How Bitcoin Can Change Your Life
To many of us, this has not been a good year but if you are an investor, there is still hope in the remaining months to make money through Bitcoin.
Earning through Bitcoin has become a challenge, especially in 2022 when the markets have fallen due to the crypto crash and the number of scammers offering free bitcoin increasing.
Also, bitcoin mining, which was once a profitable venture, is now competitive, and earning through it is difficult. However, there are still ways you can make money from bitcoin through trading, lending, and holding it.
It is important to note that investing in bitcoin can be risky since the market is unstable and earning profit is not always a guarantee. You can easily earn good money as the prices rise as well as make losses as the prices fall.
Investors however have confidence in its future. Since its launch in 2010, this market has continued to grow where 1 bitcoin which was valued at 9 cents is now worth 19,000 dollars. Here is how to make money through bitcoin:
Hold the Bitcoin
One way to kick-start your plan to earn money through Bitcoin is by buying and holding the coin. The idea is to sell it in the future at a higher price. This of course is for investors who are looking for long-term investments.
At some point, 1 bitcoin has been valued at $ 65,000 so, the future is unpredictable and you might end up getting some good money out of your investment.
When Bitcoin was launched, it was meant to be used daily for transaction purposes. However, since its value continued to increase in value, several investors see it as a long-term investment.
Just like investing in a long-term venture, it has its pros and cons especially due to fluctuating prices. This means you have to be disciplined and not give in to the urge of selling or buying back the investment.
While investing in a risky venture such as Bitcoin, ensure you only invest 10% of your money. This way you do not pour all your hard-earned money into a highly unstable business.
Earn Bitcoin Rewards Using Credit Cards
Now that we have several cryptocurrencies, each crypto is looking for ways to attract more users while at the same time ensuring that the users can earn from it.
Some cryptocurrencies allow you to earn a small reward from every purchase you make as seen in the cash-back programs. These rewards can be given in the form of Bitcoin or bonuses for meeting a certain target.
Nevertheless, the rewards can increase and reduce depending on two things. One, transaction fee, and two, the Spread added. Spread is the difference between the market price and the value set by the platform.
One of the main disadvantages of a crypto card holder is the exchange rates. Which is unsuitable, especially when selling and earning rewards.
Start Lending Bitcoin
If you have some Bitcoin stocked away and are thinking of what to do with them, you can lend them to investors or institutions. Try Cake DeFI or Gemini which allows its users to lend their Bitcoins but of course at an interest of sometimes as high as 5%
Every site has regulations to adhere to when lending. Taking the example of Gemini and Cake DeFi. Lending out your Bitcoin on this platform can be risky. If the borrower defaults, you might end up losing your investments.
Since lending of Bitcoin is still new and not many measures have been put in place to ensure the risks are less, you should be careful who you lend to. Due to the high risks, many platforms have ceased to provide these services. Examples of these platforms include:
- Celsius, a platform known worldwide for providing lending services, canceled withdrawals from its users. It later filed for bankruptcy.
- BlockFi, a lending platform, stopped this service after it was sued for failing to register its sales and offers for its crypto lending systems with the US security exchange Commission.
- Nexo also stopped its lending services to new US customers following multiple suits that the platform was issued over misleading marketing.
Earn Through Tips and Payments
Accept payments for services offered or received in the form of Bitcoins. Look for platforms that can process these services. BitPay and Coinbase are good sites to think of.
Other than the challenge of accepting payments in the form of Bitcoin and getting by without breaking any tax laws, starting this service is simple. For instance, setting up Coinbase is the easiest since not much is required. BitPay on the other hand will take a couple of days to be approved.
If Bitcoin is your preferred choice of cryptocurrency, use services that accept payments in the form of Bitcoin.
The most common way to make money in Bitcoin is by buying and selling them on a short-term basis putting into account changes in market price. Like day trading with stocks, losing money through this method is highly probable.
A stock trader will use several methods to assist in predicting the market prices and know which stock to buy and when to sell them. They use both macro and microeconomic factors, market trends, and other tools.
However, with all those tools used, they are still not enough to give an accurate analysis. Hence the struggle to match the returns that can come from buying and holding let’s say a coin.
It is difficult to predict how a cryptocurrency will perform. Like early this year. One Bitcoin went for around $ 47,000 and by September the value had dropped to $19,000 per coin.
You should also keep in mind that trading the coin during tax season can be a pain. You have to have an excellent track record of what you bought and sold and the prices each went for.
Consult a financial advisor before making any decisions that will affect your finances. Also, beware of the highly volatile tendencies of cryptocurrencies. The philosophy of buying low and selling high may not be applicable here.
Mining Bitcoin is also a way to earn money. However, this will not apply to individual investors. Since there is so much work required in computing power, the ongoing and upfront cost might rise surpassing the rewards earned through mining.
Like most crypto, Bitcoin works on the concept of proof-of-work. This means for every transaction, validation has to be made which in turn ensures the platform is safe.
Each transaction is recorded on a ledger every 10 minutes and the person who validates the new block is rewarded 6.25 Bitcoins. This amounts to $122,000 depending on the prices.
The miners can also earn by validating transactions made by users who would want their transactions to be validated faster. This service might earn them $ 4,400 out of each block they validate.
Mining requires the user to have a very powerful computer called ASIC (application-specific integrated circuit) used for the validation process.
This computer can cost up to $10,000. Another drawback is you will also need to spend thousands of dollars on electricity bills and the reward is not guaranteed.
Look for platforms that will provide computational pools and offer rewards for bitcoin mining. Setting up these pools is also not easy and the fees charged for using the platform can also be draining financially.