How To Make Money With Cryptocurrency
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If you asked the average person how to make money with cryptocurrencies, they would most likely say “the same way you do with stocks.” You buy them and hope that the price rises so that you can sell them for a profit.
Many people are unaware of the numerous opportunities to earn money with cryptocurrencies. If that sounds like you, keep reading. Benzinga lists as many as possible here and briefly summarizes each opportunity.
Keep in mind that all investing and trading carries some risk, and some asset classes are riskier than others. Crypto is on the riskier side of the spectrum. On top of that, you also have risks associated with the style of investing or trading. Day trading or scalping is probably the riskiest style of trading.
Traditional Buy and Hold InvestingBuy-and-hold, long-term investing can be profitable if done correctly. You need to do your homework, though; you can’t just buy any cryptocurrency and expect to make money. The lowest risk positions would be to invest in Bitcoin or Ethereum and dollar-cost average into your position over a long period.
Looking at the table above, you can see that holding either Bitcoin or Ethereum over the last 5 to 6 years has been very profitable. Moving forward, there are no guarantees, but using a dollar-cost averaging strategy should give you an acceptable position cost average.
Dollar-cost averaging is an investment strategy that tries to reduce the impact of market volatility on large purchases. Instead of entering a position all at once with a large purchase, purchases are spread out in regular intervals over a long period. The intervals could be weekly, monthly or whatever fits your strategy. The critical part is to purchase the same dollar amount at each interval.
With this strategy, when prices are higher, you will be purchasing a smaller amount of whatever coin or token you are investing in. When prices are lower, you will be buying larger amounts of the coin or token. This strategy will lower your overall average price. Some good places to get started dollar cost averaging into cryptocurrencies are Gemini and eToro.
Looking at the table below, you can see how buying in equal dollar amounts can give you a better position cost average than purchasing equal amounts of Bitcoin.
Trading CryptocurrencyCommissions
Account Min $0
1 Minute ReviewCoinbase is one of the Internet’s largest cryptocurrency trading platforms. From Bitcoin to Litecoin or Basic Attention Token to Chainlink, Coinbase makes it exceptionally simple to buy and sell major cryptocurrency pairs.
You can even earn cryptocurrency rewards through Coinbase’s unique Coinbase Earn feature. More advanced traders will love the Coinbase Pro platform, which offers more order types and enhanced functionality.
Though Coinbase doesn’t offer the most affordable pricing or the lowest fees, its simple platform is easy enough for complete beginners to master in as little as a single trade.
Best ForCommissions
Account Min $50 for US and Australia; $200 everywhere else
1 Minute RevieweToro, headquartered in Cyprus, England and Israel, has provided forex products and other CFD derivatives to retail clients since 2007. A major eToro plus is its social trading operations, including OpenBook, which allows new clients to copy trade the platform’s best performers. Its social trading features are top notch, but eToro loses points for its lack of tradable currency pairs and underwhelming research and customer service features
Best ForBest For
Intermediate Traders and Investors
Commissions $0
Account Min $0
1 Minute ReviewWebull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.
Webull is widely considered one of the best Robinhood alternatives.
Best ForThe staking of cryptocurrencies is very similar to depositing fiat into a savings account. The big difference with staking is that you can realize a much higher yield. A traditional bank will pay you around 1% interest if you are lucky. Some banks pay as little as 0.01%, including JPMorgan Chase, the largest bank in the United States. Staking yields will vary depending on the coin or token you stake, but it is not uncommon to receive 15% to 20% or even higher.
Many exchanges and platforms offer staking, with both centralized and decentralized options. You can even stake crypto from some hardware wallets. The lowest risk option for staking would be to stake stablecoins. When you stake stablecoins, you eliminate most of the risk associated with the price fluctuations of cryptocurrency. Also, if possible, avoid lockup periods when staking.
Yield FarmingYield farming is similar to staking but with a twist. Yield farms consist of many liquidity pools, and each pool will require a pair of cryptocurrencies to be staked into a pool. You just pick a pool you want to farm and buy equal amounts of each required coin or token. After purchasing the coins or tokens, you need to deposit them together. This process takes place on the liquidity section of the platform. You manually input the proper crypto that you need to deposit and click to add liquidity.
Once the coins or tokens are paired, you open up the farm you want to join and stake your liquidity pair. Your rewards will be paid out in one of the paired cryptocurrencies.
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