given by the latter. Currently, this methodology tends to be inexpensive.
A second, potentially cheaper, mode, on the other hand, involves renting rather than actually purchasing the machines thus sheltering oneself from the onerous prices and the possible economic loss in the event of not making a profit. In essence, one joins other people by investing
in a mining pool. The profit is then divided among all participants.
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| how to make money with cryptocurrency |
4. Arbitrage
Cryptocurrency arbitrage is the way to earn from the price difference that is created between two or more Exchanges.
To better understand let's take an example. Assume that you buy a
Bitcoin priced at 10,000 on one Exchange and sell it on a second Exchange in which Bitcoin is trading for 10,050. Obviously, the values given are made up, but it may help you understand how arbitrage works.
There are two particular modes of cryptocurrency arbitrage: Regular and Triangular.
With Regular Arbitrage, you buy and sell the same crypto on different Exchanges with a significant price difference, as in the example above.
Triangular Arbitrage, on the other hand, takes advantage of the price difference obtained through an intermediate currency. For example, you buy Bitcoins by paying in Euros, you convert the Bitcoins to Ethereums, and finally, you exchange the Ethereum into Euros, for more than the value initially invested. This technique takes advantage of the advantages in the exchange rates of the various exchanges.
Arbitrageurs profit through microtransactions from one Exchange platform to another by taking advantage of price gaps
. Cryptocurrency arbitrage is very similar to Surebet in the Betting world, and to do so requires having the right tools and good timing.
5. Staking
Cryptocurrency staking can be seen as an alternative to mining but one that requires the use of fewer resources.
It consists of holding funds in a cryptocurrency wallet to support the security and operations of a project or blockchain. More simply, we can say that staking consists of locking cryptocurrencies to receive rewards.
In most cases, you will be able to stake your coins directly from the wallet. In addition, several exchange platforms offer to stake services to their users.
Earnings are considered annualized and the period varies according to the contract signed.
Among the most popular is Crypto.com, which allows you to lock in cryptocurrencies in order to have, periodically, a profit. The percentage usually ranges between 2 and 5 percent depending on the type of currency you decide to trust.
6. Syndicate
Crypto.com has contributed to the spread of syndicates, and special promotions that are done by platforms to promote a cryptocurrency.
There is often no shortage of opportunities, for example, there may be some offers related to coin, which is sold at a reduced price.
There are conditions to accept in order to participate and take advantage of Syndicates, but the payoff can be worthwhile.
7. Airdrop
Similar to Syndicates, Airdrops allow you to receive coins for free. What is required is the performance of small transactions such as signing up for a Telegram channel or a newsletter.
An Airdrop is nothing more than a gift given by the founders of a cryptocurrency for a mainly self-promotional purpose. Thus, it is a marketing activity by the team to introduce the new token or cryptocurrency to the broad community. Coins can appreciate over time.
8. Fork
The term Fork of cryptocurrency is defined as a modification to the original code whose purpose is the improvement of a digital currency. This makes it possible to generate a new version of the coin or token while retaining all the antecedent history.
This mechanism has allowed the emergence of new coins with different characteristics than the original cryptocurrency.
This is a particular phase of the coin, where for certain factors it is split and if you are the holder you will end up with two coins instead of one at two different prices. Both are immediately usable and monetizable.
9. Dark Pools.
Little known and very innovative, they are a great tool for making interesting performances. Large amounts of capital are required to participate in a Dark Pool.
Dark Pools are an alternative trading system that allows institutional investors to anonymously place, large orders without having to publicly disclose their intentions while searching for buyers or sellers.
The advantage of this tool is that investors tend to execute block purchases, so as to avoid slippage and triggering potential adverse price movement.
Some experienced traders exploit this system to gain access to insider information or to make money through arbitrage between the dark pool book and the public book.
read more : cryptocurrency tier list : top 10 cryptocurrency 2022
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