Cryptocurrency is a virtual currency that is not issued by legal tender institutions and is not controlled by the central bank. The cryptography-based design allows cryptocurrencies to be transferred or paid only by the true owner. For newcomers in the currency circle, how to make money through cryptocurrencies is the original intention of investing in cryptocurrencies. So, how does this cryptocurrency make money? Next, the editor of the currency circle will briefly explain the way to make money in cryptocurrency for readers.

How do cryptocurrencies make money?

1) Low-risk return method

(i) Cryptocurrency faucet

Easiest and inexpensive way to earn free Bitcoins

This is one of the lowest budget and easiest ways to make money with cryptocurrencies today. All you need to do is do small tasks in exchange for satoshi (1 satoshi = 0.000000001 BTC). These tasks can include visiting a website or watching an advertisement.

Finding cryptocurrency faucets is easy. Now, the internet is full of services that are ready to pay you small rewards. The important thing is to choose a reliable portal that can really pay you. The top rated services are Bonusbitcoin, Moon Bitcoin, FreeBitcoin and AdBTC.

Be very cautious of fake websites offering Airdrop

(ii) Airdrop

Airdrops are the free distribution of tokens through new cryptocurrency projects to increase visibility and attract new contributors. You can find information about upcoming airdrops in special forums such as Bitcointalk and social networks, as well as in Telegram channels. The rules can be different for each cryptocurrency. Some projects require you to share their posts on social networks, follow their accounts, write a brief comment, or even store another cryptocurrency.

For example, currently, the TRON Foundation issues BitTorrent (BTT) tokens monthly to every TRON holder until 2025. One way to interact with Tron is to open an account on Freewallet, which will participate in this campaign and offer BTT coins to Tron holders on Freewallet.

This method is still useful today, and you can use airdrops to get a fraction of the digital currency. In practice, however, such incidents are rare and distributed in very small numbers. So the biggest benefit from these things is gaining the skills to use crypto wallets.

(iii) Promoting sign up

A well-known crypto enthusiast forum has been running the so-called signature campaign for years. You can use your account to promote cryptocurrency projects and earn rewards for every blog post you publish. However, only Premium accounts can participate in these promotions. Therefore, it will take time to upgrade your account to the desired level.

Each project has its own rules for signing activities. These rules may vary in the amount of the reward, the number of posts required for the reward, the length of the post and even what you can write. Before participating in any of these sports, make sure you have read through the rules and conditions and then decide if you can meet all the requirements. Also, get to know the project, its team and development prospects to avoid potential fraud.

2) Medium risk return

(i) Buy cryptocurrency and hold

Holding is the long-term storage of cryptocurrencies in order to be profitable over a period of several years. This is one of the most common strategies when you want to make money with cryptocurrencies. To do this you need to do the following:

Plenty of funds available for this pursuit. Under no circumstances should cryptocurrencies be purchased on credit. You should never invest more money in cryptocurrencies than you can afford to lose.

Do your research before investing in a cryptocurrency project. You need to look closely at the project of interest to see if there is really a high-quality product behind it, if it is really an unprecedented technology that can effect change on a global scale, not some dumb product.

Has a will of steel. After buying one or more of these cryptocurrencies, the main thing is patience. You need to be patient lest you panic and sell your assets after a few months due to a drop in the market or whatever. It is best to avoid holding cryptocurrencies on exchanges and keep them in wallets to protect yourself from exchange hacks and mishaps.

(ii) Cryptocurrency mining

Mining are illegal in some countries

Today, if you want to make any profit, mining is not really a thing anymore. The truth is that mining today requires expensive equipment and high electricity bills. You will not make an immediate profit, but there is a good chance that you will mine a certain amount of cryptocurrency and hold it for further market growth.

Full text introduction The public chain is the underlying infrastructure in the blockchain. The best example of the public chain is Bitcoin. In the past two years, public chains at home and abroad have sprung up like mushrooms after a rain. This kind of mechanism and technological innovation, but after the baptism of the market winter since 2018

If you don’t want to buy expensive mining equipment, you can use cloud mining. In this case, you need to pay the company rent and use their equipment. But be careful, there are many fake companies out there. Among the established companies offering such services, Genesis Mining and Hashing24 rank among the best.

(iii) Staking

Staking is the “mining” of cryptocurrencies based on the Proof of Stake (PoS) algorithm. You deposit a certain amount of tokens to facilitate operations on the blockchain and get rewarded for doing so. This allows you to passively earn some income without buying expensive equipment, but you need to keep the equipment online to participate in staking. Rewards will be distributed based on the amount of “miners” staked.

For example, if Jack owns 1% of all issued tokens, he is entitled to 1% of the reward for finding new blocks. This is a very rough description, but it shows the general principles behind the PoS algorithm.

There are many types of tokens that can be staked. The most popular are Dash (DASH), Lisk (Lisk), VeChain (VeChain), NEO (NEO), Tezos (XTZ) and Astro (Cosmos).

3) High risk return

(i) Cryptocurrency trading

Crypto trading is one of the main ways to make money with cryptocurrencies. Trading cryptocurrencies and tokens is not much different from trading precious metals and stocks. The main mission remains the same: buy as cheaply as possible, sell at a higher price and make a profit. The main difference between cryptocurrency trading and the stock market is the high volatility of exchange rates.

Trading is not based on guesswork and luck. Successful traders spend a lot of time learning principles, trading strategies, and understanding market behavior patterns. For sustainable success, cryptocurrency traders must learn the following basic skills, how to:

Analyze cryptocurrencies and their volume; use charts and quotes; make buy and sell transactions; track bid history.

Once that’s done, they are well positioned to trade both rising and falling markets, but they also realize that they can easily lose money in minutes. This is a highly profitable but extremely risky investment.

(ii) Cryptocurrency lending

A very popular way to increase capital is to become a lender on one of the credit platforms and issue loans in Bitcoin and altcoins. Such services act as an intermediary between borrowers in need of cryptocurrencies and lenders willing to offer tokens at an interest rate.

Since this type of loan is a risky business, the interest rate is high. At first glance, borrowing may seem like a very tempting way for lenders to earn passive income. Earn 15% of tokens every year, who can refuse such a high yield?

But it’s worth considering that such loans are actually unsecured. Therefore, there is a good chance that your money will not be refunded.

Participate in IEO

An IEO (Initial Exchange Offering) is a form of crowdfunding to fund projects, buying their tokens very cheaply and expecting them to grow significantly in the future. This can be a very lucrative and very risky way to make money.

Basically, it is a variant of an ICO (Initial Coin Offering), but the activity takes place on an exchange platform. The exchange is responsible for the quality of the project, evaluating the feasibility, risk, financial situation, market position, etc. of the developed product. The fact that exchanges take reputational risk in issuing products increases the trust of potential token buyers.

In any case, the token price could easily drop after the token sale. One of the most popular events at IEOs is the one for the BitTorrent (BTT) token. Despite the hype that accompanies the project, cryptocurrencies are not doing well in the market today.

I believe that through the introduction of the editor of the currency circle, everyone should have a general understanding of the way to make money with cryptocurrencies. In fact, there are two main modes of making money in cryptocurrency. One is to become a miner to buy mining machines to mine, and to sell the digital currency mined to earn the difference directly. The other is to buy and sell digital currencies on digital currency exchanges, buy them at low prices and sell them at high prices to earn the difference. Cryptocurrencies are now playing an increasingly important role in the global economy, but the currency circle is small. The editor still wants to warn readers here that there are risks in speculating on coins, and you need to be cautious when entering the industry.