Investing
Updated on December 20, 2023
Written by
Frank Gogol
Written by
Frank Gogol
I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.
See all posts Frank Gogol
Reviewed by
Rohit Mittal
Reviewed by
Rohit Mittal
Rohit Mittal is the co-founder and CEO of Stilt. Rohit has extensive experience in credit risk analytics and data science. He spent years building credit risk and fraud models for top U.S. banks. In his current role, he defines the overall business strategy, leads debt and capital fundraising efforts, leads product development, and leads other customer-related aspects for the company. Stilt is backed by Y Combinator and has raised a total of $275M in debt and equity funding to date.
See all posts Rohit Mittal
At a Glance
- Investing for long-term growth.
- Trading to exploit short-term price fluctuations.
- Engaging in staking, lending, social media participation, or leveraging airdrops and forks for additional opportunities.
Interested in turning Bitcoin into cash and navigating the crypto world? While many have reaped significant profits, others have struggled due to a lack of understanding. As the cryptocurrency sector expands, new entrants are keen to find profitable avenues. With consistent growth since 2011 in developer involvement, social media buzz, and crypto startups, there are numerous ways to capitalize. Dive in to discover how to profit from cryptocurrency and get advice from out resident expert, Rohit Mittal.
In This Article
Can You Make Money With Cryptocurrency?
Making money with cryptocurrency is possible, though it comes with risks due to its volatility. Trading cryptocurrencies offers potential, especially with the crypto market’s inherent fluctuations.
For example, a CNBC article from late 2021, a year when the market was strong, reported that investing $1,000 in Bitcoin on January 1st of that year would have resulted in a $632 in profit (a +63% return).
Platforms like Binance, Coinbase, and Robinhood facilitate crypto trading. Beyond trading, there are multiple strategies to profit from cryptocurrency. Dive in to explore six of them.
9 Ways to Make Money with Crypto in 2023
If you are wondering how to earn money with cryptocurrency, look no further! Strategies for making money with crypto rely on three mechanisms:
- Invest or Trade: Engage in the crypto market, similar to stock market investments.
- Stake and Lend: Use your coins to stake or lend to others.
- Participate: Mine or earn rewards within the blockchain system.
Based on these three mechanisms, here are the nine strategies for making money with cryptocurrency:
- Investing
- Trading
- Staking
- Lending
- Crypto Social Media
- Mining
- Giveaways
- Gaming
- Airdrops and Forks
Each of these strategies is explored in more detail below.
1. Crypto Investing
Investing in cryptocurrencies involves purchasing and holding digital assets with the expectation that their value will increase over time. This long-term strategy banks on the belief that as cryptocurrencies become more widely adopted and integrated into technological and financial systems, their demand and, consequently, their value will rise. Investors aim to profit by eventually selling their holdings at a higher price than the cost at which they were acquired, realizing a capital gain. This approach requires patience, a strong belief in the underlying technology or utility of the asset, and a tolerance for the market’s inherent volatility.
How to Do It
Investing in cryptocurrencies as a strategy typically involves conducting thorough research to select which digital assets to buy, often focusing on those with strong fundamentals and long-term growth potential. Investors usually purchase crypto through an exchange, hold their assets in a wallet, and monitor the market for significant trends or changes. The investment is often held over months or years, through market ups and downs, with the intent to sell for a profit at a future date when the asset’s value has appreciated significantly.
Pros:
- Potential for significant long-term gains.
- Diversification of investment portfolio.
Cons:
- Volatility can lead to substantial losses.
- Requires understanding and research of the crypto market.
Rohit’s Advice: Don’t be swayed by the high volatility and noise surrounding daily price movements. As an investor who’s weathered several crypto winters, I’ve found that the key is a long-term perspective, coupled with thorough research into each project’s fundamentals. Remember, it’s not about timing the market, but time in the market that often yields results.
2. Crypto Trading
Trading cryptocurrencies is an active approach to profiting from the market’s fluctuating prices. Traders use a variety of methods, including technical analysis, to identify buying and selling opportunities, often executing multiple trades within a short period to capitalize on small price movements. The goal is to make a series of small profits that add up over time, which requires a good understanding of market trends and the ability to act quickly in response to market changes. Unlike investing, trading is a more hands-on strategy and can be a full-time endeavor for many.
