Introduction

Investing is a difficult art of choice, one that can bring a quick fortune or an equally quick bankruptcy on the cryptocurrency market. This text will outline the most popular methods of making money in the crypto market. First it is necessary to start with the basic concepts and general understanding of the topic, we will not propose how to assemble your first miner nor what is the most profitable form of staking, but we will quickly organize our knowledge about investing capital in the cryptocurrency market, so that at least at this stage you do not repeat that Cryptocurrency is just a bet and a matter of luck if the project you've gotten yourself into will shoot enough into space.

Earning on the crypto market

The basic method of earning on the cryptocurrency market i.e earning on a change in value. This refers to a change in value because currently, we have tools that give us the opportunity to earn not only on increases but also on decreases in the prices of some cryptocurrencies. It is the dynamic increase in cryptocurrency prices that is the main reason there are so many cryptocurrency millionaires. Just like other assets, such as gold, cryptocurrencies such as bitcoin have been wrapped in various types of financial instruments. Thus, first of all, it is possible to buy real cryptocurrencies, i.e. those that can be stored, for example, on hardware wallets. If we had to compare it to popular investments, we would say that it is the same as buying gold in physical form. With the rest of these comparisons to the gold market, there will be definitely more. In the case of such a purchase, of course, we limit the loss only to the size of our investment. We can call such a purchase of real cryptocurrencies a spot transaction, and cryptocurrencies can be purchased directly from another user or using a cryptocurrency exchange such as the Binance Exchange.

But in order to earn on the exchange rate difference, increase or decrease, it is not necessary to have elementary knowledge about the functioning of the cryptocurrency market. There are plenty of intermediaries in the form of brokers, not cryptocurrency exchanges who give us the opportunity to invest and receive advice. Of course, this is referring to CFD instruments. However, it should be remembered that brokers in the case of this type of instruments earn primarily from your losses, and the spread that they offer, i.e. the difference between the purchase and sale price, can be really large, which often excludes, for example, concluding transactions for a short period. Cryptocurrencies have also been packaged in futures contracts, i.e. futures contracts. CFDs and futures give us the opportunity to earn even faster on the price change through the leverage mechanism. However, this is a double-edged sword, so if you are a beginner in the cryptocurrency market, make a transaction on the spot market first.

When it comes to financial instruments, Bitcoin and other cryptocurrencies can be purchased by investing in a passive investment fund, or ETF. And finally, cryptocurrencies are also options speculation. Which requires much more knowledge from us, and not the one related to the cryptocurrency market .

Investing methods when it comes to cryptocurrencies

Hence, the first method of earning on the crypto market is primarily the purchase or sale of cryptocurrencies or financial instruments that are based on this market. How long it will hold its cryptocurrencies will determine whether we are short, medium or long-term investors (on the crypto market, the latter are the so-called holders).

As in the case of gold, in the case of cryptocurrencies there is a process of mining or digging cryptocurrencies. This analogy to the gold market fits perfectly into the idea of cryptocurrencies. After all, these assets were supposed to be an alternative to the system of fiat currencies that departed from the gold standard,

The concept of cryptocurrency mining

Instead of a shovel, we need a computer with adequate computing power that uses energy instead of hand strength. This computer will solve complex algorithms as a result of which we will receive a certain number of cryptocurrencies. Therefore, mining requires an investment in equipment, and in the process itself which will require costs that are related to powering the computer, which may force investors to sell cryptocurrencies on a regular basis to pay, for example, electricity bills.

Staking cryptocurrencies

The third interesting way to earn money on the cryptocurrency market is staking. Staking is nothing more than blocking your cryptocurrencies in the appropriate cryptocurrency network, thanks to which we receive interest depending on the amount of the rate set by the network. Staking enhances certain factors, such as network security, the same way money on deposits enhances the security of a given bank. Not all cryptocurrencies undergo this process. But if you want to see the potential of this method, then jump on the website binance.com Earnings tab.

In a normal world, a person can earn on their capital by making it available, of course, we are talking about loans. The world of cryptocurrencies also gives us this opportunity with the help of DeFi, i.e. the decentralized finance sector.

NFTs as an investment

And finally, another method of earning on this market is the creation of cryptocurrencies or tokens (such as a NFT), which do not necessarily have to be created from scratch, because we can use ready-made solutions, but in this case we have to make sure that our project is noticed by other market participants. The world of cryptocurrencies (if it is technologically innovative) in terms of earning methods does not differ much from those methods that we have known for hundreds of years. And as with gold, you can decide whether you want to buy a gold bar, a virtual position in the gold market, you want to buy a shovel and look for gold, or maybe you want to buy shares in a gold mine, or you want to team up with others to look for gold, or maybe you want to lend money to those who go look for gold and in the world of cryptocurrencies you will find equivalents of this type of capital investment.