How to make money with cryptocurrency?
Cryptocurrencies are a nascent alternative investment class that are wildly volatile. They are unregulated, outside of government compliance controls and completely decentralized which means they aren’t owned by a single organization. Yet, their volatility is what makes them such an investment opportunity – between January 2017 and January 2018, Bitcoin’s value grew by 1,300 percent. This makes cryptocurrencies a unique investment opportunity. The rapid volatility of the current cryptocurrency investment landscape illustrates the scope of possibilities available to the brave crypto investor. This article will help you understand how to make money with cryptocurrency assets.
Table of Contents
- How to Make Money with Cryptocurrency – The Basics
- Alternative Coin Investment Strategies
- ICO – Start off on the ground floor
- Look at the big picture
- The First Dip – Buy after the ICO sell-off
- Hold On (for) Dear Life – Pick and Hold on Tight for the Big Ride
- Market Correction – Buy a Bargain, Sell at a Premium
- Cryptocurrency mining
- Just buy Bitcoin – Put all your cash in the Gold Standard of Cryptocurrencies?
How to Make Money with Cryptocurrency – The Basics
There are two main functional pathways to cryptocurrency success. One is to invest a large quantity of fiat currency in a flagship crypto asset – like Bitcoin, Ethereum or Ripple – allowing it to mature over time. This strategy would suit a passive investor with a stomach for risk. However, the real money surrounds the myriad of Alternative Coins (Altcoins). It is this new ‘Altcoin’ that will help newbie cryptocurrency investors make the big bucks.
Bitcoin is the largest single cryptocurrency by market capital size. However, the diversity of Altcoin experiences is helping to erode its dominance. Altcoin is perhaps an unfair moniker as many of these ‘Altcoins’ are in fact Mainstream Coins? Ripple is working with MoneyGram, Santander and AMEX. Cardano is working with hospitality companies and other blockchain-based crypto platforms are working on major corporate developments.
The other major advantage of Altcoins over Bitcoin is that they provide newer, smarter blockchain technologies. The application of the blockchain is immensurable. Yet, the diversity of token choice is mind-boggling. There are literally hundreds of different coins to choose from – from state-backed cryptocurrencies issued by the Venezuelan and Swedish governments to more commercial platform-orientated alternatives.
The top nine cryptocurrency investments are worth more than Bitcoin in its entirety. This showcases the growing popularity, overall asset strength and wider acceptability of alternative cryptocurrency assets. You may also check what are the best cryptocurrency to invest in 2018. The next section will outline alternative investment strategies – more to the point; what you specifically need to know about altcoin as an investment strategy.
Alternative Coin Investment Strategies
Altcoins can provide investors with a unique opportunity. As more and more ICOs launch daily with assets in the billions, there are a myriad of diverse retail investment opportunities that small cap investors can access with a medium-term prospect of making real profits – life changing profits in some cases. Here are three tried and tested formulaic approaches to altcoin investment with a reputable and profitable outcome.
ICO – Start off on the ground floor
This approach is about pre-registering interest with an Initial Coin Offering. You will need to register with a company undertaking an ICO, you will need to heed local rules on ICOs and you’ll need to make your first investment in either Ethereum or Bitcoin. Once you’ve purchased your penny altcoin – or 0.000 cent altcoin. You can sit back and when the altcoin hits the market sell on the wave of success helping you to pocket the big bucks.
Remember, this is a volatile investment class. Don’t put all your nest egg money in one ICO – if it fails, you lose everything. So, diversification is the central tenet of ICO success. Focus on undertaking preliminary research. Read the ICO White Paper, understand more about the founding team – their industry experience and Blockchain credentials. Use this to make a guesstimate about the overall probability of success. Evaluate the wider market and understand how this Altcoin intersects with the market experience.
Look at the big picture
Once you’ve found your ICO, remember to invest legally. Some territories do not allow ICO venture capital investment. So, follow regional laws on ICO. If unsure, visit your region’s central bank website or financial regulatory body for more information on the subject. If you are legally allowed to partake in the ICO, you will need to overcome administrative hurdles – ID checks and payment in a core cryptocurrency like Ethereum or Bitcoin. Once you’ve been approved, you’ll be the first to get coins once they launch.
This means you can sit back and wait for the spike. Remember, not all currencies have the same ‘buzz’. The underlying ICO product might be useful and wonderful but it might be a slow burner. Others might be part of an unfair ‘pump and dump’ – whereby those close to the crypto will feed false news stories to drive up the price before selling at a high. Make sure you understand the market trajectory of the cryptocurrency asset you’ve invested in. You need to understand the patterns of rival coins in order to understand possible outcomes – identify the spike as this is the key selling point and your way of either breaking even, protecting further losses or making a serious profit.