For those who can transition to crypto day trading professionally, the average salary in the U.S. is $94,266.
How to Do It
Trading cryptocurrencies requires setting up an account with a cryptocurrency exchange where you can buy and sell digital currencies. Successful traders often rely on a mix of technical and fundamental analysis to make informed decisions about when to execute trades. They also must stay up-to-date with market news and events that could affect prices. It’s common for traders to use tools like price charts, trading indicators, and stop-loss orders to manage risks. They need to be disciplined, ready to cut losses, and take profits at pre-defined levels.
Pros:
- Potential for high returns.
- Flexibility in investment strategies.
Cons:
- High risk due to crypto’s volatile nature.
- Requires constant market monitoring.
Rohit’s Advice: The most crucial lesson I’ve learned from crypto trading is to never let emotions drive your decisions. Set clear rules for entry and exit points and stick to them. Also, make sure to use only a small portion of your portfolio for trading; this mitigates risk and keeps your overall holdings stable.
3. Crypto Staking
Staking is a process unique to certain cryptocurrencies that use a proof-of-stake (PoS) consensus mechanism. By holding and ‘staking’ their coins, participants can contribute to the network’s security and governance. In return for locking up their assets to validate transactions and support the network, stakers are rewarded with additional coins, similar to earning interest in a savings account. This method of earning income with crypto is particularly attractive as it provides an opportunity to accumulate more cryptocurrency without needing to put in the significant effort required by other methods.
How to Do It
Staking cryptocurrencies involves holding funds in a cryptocurrency wallet to support the operations of a blockchain network. Essentially, you lock cryptocurrencies to receive rewards. To start staking, one needs to own a cryptocurrency that uses the proof-of-stake model and keep the coins in a compatible wallet. Some exchanges offer staking services, allowing you to stake directly through their platform. It’s important to research and understand the specific staking process for the chosen cryptocurrency, as it can vary from one to another.
Pros:
- Passive income through interest or dividends.
- Supports the crypto ecosystem.
Cons:
- Crypto may be locked for a set period.
- Exchanges can be vulnerable to hacks.
Rohit’s Advice: Staking has been a relatively lower-risk way for me to grow my crypto assets compared to trading. But it’s vital to choose platforms and coins with a strong track record and a clear staking process. Always do your due diligence, and consider the lock-up period and the liquidity of the asset before staking.
4. Crypto Lending
Lending provides a way to earn income from cryptocurrency holdings without selling them. By offering your crypto assets on lending platforms, you can earn interest from borrowers who use your funds for various purposes, such as trading or financing their own projects. The lending market in the cryptocurrency space, especially within decentralized finance (DeFi), has grown significantly, offering competitive interest rates compared to traditional savings accounts. It is, however, not without risk; platform security and borrower default are factors that lenders must consider.
How to Do It
Lending your cryptocurrency can be done through several platforms that connect lenders with borrowers. To lend crypto, you deposit your funds into a lending platform, where they are then lent out to borrowers who pay interest. When lending, it’s crucial to consider the platform’s credibility, the security of your funds, and the interest rates offered. DeFi lending platforms often offer higher returns and require you to interact with smart contracts, while centralized platforms may provide a more user-friendly experience with varying interest rates.
Pros:
- Potential for high returns.
- Passive income source.
Cons:
- Reduces liquidity of your assets.
- Some platforms have faced liquidity challenges.
Rohit’s Advice: In lending, diversification is your best friend. Spread your lending across various platforms and borrowers to minimize risks. Also, remember to thoroughly assess the collateral and the creditworthiness of the borrowers. I’ve learned to focus on platforms that offer solid smart contract audits and insurance funds.
Participating in crypto social media platforms is a novel way to earn money with cryptocurrencies. These platforms reward users with cryptocurrency for creating content, engaging with posts, or contributing to the community in other valuable ways. For those who have a knack for creating popular content or engaging an audience, this can be a lucrative avenue, not to mention it helps foster a sense of community and shared ownership in the platform’s success.
How to Do It
Engaging with crypto social media platforms as a money-making strategy entails joining platforms that reward users with cryptocurrency for content creation, curation, and interaction. To profit from these platforms, create or share content that is likely to generate engagement, such as likes, comments, and shares. Regular participation and building a following can increase your earnings potential from these platforms’ reward systems.
