What Is A Blockchain
A blockchain is an open, distributed ledger that records transactions in code. In practice, its a little like a checkbook thats distributed across countless computers around the world. Transactions are recorded in blocks that are then linked together on a chain of previous cryptocurrency transactions.
Imagine a book where you write down everything you spend money on each day, says Buchi Okoro, CEO and co-founder of African cryptocurrency exchange Quidax. Each page is similar to a block, and the entire book, a group of pages, is a blockchain.
With a blockchain, everyone who uses a cryptocurrency has their own copy of this book to create a unified transaction record. Software logs each new transaction as it happens, and every copy of the blockchain is updated simultaneously with the new information, keeping all records identical and accurate.
To prevent fraud, each transaction is checked using one of two main validation techniques: proof of work or proof of stake.
Ingenious Ways To Make Money With Cryptocurrency
Remember, Aladdins magical lamp, which had the power to make anyone impeccably wealthy. Well, today we call that thing crypto, it does the same thing. Right investment and the patient can get your extraordinary benefits and make you super-rich.
Bitcoin is the perfect example to prove it.
We know what happened with Bitcoin is something that happens only once in history.
One who had invested 19,000 dollars in Bitcoin right at the peak of the 2017 bull run found their investments falling down 75-80%. However, the believers still keep the investments and earn 300% more on their investments after three years.
Since then, lots of people are showing their interest in the crypto market and investing. According to Cryptominati Capital Crypto space is attracting investors, entrepreneurs, and individuals to invest and make new projects.
But, things are not like that. It is not as easy as it used to be now, but patience and an analytical approach will yield good returns. The crypto market has now turned into a fierce Wild West to get into the market with unpredictable components.
In this blog, you will read what cryptocurrencies are and the easiest way to make money with cryptocurrencies with less risk than complex strategies.
What Is A Long
Long-term investing is a method that typically holds an investment for more than one year. Typically, long-term investors are also passive investors. In other words, you dont buy or sell large quantities in a short period. Long-term investors can invest in stocks that increase in value, or they can invest in funds or ETFs for the long term. But in general, long-term investing is more of a set-and-forget approach.
Strategies for long term investment:
There are a few different strategies, but the overall theme is about Buy and Hold. Keeping this in mind, here are some strategies for long-term investors.
- Value investing A strategy where an investor tries to buy a cryptocurrency for lower than its intrinsic value.
- Growth investing Investing in companies that you believe will exceed the overall market cap.
- Dividend investing Investing in firms that pay out dividends.
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What Is A Short
A short-term investment is a method that is usually held for less than one year. Short-term investors are often referred to as active traders or active investors. This means you buy and sell much more often than long-term investors. This can be several times a year, several times a month, or even several times a day. Short-term investors usually want to make a quick profit and dont plan to put an investment on hold but speculate on the market.
These short-term investors will also have long-term investment portfolios elsewhere. You are probably using it for retirement or for other companies that want to invest in stocks and keep them for the long term.
Strategies for short term investment:
Short-term investors look to buy and sell their holdings quickly to make a profit. So, here are a few common strategies for short term investing:
- Scalping Buying and selling promptly in a day or multiple times within the same trading day.
- Day trading Investing to make those small profits that add up to a fortune.
- Swing trading Investments for a few days or weeks or even for a few months.
How To Invest In Bitcoin
No matter where you choose to hold your Bitcoin, peoples philosophies on how to invest it vary: Some buy and hold long term, some buy and aim to sell after a price rally, and others bet on its price decreasing. Bitcoins price over time has experienced big price swings, going as low as $5,165 and as high as $28,990 in 2020 alone.
I think in some places, people might be using Bitcoin to pay for things, but the truth is that its an asset that looks like its going to be increasing in value relatively quickly for some time, Marquez says. So why would you sell something thats going to be worth so much more next year than it is today? The majority of people that hold it are long-term investors.
An important note, though: While crypto-based funds may add diversification to crypto holdings and decrease risk slightly, they do still carry substantially more risk and charge much higher fees than broad-based index funds with histories of steady returns. Investors looking to grow wealth steadily may opt for index-based mutual and exchange-traded funds .
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Buying And Storing Crypto
You can buy or sell crypto on a crypto trading platform using traditional money. Crypto is kept in a unique digital wallet or hardware wallet.
A users wallet has a set of private keys that are used to authorise outgoing transactions on the blockchain network. A wallet may be a software or hardware wallet. A hardware wallet stores these private keys on a secure hardware device not connected to the internet. This can protect the users wallet from hackers.
Scam alert: an increased number of Australians have reported losing money through crypto-asset or cryptocurrency scams.
