Right now, it’s practically impossible to go a few days without hearing about the latest cryptocurrency craze. We hear about how Bitcoin or Litecoin is hitting a new high. Chances are, you’ve thought about how to make money with cryptocurrencies. But how can you actually invest in these digital currencies to make money?
There are different ways to make money with cryptocurrencies, and we’ll look at three of them:
1. Buy (or trade) a Cryptocurrency
Your first option is to just buy coins. There are different exchanges that will allow you to buy or trade coins to keep in your wallet. One of the most popular exchanges is Coinbase. Coinbase offers a super clean user interface and is one of the best ways to get started if you have no prior experience in cryptocurrencies. You can sign up here for $10 in free credit!
Once you’ve created your account you pay the market rate for the coin and then hold onto it until you’re ready to sell. The hope, of course, is that the price goes up.
However, like any investment, you need to be careful. Cryptocurrency prices fluctuate. Right now, Bitcoin is very high-priced. You might have a hard time buying Bitcoin and having it appreciate enough. Some people hope to make money with cryptocurrencies by purchasing Litecoin or Ethereum instead.
In the end, you need to make sure you go through a reputable exchange, and that you back up your digital wallet. Then, you need to pay attention so that you can sell your coins when you feel like your profit has been reached.
2. Accept Payment in Cryptocurrency
Another way to make money with cryptocurrencies is to accept them for payment. If you have a business where you sell products or services, you can accept payment in the cryptocurrency of your choice. You need a digital wallet, and to work with people who are willing to pay in cryptocurrency.
With a little research, you can find clients or customers that use cryptocurrencies and are willing to pay you by transferring the coin through the blockchain. You will have to be able to calculate a rough estimate of what a service might cost, though, based on the value of the coin. If I were to accept Bitcoin for some of my services, I might ask for one-fourth or one-third of a Bitcoin, depending on the project.
Other currencies are less valuable, though. I might be able to ask for three or four ETH if I were being paid in Ethereum. The idea is to have a feel for how your products and services translate into the cryptocurrency of your choice.
After you receive the payment, you could either use it to pay others for something or hold onto it until it rises in value. If the value of the coin goes up, you could see a solid profit by selling for U.S. dollars later.
3. Mine Your Own Cryptocurrency Coins
Finally, it’s possible to mine your own cryptocurrency coins. However, we aren’t in the days where you could just use your home computer to work on mining Bitcoin. Today, with so many miners working with their rigs, it can be difficult if you want to make money with cryptocurrencies through mining.
You need to invest in graphics cards and the right setup for the best chance. You need to know how to build a computer. Once you get it set up, you will be using more electricity. Some coins might be faster to mine than others. For example, you might have more luck mining Litecoin than Bitcoin. However, Litecoin doesn’t sell for as much. You could also mine something like Monero. You can get a lot of them faster, but then you have to be able to sell them on the exchanges. There might not be enough demand for you to sell all your coins if you mine something less popular.
No matter what method you use to make money with cryptocurrencies, though, you have to be aware of market conditions. If a coin drops in value, you might have to wait until it rises again to sell — or it might be a coin that doesn’t pan out and then your losses are permanent. Make sure you understand the risks before you start.