If you want to learn how to make money investing in cryptocurrency, you're in the right place. We’re going to show you all of the trading tricks advanced traders are using to increase their income.
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Should I invest in cryptocurrency? This is the first question we asked after hearing about blockchain technology.
We’re going to look at six simple ways to invest in cryptocurrency and generate a passive income. With this cryptocurrency investment strategy, you can invest a smaller amount of money and have good upside potential.
Not everyone has a lot of money to dump into the market or buy the most popular cryptocurrency Bitcoin.
To start things off, we’re going to look at six proven ways to make money investing in cryptocurrency.
How to Invest in Cryptocurrency
The best way to start is to find a cryptocurrency investment strategy that best suits your needs and goals. This crypto guide will give you an idea on the many different ways to make money with cryptocurrencies.
So, how do I invest in cryptocurrency?
Cryptocurrency Investment Strategy #1: Long-Term Investing – HODL
The same way you invest in the stock market you can invest in bitcoin and other alt coins. Most cryptocurrency traders embrace a HODL mentality. They hold a coin for the long-term for the potential of profiting from the rise in price.
HODL has become one of the main staples of the cryptocurrency slang.
When you HODL a coin it means that you believe in it and holding on to it for dear life. You want to the cryptocurrency you’re invested in to have success when hodl-ing.
Long-term investing in cryptocurrency works amazingly well.
But, how do you invest in cryptocurrency in a bear market?
The key is to diversify your investment strategy.
Cryptocurrency Investment Strategy #2: Passive Income from Dividend Payouts
Passive income is defined as a source of income collected on a regular basis that requires no maintenance. The traditional dividend payouts received from holding stocks is a source of passive income.
Not many traders know that you can actually earn dividends from some cryptocurrencies as well.
There are some coins like NEO coin or VeChain cryptocurrency that pay dividends anywhere between 5% to 10% per annum. The dividend payout is received in cryptocurrency. You have the potential to compound those profits if the coin price goes up over time.
For example, NEO crypto holders earn their dividends in the form of GAS. It is used as a fuel on the NEO blockchain.
If you think about it, that’s more than the 2-3% per annum interest rate offered by your local bank.
If you really want to diversify your cryptocurrency portfolio, consider including cryptocurrency that pays dividends in your crypto portfolio.
Let’s explore other ways to make money with crypto.
Cryptocurrency Investment Strategy #3: Arbitrage
In simple terms, arbitrage is buying something for a low price and selling it at a higher price in a different place. You might not know this, but you probably have engaged in arbitrage when you have bought something cheaper so that you can sell it later at a higher price.
A lot of people do it and want to be able to do bitcoin arbitrage. It’s probably the fastest way to make money.
If you go from one exchange and see a coin listed for one particular price and then look at another exchange, you’ll see a difference in price. In this instance, you'll want to buy the coin on the cheaper exchange.
Transfer the crypto from one wallet to another. Sell it on the other exchange where the coin is trading at a higher price.
You have to be quick, and you have to be sure there’s a fair profit margin. Otherwise, it’s not actually worth to do arbitrage trading bitcoin.
Cryptocurrency Investment Strategy #4: Airdrops
In simple terms, Airdrops gives you the ability to earn free coins. Airdrops are when a blockchain project distributes free coins or tokens to the crypto currency community.
The nice part about an Airdrop is that you’re getting free coins without any investment. However, there is a caveat with that because usually to receive the airdrop you normally have to own a specific token already.
In the crypto community space, Airdrops are also known as crypto freebies.
The main purpose behind an Airdrop is to distribute crypto assets to people so that they start using them.
Let’s now explore what is the other best way to invest in cryptocurrency.
Cryptocurrency Investment Strategy #5: Mining
Read this step-by-step mining guide and you’ll not have any questions about how to mine bitcoins. For the purpose of this article, we’re going to look into how bitcoin mining works.
So, what is bitcoin mining?
Every bitcoin transaction that happens between two users must be authorized before added on the public ledger aka the blockchain. The blockchain keeps a record of all transactions made with bitcoins. These transactions are approved by computers that are connected to the blockchain.
These computers need to use their power to calculate complicated equations. These equations are complicated even for the most powerful computers not just for the human brain.
As more bitcoins are created the difficulty of these equations will increase. The computers who successfully resolve these equations are rewarded with bitcoins.
In other words, mining is the process of creating new bitcoins in the case of your trying to mine bitcoin. Usually, each cryptocurrency has a finite number of coins. For example, Bitcoin coin supply is 21 million. The last bitcoin is expected to be mined around the year 2140.
There are countless more coins that you can mine so there is still time to get in on the mining frenzy if you wish.
Let’s explore another best way to invest in cryptocurrency.
Cryptocurrency Investment Strategy #6: Take Advantage of Hard Forks
We’re going to use Bitcoin as the primary example, but all the concepts explained in this section can apply to other cryptocurrencies as well.
The hard fork is critical for the development of blockchain technology. Every blockchain project needs constant updates to increase its performance. If there is not a consensus among Bitcoin users on how those updates to look like, Bitcoin blockchain has split in two.
That split is called a Fork.
When Bitcoin fork happened and Bitcoin Cash was created, for everyone Bitcoin in your wallet you will get automatically one Bitcoin Cash.
The only thing you need to do is to actually own that cryptocurrency that goes through a hard fork.
Conclusion – How to Make Money Investing in Cryptocurrency
The cryptocurrency market is highly volatile therefore; you need a profitable cryptocurrency investment strategy to help you make money. Despite the headwinds we saw in the crypto market in 2018, blockchain technology still has tremendous potential.
These are just a few ways on how to make money investing in cryptocurrency.
Try them and see where it leads!
We personally use some of these cryptocurrency strategies to book some profits. However, we recommend doing your own due diligence because, in a decentralized space such as the crypto market, there are lots of scams that look to steal your money. Also, make sure to check out this article on the best cryptocurrency investment.
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