How Much Should You Have To Start Crypto Investing
One of the rules of investing in cryptocurrency is to maintain discipline. Avoid the temptation of over-buying. So how much exactly should you invest in cryptocurrency? It is recommended that traders invest something between 5% to 30% of their investment capital.
The 5% should be pretty an okay amount. 30%, on the other hand, is for the investor that prefers risk. While that may be the recommended amount, traders are allowed to invest whatever they feel comfortable with. Allocate an amount that you are comfortable losing.
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Can You Make Money With Cryptocurrency
Yes, you can make money with cryptocurrency. Given the inherent volatility of crypto assets, most involve a high degree of risk while others require domain knowledge or expertise.
Trading cryptocurrencies is one of the answers to how to make money with cryptocurrency. Although the daily average volume of cryptocurrency trades is just 1% of the foreign exchange market, there is a lot of volatility in the crypto market. So there is the potential to do short-term trades.
Even though the crypto market is relatively small at the moment, there is great growth potential. In addition to some of the more well-known cryptos like:
Essentially, there are quite a few methods for you to make legitimate money with cryptocurrencies, other than the obvious way of trading.
Lets take a look at 6 strategies for how to make money with cryptocurrency.
How Much Money Do I Need To Swing Trade Cryptocurrencies
As we mentioned earlier, cryptocurrency swing traders may hold trades for days or weeks. Some professional cryptocurrency traders may wait months for a swing trade to set up. They will carefully plot their charts to wait for the perfect moment for an entry.
They are looking for a long-term move, perhaps a reversal. Or crypto swing traders will wait for a price correction in the market.
Patience is the king of attitudes for swing trading crypto. It can be frustrating to wait for days or weeks for a trade to set up how you want. And, many times, the trade ends up not working out.
An RTR of 4 to 1 as a minimum protects you from all the trades that don’t work out.
A high RTR means that you can have a low win rate, but the wins are so significant that it balances out the losses. The aim is to target the best entry and exit points.
Because the stop losses involved in swing trading crypto have to be wider, it is necessary to have more capital. Even trading micro-lots, a 300 pip stop loss could be a $30 risk, so you would need $3000 to stay within the 1%. You could increase your risk to 2%, but it is safer to stick with less risk on your account if possible.
Ideally, a capital balance of $5000 would be an excellent start. You can comfortably stay within your risk management plan but have significant returns on your trades. With, say, a 5 to 1 RTR, a $50 risk would return $250.
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How Crypto Is Used
Crypto-assets were first developed as a digital form of currency, to be used as money. Some stores accept crypto as payment for goods and services, and some ATMs let you withdraw it as physical money. However, crypto is not legal tender in Australia and is not widely accepted as payment.
Crypto is more commonly used as a speculative, longer-term investment, as most people dont access their balance for everyday transactions.
Why Did Cryptocurrency Investing Skyrocket
Investors are being exposed to cryptocurrency left and right, from both companies they’re familiar with and newcomers and it’s all led to more interest in crypto.
Over the last few years, there’s been greater crypto adoption by non-crypto-native businesses, Hume says. For example, Tesla CEO Elon Musk announced earlier this year that merchandise from the vehicle manufacturer can now be bought with dogecoin, and in 2021, the digital payment platform Square changed its name to Block and shifted its corporate strategy to involve more crypto.
While crypto offerings by businesses that weren’t originally crypto companies, like Robinhood, were certainly drivers of crypto adoption, there has also been a greater prominence of crypto-native businesses.
Meanwhile, developments within the cryptocurrency market, like non-fungible tokens and decentralized finance a.k.a. DeFi, which offers financial instruments like loans via blockchain technology instead of traditional intermediaries like banks have captured people’s interest and attention.
Some of the innovations we’ve been hearing about for a long time are becoming realities. “It’s no longer just a bitcoin-driven rally or market. It’s really unfurling in a bunch of different directions,” says Hume.
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Increased Regulation In 2021
The rise in the popularity of cryptocurrencies and their adoption by financial institutions has led some governments to assess whether regulation is needed to protect users. The Financial Action Task Force has defined cryptocurrency-related services as “virtual asset service providers” and recommended that they be regulated with the same money laundering and know your customer requirements as financial institutions.
In May 2020, the Joint Working Group on interVASP Messaging Standards published “IVMS 101”, a universal common language for communication of required originator and beneficiary information between VASPs. The FATF and financial regulators were informed as the data model was developed.
In June 2020, FATF updated its guidance to include the “Travel Rule” for cryptocurrencies, a measure which mandates that VASPs obtain, hold, and exchange information about the originators and beneficiaries of virtual asset transfers. Subsequent standardized protocol specifications recommended using JSON for relaying data between VASPs and identity services. As of December 2020, the IVMS 101 data model has yet to be finalized and ratified by the three global standard setting bodies that created it.