Pros:
- Earn crypto for activities you might already be doing on traditional platforms.
- Helps in understanding and staying updated with the crypto community.
Cons:
- Earnings can be inconsistent.
- Platforms may not have the same reach or user base as mainstream social media.
Rohit’s Advice: Earning crypto through social media requires you to be actively engaged and genuinely interested in creating valuable content. My success came when I focused on providing real insights and fostered genuine discussions, rather than just chasing the rewards.
6. Crypto Mining
Mining is one of the oldest methods of making money with cryptocurrency. It involves using specialized computer hardware to solve complex mathematical puzzles, which in turn secures the network and processes transactions. Miners are rewarded with newly minted coins and transaction fees. This process requires a significant upfront investment in hardware and ongoing costs for electricity, making it challenging for individual miners, especially in areas with high energy costs. However, for those with the resources to start mining, it can be a steady source of income.
How to Do It
Mining cryptocurrencies requires obtaining the necessary hardware, such as ASIC miners for Bitcoin or high-end GPUs for other cryptocurrencies. Once the hardware is set up, you need to install mining software and join a mining pool to increase the chances of earning rewards. The mined cryptocurrency can either be held or sold on the market. Due to the energy-intensive nature of mining, it’s crucial to consider electricity costs and the efficiency of the mining setup.
Pros:
- Direct way to acquire new coins.
- Potential for significant returns.
Cons:
- Energy-intensive.
- Requires substantial equipment investment.
- Not always profitable.
Rohit’s Advice: If you’re looking to get into mining, be aware of the energy costs and the initial investment in hardware. It’s essential to calculate your potential return on investment carefully. I found that joining a mining pool increased my chances of earning rewards, as it combines resources with other miners.
7. Crypto Giveaways
Giveaways in the cryptocurrency context, often known as “crypto giveaways,” offer the chance to receive free tokens as part of a promotion or marketing campaign. While not a traditional method for making money, if the received tokens increase in value, there is a potential for profit. Participants must be cautious and discerning to avoid scams, as the allure of free tokens can sometimes be used as bait by malicious actors.
How to Do It
Participating in giveaways to make money with cryptocurrencies often involves joining a blockchain project’s community, such as following them on social media or signing up for newsletters. Projects may require participants to perform tasks, like sharing posts or tagging friends, to qualify for the giveaway. While this method requires minimal effort, it’s also less reliable as a consistent income source, and the value of free tokens can vary widely.
Pros:
- Opportunity to earn free crypto.
- Minimal effort required.
Cons:
- Potential scams or malware risks.
- Earnings may be minimal.
Rohit’s Advice: Always approach giveaways with a healthy dose of skepticism. Legitimate giveaways are few and far between, and they should never require you to send your own crypto first. From my experience, the safest giveaways are directly from well-known and reputable projects or individuals.
8. Crypto Gaming
Gaming has emerged as a new frontier in the crypto space with the advent of ‘play-to-earn’ models. In these blockchain-based games, players can earn in-game cryptocurrencies or NFTs which can be traded or sold, potentially for real-world currency. This convergence of gaming and finance has created a burgeoning industry where skillful play or strategic trading of in-game items can lead to tangible earnings.
How to Do It
Making money through gaming in the crypto space typically involves playing blockchain-based games that have a play-to-earn model. To start, one needs to understand the mechanics of the game and how earnings are generated, which could be through in-game currency, NFTs, or other digital assets. Players may need to invest in starting assets or characters, depending on the game’s design. Profits are made by selling earned in-game assets on various marketplaces or exchanges.
Pros:
- Fun way to earn crypto.
- Growing industry with increasing opportunities.
Cons:
- Some games require initial NFT investment.
- Market can be unpredictable.
Rohit’s Advice: The ‘play-to-earn’ model can be incredibly rewarding, but it also requires time and effort to understand the game’s economy and mechanics. My advice is to enjoy the gaming aspect first and view any earnings as a bonus. This way, you avoid burnout and can make strategic decisions when trading in-game assets.
