Cryptocurrencies are a widely discussed topic, especially recently. We really believe that they will play a huge role in the future of the financial world, and we are definitely not the only ones to believe in that.
Sure, in the crypto world there are lots of different stories - some are with happy endings, and others end up with a bankruptcy. Of course, we can see that cryptocurrencies have come a long way in the past ten years. More and more people are considering the opportunity to invest in digital assets, since there are many inspiring stories of people who became rich after such an investment.
One commonly discussed question, especially from cryptocurrency newbies, is how to make money with cryptocurrency. So today, we are going to focus on some of the most popular and used ways of gaining profits from crypto - day trading, holding and mining.
Day trading with cryptocurrencies
As the name suggests, this type of trading entails the buying and selling of cryptocurrencies during the day. Since cryptocurrency prices are highly volatile, day traders are trying to gain profits from price differences.
Although it seems easy to earn from day crypto trading, there are still some risks to consider, as well as there are real benefits.
Pros of day trading
Returns - On one hand, the volatility of cryptocurrencies can be a fantastic thing. If a trader invests in a currency which increases in value later, they can gain pretty good profits. Actually, cryptocurrency prices can change in value over 10 percent in just a few hours.
Low taxes - Usually, those exchanges that enable day trading, charge low taxes and fees. Still, you have to be informed before you start trading, since it is possible to pay more than you have earned.
In favor of all investors - Day trading doesn’t require a long term view. Both small and large investors have equal chances to succeed.
Cons of day trading
Volatility - Although we already said that volatility can be a good thing, it can also be a huge problem, when it comes to cryptocurrencies. Their value can fluctuate at any time, which can result in huge losses
Hacking - Day traders usually keep their cryptocurrencies in an exchange. Although they are secure, there is still a risk of a hackers attack and losing the coins.
Holding cryptocurrencies
Interesting fact is that there is a term Hodl which is an intentional misspelling of hold. Anyway, it is a strategy of buying and holding crypto, despite the volatility of the prices. This is a strategy that requires a great deal of emotional strength, since not everyone is capable of keeping their coins, when the price starts to change.
Pros of holding
Easier - This is a good strategy for newbies, since it requires less technical knowledge. You just have to buy the chosen coin and keep it in your wallet.
Effortless - If you decide to buy cryptocurrency as a long-term investment, you don’t have to worry about any time-consuming activities.
Cons of holding
Fewer profits - In general, day traders may have better returns on their investments. They have a closer look and greater knowledge on the market, so they know when to buy and when to sell.
Takes time - Holding can be a good strategy for long-term investors. If you are looking for a fast profit, this may not be the right choice for you.
Risky - As any cryptocurrency investment, this can be a risky one. Be careful on where and how you store your coins.
Cryptocurrency mining
Cryptocurrency mining is maybe the most difficult and time-consuming way of making money with crypto. It works via solving a complex code, and needs dedicated computer equipment, software setup and maintenance. It also requires some good skills and the right PC.
Pros of cryptocurrency mining
Mining requires some good investment, but still can bring you daily profits. It hides the lowest risks of any cryptocurrency investment, and you have control over it.
Cons of cryptocurrency mining
As we already said, cryptocurrency mining requires special equipment, which can be really expensive. Not only that, but it requires daily monitoring and support, and of course - you need to have basic knowledge about computer hardware.
As we can see, there are some good ways to make money from cryptocurrency. Of course, they all hide risks, but can also bring good profits.
Cryptoarbi.com is an automated crypto arbitrage platform. Our goal is to help you make the best out of a trading opportunity. Choose your subscription plan, and we will do the work for you.