Instructions for users There are many ways to make money using digital assets such as cryptocurrencies. This includes investing in individu...
Instructions for users
There are many ways to make money using digital assets such as cryptocurrencies. This includes investing in individual cryptocurrencies or crypto projects, trading cryptocurrencies, mining, stacking, and other methods.
There is a high probability that in 2022 the cryptosphere will be popular, which means that its growth will continue and there is a possibility of establishing new historical highs of its value, and this entails the growth of altcoins - all other cryptocurrencies. It is simply impossible to imagine a more suitable time to study the most common ways of earning on cryptocurrencies. Let's consider each method separately.
Trading is understood as an attempt to make money on the difference in value by speculating in a short period of time, while making a large number of transactions. It is easier and more convenient to do this on cryptobizhes. The exchanges also have the opportunity to carry out margin trading with leverage. This method is not recommended for beginners, because it contains a high degree of risk.
Cryptocurrencies are famous for their volatility, that is, the frequency of price spikes, so it would be best to start mastering cryptocurrency trading on a demo account. This account is a space for training, because the money on it is not real. But you will be able to get the necessary first experience of speculation. After you have learned the working principle of the exchange on a demo account and familiarized yourself with its tools, you can switch to your real account. We recommend that we replenish it first for a small amount - one that is not a pity to lose. It is important to mentally prepare for their loss, calmly survive it. No matter how strange it may seem, but this way you will learn to control yourself in unpleasant and stressful situations, from which no one is immune in the future. In such situations, it is important to remain cool-headed in order to make balanced and rational decisions.It would not be superfluous to familiarize yourself with thematic educational materials on the topic of trading, such as books, lectures and courses. And it's even better to put what you've learned into practice. Study different approaches to this case in order to learn how to understand the market well and navigate it, develop your own trading strategies, and so on. You can read more about how to take your first steps in cryptocurrency trading in our previous article from the section "Instructions for a users".
Trading using algorithms
In addition to the usual trading, there is also algorithmic. Most of the transactions on crypto exchanges around the world are made through high-frequency trading tools - with this type of trading, specially developed algorithms automatically try to make money on the difference in value against the background of price volatility. Such programs can carry out several transactions in a fraction of a second. The high volatility inherent in cryptocurrencies leads to the increasing introduction of such algorithms for trading in automatic mode.
Algorithmic trading systems are used by both professionals and beginners in the market. Programs come in different degrees of complexity and with different principles of functioning.There are three main categories of software for trading on crypto exchanges:
1) Ordinary bots with a pre-prescribed trading strategy;
Trading bots developed on the basis of AI and machine learning technologies, capable of learning in practice;
Expert Advisor bots. This type of transaction programs are not performed, but only analyze the market and give recommendations on trading.
This tool is not exactly suitable for beginners in the cryptosphere. It is difficult to predict, and even more so to be 100% sure of the effectiveness of automatic trading. You do not need to completely entrust your deposit and transactions to the program, but you can adopt Expert Advisor bots, gaining the opportunity to evaluate their effectiveness, while not losing anything.
2) Earnings on referral programs;
A referral or affiliate program is a type of cooperation between a service and a client, in which an organization awards a client (aka a referral) for each new user attracted (they are also referrals). Both the referral and the referral receive remuneration. Each company determines the type and amount of bonuses individually.
Among the crypto exchanges there are those that have an affiliate program that operates on an ongoing basis. These are Binance, BitMEX, EXMO, OKEx, Huobi and Bitfinex. The amount of the reward depends on the total number of attracted customers. Often exchanges can conduct separate unique referral programs that will not be repeated. For example, about a major update or the anniversary of the service.
In March, the Bittrex Global exchange announced major innovations related to the operation of their mobile application: now their platform supports the connection of credit cards for convenient purchase of cryptocurrencies and deferred orders on smartphones. At the same time, the exchange announced a new referral program that will allow referrals to receive an additional commission percentage from transactions that are made by their referrals who have clicked and registered using a special link.
3) Investing in cryptocurrencies
Investing or in slang terms, the "hodl" of cryptocurrencies is the opposite of trading. The essence of this approach is to run a long distance, that is, when buying and holding a crypto coin for a long period of time. This method is the best for beginners, since it does not require special knowledge and skills. All you need is to figure out how to buy and then sell cryptocurrency to withdraw money.
The earning potential of investing is much less than that of trading. The cost of a particular cryptocurrency can grow or fall by tens of percent in a day. A long-term investor, accordingly, refuses the opportunity to earn these price fluctuations. At the same time, the so-called "hodlers" should take into account one more nuance. It is important to choose the right moment to buy a crypto coin. To do this, wait for a strong drop in the price of the selected asset. For example, investors who invested in bitcoin in 2017-2018, with the then rate above $ 14,000, until recently did not have the opportunity to sell what they bought to themselves as a plus. But 3 years have passed.
A stablecoin is a cryptocurrency that is backed by real assets, such as, for example, US dollars and other currencies. This type of coins usually find their use on crypto exchanges as a convenient equivalent of value. In particular, traders fix their profits from transactions just in stablecoins. Stablecoins are convenient because with a successful transaction, you can not bother to convert your earnings into fiat funds.
Already as of April of this year, there were more than $1 billion worth of USDT and USDC stablecoins on the accounts of users of crypto exchanges around the world. Analysts from Longhash believe that traders began to withdraw money less due to the fact that they were going to reinvest them in the crypto market when there was a good time to enter.
Last summer, the cost of bitcoin was $32,000, and in the fall it has already reached $67,000!