The First Dip – Buy after the ICO sell-off
ICOs can be problematic and cumbersome to engage with if you’re a small cap investor. However, there is a way of getting in on the action early. Follow ICO developments, tag coins you think could be profitable due to underlying issues and market conditions. Once you identify key Altcoins, make sure you follow the market launch day because peculiar events can lead to medium-term profitability.
When those involved in an ICO and those who have invested during the presale period reach the market, a dip naturally occurs in the market response as a sell-off ensures. This isn’t bad; its people getting rid of ‘free’ coins and presale coins. This means you can buy cheaply and then sit back whilst your Altcoin grows in value over the longer-term. This is a particularly acute way of getting involved in a very profitable Altcoin without partaking in the official ICO system. It means having to follow closely the organisation’s announcements and wider market rumours to help make informed decisions about crucial altcoin developments.
Hold On (for) Dear Life – Pick and Hold on Tight for the Big Ride
This strategy is a rather simple endeavour in terms of risk-averse strategy. It is about sitting back, watching the volume of trades and holding on for dear life as the volatility kicks in post-ICO. This is for the less daring Altcoin investor. The purpose of this strategy is to nurture the longer-term beneficial outcome that comes from organic maturity within the Altcoin marketplace.
Are you wondering about how to make money with cryptocurrency investments? By looking at this long-term strategy, you could be undertaking this functional approach to alternative cryptocurrency asset investment. This method is about understanding patterns – you need to follow the volume; as the volume indices will help you understand price differentiation. By understanding this experience, you’ll be able to extrapolate key intelligence from the marketplace.
Once you’ve identified the right Altcoin cryptocurrency, once you’ve invested your total amount, and after you’ve understood market patterns and volume-related pressures, you are free to hold on for dear life – this can be either a pleasurable or horrendous experience depending entirely upon your cryptocurrency investment asset. The extreme volatility of early 2018 doesn’t seem to be slowing down. So, you’ll need to make allowances for corrections. Yet, this is still a focused approach to cryptocurrency investing.
Market Correction – Buy a Bargain, Sell at a Premium
You might have missed the ICO and the post-ICO experiences. However, you can always buy a bargain Altcoin. The constant volatility within the cryptocurrency landscape helps provide a counter-narrative. One that espouses a profitable alternative viewpoint. Why not view each ‘correction’ to ‘regulatory doom and gloom’ as evidenced during January 2018 when the market ‘collapsed’ and some commentators called it the ‘end of days for cryptocurrency investors’, as the perfect opportunity to buy? This didn’t happen, and the market rallied back.
However, in January 2018, you could have purchased a single Ripple XRP token for $0.86 on the 24th of January 2018. Yet, by February 22nd, 2018, the price had increased to $1.09. This was consistently evidenced across the top twenty-five cryptocurrencies as volatility caused a massive sell-off. However, the budding raider could buy cheap allowing them to sit back and watch the value return. The correction route allows those who have missed the ICO, and subsequent ‘events’, the possibility to profit in the longer term.
Another way to earn money with cryptocurrencies is mining. Mining is creating new coins using the certain programs, hardware and electricity power. However, mining Bitcoin today is a dead left for most people. It requires too much power, lots of specialized equipment and time. If you’d like to mine your own coins you’d better opt for altcoins which are lower in price but far more accessible for ordinary user. Check the list of the easiest cryptocurrencies to mine.
Just buy Bitcoin – Put all your cash in the Gold Standard of Cryptocurrencies?
Bitcoin has remained incredibly resilient. Even during painful corrections, whereby the currency has gone from $8,000 dollars to $19,000 dollars back up to $12,000 dollars only to fall back to $10,000 dollars – and this is just the past three months. If you have a lot of liquidity, putting money into Bitcoin as a long-term investment strategy could pay major dividends in the future. However, putting all your nest eggs into one big Bitcoin basket could pose risk headaches down the line. What this article has outlined is a progressive investment strategy that can help nurture short, medium or long-term investment success.
However, please note this does not constitute financial advice. Investing in cryptocurrency is a risk. It is an unregulated investment space and you could lose all the money you invested. You need to use money you are willing to lose. This means using retirement funds and other important funds to invest in cryptocurrency is folly. Always use capital you can afford to lose and invest sensibly. Always evaluate the team behind the cryptocurrency, the market volume and the patterns therein. Do your research and invest through a trusted exchange, use secure wallets and be sensible. If you heed this advice on how to make money with cryptocurrency the best one could be the answer you find through alternative coins and the opportunities therein.
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