9. Crypto Airdrops and Forks
Lastly, airdrops and forks are events that can result in receiving new cryptocurrencies. Airdrops occur when projects distribute free tokens to existing holders to drive engagement or as a loyalty reward, while forks happen when a blockchain diverges into two paths, potentially granting holders of the original currency an equivalent amount of the new one. Both scenarios can result in the acquisition of new assets without a direct purchase. These assets can be held in anticipation of value appreciation or sold for immediate profit, depending on the holder’s strategy.
How to Do It
To benefit from airdrops and forks, cryptocurrency holders should keep informed about upcoming events. For airdrops, this often involves holding a specific cryptocurrency at a certain time to qualify for the free tokens. For forks, holders of the existing cryptocurrency typically receive new tokens at a one-to-one ratio. Staying active in the crypto community, joining project announcements channels, and holding a diversified portfolio can increase the likelihood of benefiting from these events.
Pros:
- Free tokens can lead to unexpected gains.
- Opportunity to explore new projects without financial commitment.
Cons:
- Many airdrops have little to no value.
- Potential scams or fraudulent schemes.
Rohit’s Advice: With airdrops and forks, one piece of advice is to stay informed about the projects you invest in and the broader crypto community. This knowledge helped me benefit from airdrops and forks without being caught off-guard. Also, always secure your holdings in a wallet you control to be eligible for these events.
The Pros and Cons of Making Money With Cryptocurrency
Cryptocurrency, a digital or virtual form of currency, has taken the financial world by storm. As with any investment, there are potential rewards and risks. Let’s delve deeper into the advantages and challenges of making money with cryptocurrency.
Pros of Making Money with Cryptocurrency
- Quick Returns: Cryptocurrencies can offer substantial returns in a short time frame due to their volatility.
- Global Market: Cryptocurrencies operate 24/7, allowing trading at any time from anywhere in the world.
- Diversification: Crypto offers a new asset class, allowing investors to diversify their portfolios.
- Low Entry Barrier: Unlike traditional investments, you can start trading crypto with a relatively small amount of money.
- Decentralization: Cryptocurrencies operate without a central authority, offering a level of transparency and security.
Cons of Making Money with Cryptocurrency
- High Volatility: The same volatility that can lead to high returns can also result in significant losses.
- Security Concerns: Cryptocurrencies are susceptible to theft from hacking. It’s crucial to use secure wallets and exchanges.
- Lack of Regulation: The crypto market isn’t as regulated as traditional financial markets, leading to potential scams and fraud.
- Knowledge Barrier: To succeed, one needs to stay updated with industry news, understand trading best practices, and be aware of market trends.
- Uncertain Future: The future of individual cryptocurrencies is uncertain. It’s essential to have an exit strategy.
Other Crypto Considerations
Knowing and understanding the strategies above will be really helpful — if you have a good grasp of the concepts around cryptocurrency. But if you aren’t clear on some of the basics, like understanding how crypto gains value, how to read the crypto charts, what an ICO is, or how to pay taxes on your crypto gains, you might want to take a beat before diving in.
And if you’re looking for an awesome, secure crypto wallet to earn with, check out ZenGo. It offers unparalleled security. Being the only self-custodial wallet without private key vulnerability, it’s powerfully backed by MPC. Always recoverable and boasting a pristine record of never being hacked, ZenGo sets the gold standard.
Sources▼
- https://www.cnbc.com/2021/12/28/how-much-youd-have-if-you-invested-1000-in-top-cryptocurrencies.html
- https://www.ziprecruiter.com/Salaries/Cryptocurrency-Trader-Salary
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FAQ: Making Money with Crypto in 2023
How can I maximize my profits quickly in the crypto market?
To maximize profits swiftly, monitor price trends, time your investments wisely, and consider early entries into promising projects or coins.
Is it feasible to earn a daily income from cryptocurrency?
Absolutely. With diligent research and a robust strategy, you can earn daily from cryptocurrency. For instance, mastering an NFT game can lead to daily earnings through competition victories.
Can I realistically make $100 a day trading cryptocurrency?
Yes, it’s possible, especially for adept day traders. However, your daily earnings largely depend on your initial investment and the market’s performance.
Given the current trends, is cryptocurrency a wise investment?
Crypto investment viability varies with market dynamics. Stay updated with market conditions, financial news, blockchain innovations, and track the performance of specific cryptocurrencies to make informed decisions.
How safe is it to invest in cryptocurrency?
