Though there are numerous ways to earn with cryptocurrencies, there are many more unrealistic expectations abound in the crypto space. There is a lot of doubt about the idea that you could earn a decent living off cryptocurrencies.
Some people think that buying a coin will instantly yield profits, and they end up losing a lot of money in the process. Interacting with cryptocurrencies is similar to making investments; you could either make profits or lose your capital due to the volatile nature of the market. Yet, it is possible to earn a decent income from cryptocurrencies.
As with every other financial venture, learning about how the crypto space works and staying in touch with new trends is crucial if you want to be profitable. To help straighten the learning curve for many, here are ten excellent ways to earn through cryptocurrencies:
Participating in Crypto Airdrops
When developers and project owners want to create awareness and help their project gain traction, they sometimes give out some of the tokens to random users or early adopters. Airdrops are a familiar sight in the crypto space, and people have profited from participating in them.
Recall how popular exchange, Uniswap, airdropped tokens to users worth over $1 billion at the issuing time.
To participate in airdrops, you should have a cryptocurrency wallet, and you might be required to complete some tasks to be rewarded. You can find legitimate airdrops on CoinMarketCap.
The most common way to earn from cryptocurrencies is to buy and hold on to the coins over time, a term known as hodl in the crypto space. Cryptocurrencies generally increase in value over time; hence, hodling is most popular, especially among newbies.
Bitcoin all-time price chart. (Source: Coinbase)
1 Bitcoin was worth $0.08 in July 2010. Eleven years on, 1 Bitcoin trades around the $50,000 mark. A ten-dollar purchase of Bitcoin in 2010 would be worth some $6 million today. This scenario explains how one can earn maximum returns by hodling cryptocurrencies for the long term.
Seed Funding (ICO, IDO, IGO)
When cryptocurrency projects want to launch, they sometimes organize a private sale event to attract long-term investors and raise funds for marketing purposes. These events, depending on the nature of the projects, are known either as Initial Coin Offerings (ICO for coins and tokens), Initial Dex Offerings (IDO for exchanges and marketplaces), and Initial Game Offerings (IGO for blockchain games).
ICOs and initial offerings, generally, are high-risk investments but have proven to be very profitable. Ethereum’s ICO price was at $0.31 per ETH. If you had participated in the event, your $100 investment would be worth at least $1 million today. If you consider participating in ICOs, be sure to take advantage of platforms like Coinlist and Binance Launchpad.
While some coins and tokens are in full supply at launch, others use yield farming to mint new coins. You will be required to provide liquidity by pairing with another token and staking the liquidity tokens (LP tokens) to participate in the farming.
Yield farming is a perfect way to earn with cryptocurrencies. Instead of leaving the coins idle in the wallet, you can use them to earn more tokens passively over a fixed period by participating in a yield farm. The income earned depends on the annual percentage yield (APY) associated with the farm. Note that providing liquidity comes with impermanent profit or loss, depending on the exchange rate between the paired tokens.
Minting and Trading NFTs
The current hype around non-fungible tokens is massive, and for a good reason too. NFTs are an excellent way to earn passive income in cryptocurrencies. You can mint (create) an NFT and trade it on marketplaces, or you can buy an NFT and sell it later at a higher price. Either way, anyone, even newbies, can earn decent money with NFTs.
Popular NFT marketplaces like Rarible, Opensea, and AirNFTs allow users to mint NFTs on their platforms. The newly created unique tokens can then be put up for sale. Some NFTs have sold for sums as high as a million dollars. Some marketplaces allow users to mint for free, while others charge a fee for minting.
Blockchain games also present an excellent opportunity to earn with cryptocurrencies. Through the play-to-earn model, blockchain games reward players in tokens or NFTs for their game time and performances.
Popular games like Axie Infinity, Decentraland, and The Sandbox reward their users in cryptocurrencies. If you are good at gaming, you can make a very decent living playing blockchain games. Gamers can even earn up to $1000 monthly for playing blockchain games.
Perhaps the most popular way to earn with cryptocurrencies, crypto trading is a profitable venture if well mastered.
Exchanges are either centralized (CEXs) like Binance and Huobi Exchange or decentralized (DEXs) like Uniswap, DYDX, and Poloniex. Some of these exchanges have unique features like spot, margin, and futures trading.
You can also buy and sell cryptocurrencies through P2P exchanges and engage in arbitrage trading, taking advantage of the differences in pricing on different DEXs. Trading can be very profitable, yet day trading remains a high-risk venture in the crypto space.
Crypto protocols built on a Proof-of-Stake model offer rewards for users who stake their coins to secure and validate the network. Some protocols pay out as much as 11% annual percentage returns (APR) in staking rewards. For long-term investors, instead of merely buying and hodling, you can stake your cryptocurrencies to earn passive income.
Another profitable way to earn with cryptocurrencies is by lending idle assets to DeFi protocols and earning a fixed APR on loans provided. You can interact with platforms like Celsius, MakerDAO, and Compound Finance if you have idle assets you want to earn passive income on.
Offering Services for Cryptocurrencies
Freelancers, merchants, and service providers can break the geographical restrictions on their businesses by accepting payments in cryptocurrencies. Some platforms like CryptoGrind and Cointelegraph hire service providers and pay in cryptocurrency.
There are many more awesome ways to earn with cryptocurrencies, but these ten are pretty straightforward to understand. Happy earning!