If you’re a cryptocurrency investor, you probably already know how the market works. Most people hold cryptocurrencies after doing their research, waiting for the price to keep gaining.
While hodling is a great strategy (especially for beginner crypto enthusiasts), it is worth noting that it isn’t the only one. Cryptocurrencies have become much more functional than just tools for investing or sending value.
Today, innovations in the crypto industry have made it much easier for investors to get more out of their money. Considering that the industry is still in its beginning stages, there are even more reasons to be excited. Nevertheless, here are some ways you could make your cryptocurrencies work for you.
For most crypto holders, trading is usually the first avenue for earning money. The rule remains the same as you get with stock trading - you need to buy a cryptocurrency at a specific price and sell it off when its value increases.
Crypto trading is especially profitable because of the market’s volatility. In the traditional stock market, seeing a stock rise by up to 5 percent in a day is pretty rare. But, this is just a regular day for the crypto market. Coins can rise by as much as 100 percent in 24 hours, allowing you to grow your wealth exponentially.
Thanks to this volatility, crypto traders have endless possibilities to make profits. However, this volatility is also a warning to crypto traders. Just as a coin could grow its value by 100 percent in a day, its value could be cut by more than 50 percent just as well.
Volatility is especially prominent among small altcoins. Big names like Bitcoin, Ether, and many more are relatively stable because they have built a base of supporters worldwide who understand their value. But, for smaller altcoins, the market is a bit different. Many of these coins have whales - people with massive units of the coins who could move the market when they sell.
All in all, it’s important to trade carefully. Watch out for the right coins to buy and trade with and do your research. Remember to also protect yourself against volatility, so you can avoid a wipeout in the event that the market doesn’t go your way.
Staking is still a new concept for many crypto holders. However, it has grown in popularity this year.
To understand staking, think of Bitcoin. One of the biggest criticisms of Bitcoin is its mining structure - a resource and capital-intensive process where only a few people end up making money through their work. Several other coins are mined like Bitcoin, and they’ve also gotten the lion's share of criticism.
So, staking was born. It has emerged as an eco-friendly and relatively easier method of validating transactions, and everyone can earn from it. With staking, network participants put their coins into its protocol. Randomly, the protocol selects a wallet that will automatically validate transactions. Once the process is finished, the wallet gets the staking rewards.
Staking is random and completely dispassionate. So, there is no way for you to manipulate the process to ensure that your wallet is the one selected to mine. However, keep in mind that wallets with higher network deposits will be more likely to be selected.
Staking is definitely a great way to earn passive income with cryptocurrencies. Simply stake the coins in the right protocol, and you can kick back and enjoy your rewards. Plus, your capital is safe. You can stake and unstake whenever you like on most protocols. So, no one can hack or steal your funds.
Some staking services even open the opportunity for participants to get rewards in other coins. One of Africa’s largest exchanges - named Quidax - launched its QDX token earlier this year. The asset is live on the exchange, and customers can stake it using Qudax’s QDX Vault service. Back in October, the exchange distributed 1 billion Shiba Inu tokens to all stakers.
With a convenient and virtually risk-free mode of operation, staking is undoubtedly great.
If you have considerable amounts of cryptocurrencies, you could also give them as loans.
Crypto loans work almost like the traditional ones. People come to loan platforms, putting up collateral in exchange for coins. Most lending platforms allow customers to keep their coins in escrow, while accessing more coins for immediate use. So, if they’re unable to pay back, the platform takes ownership of the collateral.
Crypto lenders benefit from impressive interest rates, which can be up to 10 percent per annum. All in all, this process is also incredibly easy. Payments are flexible, and interest rates are reasonable. Crypto lending is beneficial to pretty much everyone - borrowers looking to get their hands on money quickly, and lenders looking to earn interest on their cryptocurrencies.