The European Commission published a digital finance strategy in September 2020. This included a draft regulation on Markets in Crypto-Assets , which aimed to provide a comprehensive regulatory framework for digital assets in the EU.
Four Tips To Invest In Cryptocurrency Safely
According to Consumer Reports, all investments carry risk, but some experts consider cryptocurrency to be one of the riskier investment choices out there. If you are planning to invest in cryptocurrencies, these tips can help you make educated choices.
Before you invest, learn about cryptocurrency exchanges. Its estimated that there are over 500 exchanges to choose from. Do your research, read reviews, and talk with more experienced investors before moving forward.
Know how to store your digital currency:
If you buy cryptocurrency, you have to store it. You can keep it on an exchange or in a digital wallet. While there are different kinds of wallets, each has its benefits, technical requirements, and security. As with exchanges, you should investigate your storage choices before investing.
Diversify your investments:
Diversification is key to any good investment strategy, and this holds true when you are investing in cryptocurrency. Don’t put all your money in Bitcoin, for example, just because that’s the name you know. There are thousands of options, and it’s better to spread your investment across several currencies.
Prepare for volatility:
The cryptocurrency market is highly volatile, so be prepared for ups and downs. You will see dramatic swings in prices. If your investment portfolio or mental wellbeing can’t handle that, cryptocurrency might not be a wise choice for you.
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How Much Money Could Cryptocurrency Make Me This Year
Every day, new developments in cryptocurrencies and blockchain technology are being made which excite crypto-enthusiasts and investors around the world. The metaverse is getting bigger and better and it is time for everyone to join in and make money passively. Whatever the amount of your stakable capital is, investing and returning profits should be in your top priorities this spring .The world is changing, it is impossible to avoid cryptocurrency.
How Much Money Can You Make In Cryptocurrency
As an investor, your number one priority is making the highest return in the shortest space of time. If you want to make money in cryptocurrency, then you need to decide on your preferred digital assets and the mode of investing that best fits your specific level of experience, time commitment, technical capabilities, and risk tolerance.
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How To Mine Cryptocurrency
Cryptocurrency mining involves the process of solving complicated mathematical problems in the hopes of successfully recording and verifying transactions and adding them to the blockchain.
Mining can look different for different cryptocurrencies. But for Bitcoin, successful miners receive a “block reward,” or a fixed number of new bitcoins . One block equals 6.25 BTC, but the rewards are halved after every 210,000 blocks, or about every 4 years, as part of Bitcoin’s design to ensure that a maximum of only 21 million bitcoins are created.
Being able to mint a coin worth thousands of dollars is tempting, but crypto mining isnt as easy as it may sound. Despite having access to tools like a new direct-to-consumer mining service, individual miners are up against large firms that are able to mine with thousands of specialized machines at once. That leaves at-home miners with high hardware and electricity costs and less of an opportunity to actually mine any Bitcoin.
At-home mining is not economical,” Hanna Halaburda, an associate professor at NYU Stern School of Business previously told Money.
Add Value To Your Account
Depending on how you choose to pay, you may have to fund your account before purchasing any crypto. If you’re using fiat currency, most exchanges allow debit and bank transfers. Some also allow you to fund a purchase with your credit card, though this can be a risky move with a volatile asset like cryptocurrency because interest costs can deepen your losses if your investments decline in value.
If you already own cryptocurrency, you can transfer it into your account from a digital wallet or another platform, then use it to trade. Just be sure to verify that your crypto exchange allows trading between the assets you’re looking at. Not all cryptocurrencies can be directly traded for one another, and some platforms have more trading pairs than others.
Another thing to note is that exchanges fees vary depending on what you’re buying and how you’re buying it, so review these details carefully.
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Bitcoin Is Fading Meme Coins Are The Future
Bitcoin is now seen as the granddaddy of cryptocurrencies, and investors are piling into other cryptocurrencies such as Dogecoin. In 2019, Investopedia claimed that bitcoin was losing its power as the driving force of the cryptocurrency world. Bitcoin And Ethereum Are Being Left In The Dust By Dogecoin, reads a recent Forbes headline.
Dogecoin and other such cryptocurrencies, which are simply built around memes , dont even make a pretense of being usable in financial transactions. And there is no clear constraint on the supply of these coins, so their prices surge or crash on random events such as tweets from Musk. The valuations of meme currencies seem to be based entirely on the greater fool theoryall you need to do to profit from your investment is to find an even greater fool willing to pay a higher price than you paid for the digital coins.
Bitcoins technology does seem outdated compared with some of the newer cryptocurrencies that enable greater anonymity for users, faster transaction processing and more sophisticated technical features that facilitate automatic processing of complex financial transactions. For all its flaws, however, bitcoin remains dominant: It accounts for nearly half of the total value of all cryptocurrencies.