It is not uncommon to observe the phenomenon of a sharp jump in the price of an asset on the crypto exchange. Moreover, the price jump may well reach tens or even hundreds of percent, after which the price returns to the previous level at the moment.
For example, on the Coinbase exchange, the value of the Ethereum cryptocurrency dropped from $317 to $0.10 for just a few seconds. This happened in November 2017. The reason was that some trader sold more than 96 thousand Ethereum coins in one transaction.
It is precisely such momentary fluctuations in the exchange rate that occur in relation to stablecoins such as BUSD, PAX, USDS and others. To try to make money on such jumps, you should purchase one or another stablecoin, then place an order to buy one or another cryptocurrency, the rate of which is calculated in conjunction with this stablecoin. Care must be taken to ensure that no other orders are placed between your position and the current value of the asset.
The advantage of this method is that it does not include most of the market risks. But, if you manage to get to the "price gap", you will purchase cryptocurrencies at a bargain price. If the "lumbago” does not happen— your funds will remain in stablecoins, the price of which is stable and does not fluctuate. The most important risk in this case is only if the issuing company of your stablecoin directly ceases to exist.
ICO and IEO
At the beginning of last year, the peak popularity of ICO projects passed. For some players, they remained in memory in the form of losses, while for others in the form of jackpots.
It is possible that the failed launch of the Telegram Open Network project, led by Pavel Durov, the owner of the popular messenger of the same name, helped to bury this way of raising capital. The attempt to launch this project was followed by the entire crypto community, but to great disappointment, during the decision of the American court, the Securities and Exchange Commission of the United States banned Pavel Durov from launching the Gram crypto coin within the framework of this project. After that, Durov and his team had to complete it.
But, instead of ICO, IEO — (Initial exchange offering) appeared, which means initial exchange offers. IEO differs from ICO mainly in that funding is attracted not by the project developers themselves, but by the crypto exchange itself, having decided to promote one or another promising coin during the selection. The main advantage of IEO over ICO is that coins are necessarily released into free circulation on the market and their listing is carried out. This eliminates the risk for depositors not to receive their coins for which they paid money.
Naturally, no one can guarantee investors a profit. But, IEO projects everywhere show a multiple increase in their value after the start of trading. It got to the point that last year some fundraising campaigns were completed in a few seconds.Tokens on IEO flew like hot cakes - this type of earnings was so popular. However, most of the depositors did not have time to participate in the crowdsale - the mass sale of a token in order to fix a profit, which is why the exchanges had to change their approach and turn it into a kind of lottery.
Most exchanges now have a new rule, according to which investors should hold the purchased tokens on their account for some time before selling. In this case, everyone can take part in a kind of lottery to win an allocation for the purchase of new tokens. Part of the tickets with winnings does not exceed 20% of the total number of participants.
Mining, the most famous and popular way to earn money on cryptocurrencies. After each halving in the bitcoin network, the reward for miners is halved. The last halving is no exception. Mining the first cryptocurrency is unlikely to be a good option for a beginner. With the help of mining, it is easier to earn money for large companies or wealthy people who can afford the necessary equipment on a large, often industrial scale. In addition to the equipment, which costs a lot of money, you also need a room and cheap electricity. It makes sense to mine cryptocurrencies only if you will not sell part of the mining to cover the costs of mining.
For a beginner in this matter, altcoin mining is better suited. It will be cheaper, more affordable, and with less load on video cards, which, if anything, can be successfully sold. ASIC, which was already in operation, is much more difficult to sell later. If possible, it will be profitable to mine in a pool - together with other miners. With this variant of mining, thanks to the total computing power of the pool, there is a chance to receive, although not too large, but nevertheless a stable income.
Stacking is an alternative to mining, their principle is very similar. In both cases, you are engaged in cryptocurrency mining, but in the case of stacking, this can be done without physical crypto farms or "asics". There are cryptomonets that operate on the basis of the Proof-of-Stake algorithm. This means that while these coins are stored on the wallet and the wallet is turned on, they participate in the extraction of new coins and allow you to earn income. The amount of earnings from stacking will depend on the number of coins in your wallet, the annual interest rate on PoS, and, of course, on luck.
With the PoS algorithm, the crypto network functions thanks to remote servers running the corresponding software. These servers are also called masternodes. In essence, even an ordinary PC or laptop can serve as such a server, on which special software is installed with a wallet on which a certain amount of cryptomonets lies. For example, to take part in the ETH 2.0 network stacking, which will be presented this fall, you need to get the minimum amount of ETH on your wallet for this - 32.
To start making money on stacking, you should top up your wallet with a minimum number of coins, then wait until blocks are formed.
This process may take a day or two. After that, you should download a special client to your computer and run the digital storage through it. To earn money, you should not sell coins from your wallet for a long time.
Staking is like a deposit in a bank, when a client deposits funds into an account for a certain period in order to receive interest. Naturally, the more funds, the more you will be able to earn. The main advantage of stacking is that the computing power of your computer does not affect the amount of profit in any way. All that is required is to keep the coins on the wallet as long as possible.
The crypto market today is becoming more and more saturated with new altcoins, the production of which is carried out through stacking.
To make money on cryptocurrency, you need not only to buy it, but also to regularly perform exchange operations between bitcoin and numerous altcoins. To carry out these operations, it is necessary to choose a reliable platform that can be trusted with at least 0.001 BTC, at least 1000 BTC. A crypto exchange is best suited for these purposes HONOS.PRO (https://honos.pro). Here you can instantly and safely exchange both cryptocurrencies and fiat money at a special rate. And the withdrawal can be carried out both in cryptocurrency and Euro.