How to Make Money From Cryptocurrency: Methods and Strategies

Show me the money: Counting down three of 2018's biggest ICOs thus far

Key Takeaways:

Trading and Investment: Cryptocurrency trading, whether day trading or long-term investing, is one of the most common ways to earn. Day traders capitalise on short-term price fluctuations, while investors hold onto crypto for months or years, aiming for significant long-term gains. Research and analysis skills are crucial here, especially in volatile markets.

Staking and Yield Farming: Staking allows you to earn rewards by locking up your coins to support blockchain operations. Yield farming, on the other hand, involves lending your crypto on decentralised finance (DeFi) platforms to earn interest. These methods generate passive income but can involve certain risks, like impermanent loss or platform vulnerabilities.

NFTs and Play-to-Earn Games: Non-fungible tokens (NFTs) and blockchain-based games are growing areas for making money. People can earn profits by creating, trading, or investing in NFTs. Play-to-earn games also reward players with crypto or NFTs, creating a new pathway for earning in the digital asset space.

Several avenues exist when deciding to invest in cryptocurrency to make money. Much like with fiat money, you can obtain crypto as payment for goods or services, receive it as a gift, take part in an Initial Coin Offering (ICO) or, akin to buying company shares, purchase it through an exchange or a custodial service of your choice.

Want to Make Money From Cryptocurrency? Use These Methods

Crypto has become a desired means of earning money in recent years, with several strategies to explore, from investing to trading. Whether you are a beginner or someone with experience, there are multiple methods you can use to earn profits from the world of cryptocurrencies. Below, we outline some of the most effective ways to make money from crypto.

The HODLing Strategy

HODLing is one of investors’ most common strategies for making money from cryptocurrencies. The term “HODL” originates from a misspelling of “hold” and refers to holding onto crypto for an extended period, regardless of short-term market volatility. The idea behind this approach is that over time, the value of the crypto will rise, leading to significant profits. For instance, early Bitcoin (BTC) investors who bought and held onto their assets for years saw exponential growth in value. If you believe in the long-term success of crypto, HODLing might be an excellent strategy for you.

You Can Be a Day Trader

Day trading involves buying and selling cryptocurrencies quickly, usually within a single day, to capitalise on small price movements. Day traders use technical analysis, charts, and market patterns to identify the best moments to buy and sell. This method requires a good understanding of the market and the ability to act quickly. The key to success in day trading is staying updated with market news, using trading platforms with real-time data, and having risk management strategies in place.

Staking

Staking allows crypto holders to lock up their assets to support the security and operations of a blockchain network. In return, they receive rewards, often through additional crypto. Staking is an excellent way to earn passive income if you hold coins that support this functionality, like Ethereum (after the upgrade to ETH 2.0), Cardano, or Solana. The rewards can vary depending on the amount staked, the duration, and the particular coin, but for those not active traders, staking offers a relatively low-risk way to earn a return.

Yield Farming

Yield farming is a more advanced method that involves lending or staking your crypto in decentralised finance (DeFi) platforms to earn returns. You can earn interest and additional token rewards by providing liquidity to decentralised exchanges (DEXs). This strategy allows for higher returns but increases risk, especially if the platform experiences hacking or liquidity issues.

Mining

Mining is the process of using computational power to validate transactions on a blockchain network. Miners are rewarded with newly minted coins for their work. While BTC mining has become resource-intensive, other cryptocurrencies, such as Ether Classic and Monero, can be mined with less powerful hardware. Mining can provide a steady income for those investing in equipment and electricity.

Airdrops and Forks

Airdrops occur when crypto projects distribute free tokens to users to promote their platforms or in response to a hard fork, which splits a blockchain into two. Holding specific cryptocurrencies may qualify you to receive these free tokens, which you can later sell for profit. Hard forks, such as BTC Cash (which forked from BTC), can also create opportunities for you to own both the original and the new coin.

Play-to-Earn Games

Play-to-earn (P2E) games allow players to earn crypto or NFTs by playing games. Popular games like Axie Infinity, The Sandbox, and Decentraland have given rise to this concept, allowing players to collect in-game tokens and digital assets they can later sell on marketplaces. For gamers, P2E offers an entertaining way to earn money from crypto without needing a significant upfront investment.

You Can Also Make Profits By Lending Cryptocurrency

Crypto lending platforms allow you to lend your assets to others in exchange for interest payments. You can do this through centralised or decentralised platforms, earning returns on your idle assets. Interest rates are often higher than traditional savings accounts, and the risks can be managed by choosing reputable lending platforms.

Investing in ICOs and IDOs

Initial Coin Offerings (ICOs) and Initial DEX Offerings (IDOs) allow investors to buy new tokens at a low price before they are publicly traded. If the project succeeds, the value of these tokens can rise dramatically, leading to significant returns. However, ICOs and IDOs are inherently risky as many projects fail or don’t deliver on their promises, so thorough research is essential before investing.

NFT Trading

Non-fungible tokens (NFTs) represent ownership of digital assets such as art, music, and virtual real estate. NFT trading has exploded recently, with some digital art pieces selling for millions of dollars. Traders can earn significant profits by buying, holding, or flipping NFTs. However, like crypto, NFT prices can be volatile, and investing in valuable and unique projects is essential to maximise returns.

Should You Create a Cryptocurrency to Make Money?

Creating your crypto might sound enticing, especially given the success of coins like BTC and Ether and meme coins like Dogecoin. However, the process is complex, requiring technical knowledge, funding, and marketing skills. Creating crypto can lead to significant rewards if you’re passionate and have the necessary resources, but it’s not a path for beginners.

Here is What We Suggest

For beginners, we recommend starting with the following top three methods:

  1. HODLing: Ideal for those who want to invest with minimal daily involvement, HODLing offers a more hands-off approach with long-term benefits.
  2. Staking: A relatively low-risk way to earn passive income while contributing to a blockchain’s operations. It’s perfect for those looking to earn rewards without active trading.
  3. Play-to-Earn Games: For gamers or those looking for a fun, engaging way to make money, P2E games offer rewards without requiring significant initial investments.

These methods provide a solid foundation for beginners in the modern crypto landscape.

Frequently Asked Questions (FAQ)

  1. Is cryptocurrency safe for beginners to invest in?

While crypto can be profitable, it is also volatile. To manage risks, beginners should research thoroughly, start with small investments, and diversify their portfolios.

  1. Can I lose money in staking?

Yes, staking can involve risks such as price fluctuations of the staked token, which could lower the value of your holdings. However, compared to active trading, staking tends to be less risky.

  1. What are the tax implications of earning money from crypto?

Tax laws vary by country, but crypto earnings (from trading, staking, or mining) are taxable in many jurisdictions. It’s essential to understand the regulations in your area.

  1. How can I choose the right cryptocurrency to invest in?

Look for well-established projects with solid teams, clear roadmaps, and practical use cases. Diversifying your investments can also minimise risks.

  1. Can I make a living off cryptocurrency?

Yes, but it requires a good strategy, consistent research, and risk management. Many people make a living through trading, staking, lending, and other crypto-related ventures, but starting small and growing gradually is essential.



Fhumulani Lukoto Cryptocurrency Journalist

Fhumulani Lukoto holds a Bachelors Degree in Journalism enabling her to become the writer she is today. Her passion for cryptocurrency and bitcoin started in 2021 when she began producing content in the space. A naturally inquisitive person, she dove head first into all things crypto to gain the huge wealth of knowledge she has today. Based out of Gauteng, South Africa, Fhumulani is a core member of the content team at Coin Insider.

View all posts by Fhumulani Lukoto >

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