Cryptocurrency has gained a lot of popularity in the last decade. What started as a novelty has become a trillion-dollar industry and one of today's fastest-growing technologies. With Bitcoin and Ethereum in the lead, cryptocurrency is here to revolutionize the finance sector.
Everyday-people are investing in crypto and most are generating high returns from their investments. If you are keen on leveraging fintech for wealth building, this is one area to consider.
What Is Cryptocurrency?
Cryptocurrency is a digital currency that works on a decentralized network. It doesn't require any central authority to manage or maintain it. Cryptocurrency is stored in a digital wallet and is secured with cryptographic techniques. As a result, it’s almost impossible for anyone to forge transactions.
The first cryptocurrency created was Bitcoin. It was developed by Satoshi Nakamoto in 2009. He described it as a payment driven by cryptographic proof, not trust. There are over 2 million cryptocurrencies on the market with Bitcoin and Ethereum being the most popular.
How Does Cryptocurrency Work?
Cryptocurrency works on an open ledger known as a blockchain. The blockchain is a set of blocks linked together where transactions are recorded as they happen. Every user has a copy of this technology to create a unified transaction record. Even as new transactions happen, they are recorded and each blockchain is updated simultaneously.
Cryptocurrencies are created through Mining. Mining is an intensive process where participants use their computers to solve complex mathematical puzzles and verify transaction authenticity on the network. The participants receive newly created cryptocurrencies as a reward.
For example, Bitcoin's reward for validating a new block is 6.25 BTC which is roughly 200,000 USD.
How Can I Use Cryptocurrency?
You can use cryptocurrencies like Bitcoin, and Ethereum to pay for various products and services. With a wallet, you can make secure payments for products. You can also invest in cryptocurrency the way you invest in stocks and bonds, and reap rewards. Investing in profitable crypto coins enables you to earn high returns.
How to Make Money With Cryptocurrency
There are several legitimate ways to earn money with cryptocurrency. Crypto rewards active participation, so you need to do a lot of research and invest time to earn a good income from it. Here are some ways to earn from cryptocurrency:
1. Staking
Staking is holding a certain amount of coin in your wallet for a while and receiving rewards with slight interest. It allows you to generate interest by depositing crypto assets that would otherwise sit idle in your wallet into the blockchain for some time to keep the network operational. The asset you deposit generates interest which you get back after the agreed period. You can also opt for a flexible term where you can get your asset at any time. Staking profitable crypto coins increases your earnings.
2. Trading
Trading involves the active buying and selling of digital assets on the crypto exchange market. It requires you to have a solid understanding of the market before trading as trading can be risky due to market volatility and can result in losses. You need to thoroughly research the pricing discrepancies between two currencies and analyze the market before you trade. While mastering this might take months or even years, it can be a good reward to earn money on the crypto market.
3. Investing and Holding
Investing and holding is one of the most passive ways to earn income in crypto. You simply invest in coins by buying them, and then you hold them in your wallet till it's time to sell. This usually takes a long time, up to years. You just have to hold them long enough for the price to rise then you sell. Not only does this help you ride out market volatility, but it also allows you to witness a sizable growth.
4. Lending and Yield Farming
Lending is another passive way to make money from crypto. This involves lending your cryptocurrency to someone for interest or lending your token to a decentralized exchange, and in return, getting a fair payment for any trading fees that were collected on your token. The interest you will earn depends on the type and amount of cryptocurrency you're lending out.
5. Airdrop
Airdrop is the most risk-free way to make money in the crypto space. Newly launched crypto projects distribute crypto tokens to gain visibility. All you have to do is to complete basic tasks such as following the project on social media platforms or whitelisting their wallet address. Once you've received your token, you can engage with the project further by holding the token and participating in discussions within the community or using the token in the ecosystem of the project.
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6. Play to Earn
Play to Earn is a smart way to make money from crypto if you're on a budget. There are play-to-earn games on the blockchain. You can earn in-game assets as you engage with weapons or armor that are represented by a unique NFT stored in the blockchain. These assets can be traded on the open market.
7. Giveaways
Giveaways are similar to airdrops. You complete a task to be eligible for the giveaways but there’s no guarantee you would get them. These tasks may include joining the project's telegram group, following the project on Twitter, or inviting your friends to participate in the tasks. The more tasks you complete on time, the higher your chances of getting the giveaways. If selected the promised cryptocurrency or tokens will be sent to your wallet. .
8. Mining
Mining might be the most lucrative way to make money in crypto but it's no easy feat. This requires complex mathematical computing and coding. It requires you to verify transactions on the blockchain by connecting specialist hardware to a desktop device and adding new blocks of data to the chain. You get a cryptocurrency as a reward.
Why You Should Invest in Cryptocurrency
Cryptocurrency is a decentralized currency that exists without a physical form. Its lack of a physical attribute makes it appealing to many. Participants can perform transactions without relying on banks or the central government for verification of transactions. Cryptocurrency cannot be printed or seized, making it a safe store of value for everyone who wishes to invest in the technology.