Cryptocurrencies are ways to make secure digital payments which circumvent the need for a third party such as a bank to process the transaction. Bitcoin was the first invented in 2009 and since that time there have been over 4000 different cryptocurrencies created. There are many different ways you can make money with cryptocurrencies and these are the main ones but by no means an exhaustive list:
Investing: This is the most straightforward way to invest and is simply purchasing cryptocurrency in exchange for a traditional currency (e.g Purchase Bitcoin for US dollars). As cryptocurrencies aren’t centralised or regulated, the price of cryptocurrency fluctuate depending on the current market price similar to if you were purchasing stocks or trading currency. You make money when the price of the cryptocurrency increases in value. Even though this method is straight forward, it requires your own money to get started and there is no guarantee that a cryptocurrency will increase in value. A great site to get started is Etoro which allows you to buy or sell a number of cryptocurrencies.
Mining. Cryptocurrencies are created by solving complex mathematical problems. That doesn’t mean sitting down with a calculator but rather you run a piece of software on your computer. This is what is known as mining. However as you can imagine because this is the ultimate passive income, a lot of people are doing it with a large number of computers switched on day and night. It is very likely your home computers won’t be able to process enough calculations and create enough currency to pay for the increase in your electricty bill. Not to mention because the computer is constantly processing calculations it will heat up and need additional cooling fans. If you are serious about mining cryptocurrency you are going to need to invest a large amount of money into equipment.
Earning. The third way to make money with cryptocurrencies is to earn them. You could ask for payment for any service you offer in Bitcoin or any other cryptocurrency as they are becoming a more mainstream method of payment. Some sites such as Cointiply allow you to perform micro tasks and get paid in Bitcoin.
Cryptocurrencies are an incredibly complex instrument to deal with and there are many more ways to make money from them including lending your coins through Peer 2 Peer, setting and running a master node, and even starting your own block chain. It is worth investing a significant amount of time studying and learning about cryptocurrencies if you are interested in dealing with them. Be careful what sources you learn from as there are a lot of websites and videos on Youtube who are giving contradictory advise based on nothing other than speculation.
Cryptocurrencies are still in their very early days and no one knows what will happen with them in the future. While there is no doubt that they are here to stay and will revolutionise the way we make payments, it is still an incredibly risky, unregulated area to invest. There are scams based around cyrptocurrenices and people will make and lose fortunes. A lot of the current cyrptocurrencies in circulation will no doubt fall by the wayside in years to come. There is plenty of money to be made with cryptocurrencies but it is important than ever to educate yourself and not invest more than you can afford to lose.
Mastering Bitcoin 2e – An in depth explanation of Bitcoin.
Cryptocurrency by Stephen Satoshi – The Complete Guide to Financial Independence.
Cryptocurrency: A Trader’s Handbook – A Complete Guide On How To Trade Bitcoin And Altcoins.
Sites to use
Etoro – Social network gives you access to many investments including cryptocurrencies, commodities, shares and currencies.
Cointiply – Earn bitcoin for completing online tasks.