Cryptocurrency is inherently risky. While it offers the potential for high returns, it’s equally possible to incur significant losses. Always invest what you’re prepared to lose.
How do I start with cryptocurrency trading?
Begin by researching and selecting a reputable crypto exchange. Educate yourself on market trends, different cryptocurrencies, and trading strategies. Starting with a small investment can help you understand the market without significant risk.
Are there any tools or platforms you recommend for crypto trading?
There are numerous platforms like Coinbase, Binance, and Kraken. It’s essential to choose one based on its security features, user interface, and transaction fees. Additionally, tools like CoinMarketCap or TradingView can help track and analyze market trends.
How can I protect my cryptocurrency investments?
Ensure you use secure wallets, enable two-factor authentication on your accounts, and regularly back up your wallets. Avoid sharing sensitive information and be wary of phishing scams.
Frank Gogol
I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.
See author's posts
As someone deeply entrenched in the world of finance, particularly cryptocurrency, I understand the importance of information in achieving financial freedom. My expertise spans various aspects of the cryptocurrency market, including investing, trading, staking, lending, and other innovative ways to make money in this dynamic and evolving space.
Firstly, let's delve into the concepts discussed in the article:
-
Crypto Investing:
- Definition: Purchasing and holding digital assets with the expectation of long-term value appreciation.
- Strategy: Researching and selecting digital assets with strong fundamentals, holding them over months or years, and selling for profit when their value has significantly increased.
-
Crypto Trading:
- Definition: Actively buying and selling cryptocurrencies to capitalize on short-term price fluctuations.
- Strategy: Using technical and fundamental analysis to identify trading opportunities, executing multiple trades to accumulate small profits over time.
-
Crypto Staking:
- Definition: Contributing to a blockchain's security and governance by holding and 'staking' coins, earning additional coins as rewards.
- Strategy: Holding a cryptocurrency that uses the proof-of-stake consensus mechanism, keeping the coins in a compatible wallet or using staking services provided by exchanges.
-
Crypto Lending:
- Definition: Earning interest from cryptocurrency holdings by lending them to others.
- Strategy: Depositing crypto into lending platforms, considering platform credibility, security, and interest rates, and diversifying lending across various platforms.
-
Crypto Social Media:
- Definition: Earning cryptocurrency rewards for creating content, engaging with posts, or contributing to the crypto community on social media platforms.
- Strategy: Active engagement, content creation, and building a following to increase earnings from social media reward systems.
-
Crypto Mining:
- Definition: Using specialized hardware to solve complex mathematical puzzles, securing the network, and earning newly minted coins and transaction fees.
- Strategy: Obtaining necessary mining hardware, joining mining pools to increase chances of earning rewards, and considering energy costs and mining setup efficiency.
-
Crypto Giveaways:
- Definition: Receiving free tokens as part of a promotion or marketing campaign.
- Strategy: Participating in blockchain projects' communities, performing tasks to qualify for giveaways, and being cautious to avoid scams.
-
Crypto Gaming:
- Definition: Earning in-game cryptocurrencies or NFTs by playing blockchain-based games.
- Strategy: Understanding the game's mechanics, investing in starting assets, and profiting by selling in-game assets on marketplaces or exchanges.
-
Crypto Airdrops and Forks:
- Definition: Receiving new cryptocurrencies through airdrops (free token distributions) or forks (blockchain divergences).
- Strategy: Staying informed about upcoming events, holding specific cryptocurrencies to qualify for airdrops, and navigating forks to receive equivalent amounts of new tokens.
Additionally, the article covers the pros and cons of making money with cryptocurrency, highlighting the potential returns, global market accessibility, diversification benefits, and low entry barriers, along with the challenges of high volatility, security concerns, lack of regulation, the need for continuous knowledge, and uncertain future developments.
The author, Rohit Mittal, provides valuable advice based on his extensive experience in credit risk analytics and data science, emphasizing the importance of a long-term perspective in investing, disciplined decision-making in trading, thorough research in staking, diversification in lending, genuine engagement in social media, and strategic considerations in gaming, giveaways, and airdrops.
In conclusion, the article provides a comprehensive guide for individuals interested in navigating the cryptocurrency landscape to maximize financial gains while being aware of the associated risks and challenges.
