How to Make Money with Cryptocurrencies?
#9–18 ways to make money with cryptocurrencies
Everyone talks about cryptocurrencies. Whether they hate it or love it. Some people invested in cryptocurrencies and lost a lot, some others are rich. There are people saying this is the future and blockchain is the best technology ever and a revolution. Others say there is no real use case for this technology.
I cannot read the future but what I know is that because cryptocurrencies are quite a new technology and a new asset, there are a lot of money to be made and a set of new opportunities are raising! That is why I experimented, investigated and listed the different way to make money with cryptocurrencies 💵💵.
This article is part of my Learning challenge where I learn about one topic each month. As you can imagine, this month, I was learning about blockchain & cryptocurrencies. I based this studies on a Coursera MOOC, a few articles, some whitepapers and the building of my own Proof of Stake Cryptocurrency and Coin Generator. Click here, if you want to know more about my methodology.
Maybe I am not the best person to follow, but fore sure this article will give you some ideas! Actually, I didn’t make any fortune with cryptocurrency (yet), I hope that it will change in the future 😬😁.
Disclaimer: I tried some of the methods in this articles but my earning wasn’t sky rocket so far but there are some people who earned tons via these methods. Factors such as continues focus, timing, luck, other variables have a big impact on how much you would earn so there’s no one-size-fit-all way to earn money but until you won’t try you can’t say how they perform for you.
Investing in cryptocurrencies
Investing is the most accessible way to earn money, but not necessarily the easiest!
Long-term investment & short-time trading
One approach is to do a long-term investment. The same way you can invest in gold you can invest in bitcoin or other cryptocurrencies.
Another way is to do active trading (short-term) but this requires more time. If you prefer this approach you can take advantage of online tools and communities about Crypto Signals. Read more in the following article.
Or you can also take advantage of pump & dumps. To be honest I haven’t tried signals nor pump/dumps. At least not yet! I only hold some coins for a long term investment.
I previously wrote an article about investing and trading with cryptocurrencies that covers the full topic (why investing, how to build a portfolio, how to manage it, how to analyze a market with Technical Analysis and how to get started).
Arbitrage
One interesting fact about Cryptocurrencies is that for each of them there are hundreds of trading pairs. For example, right now the price of BTC is the following:
- DGB/BTC (Bittrex) — $804,6
- DOGE/BTC (Poloniex) — $798,6
So what can be done is:
- Buy $798,6 of DogeCoins
- Buy 0.1 BTC with the DogeCoins
- Transfer the 0.1 BTC to Bittrex
- Buy DGB with the 0.1 BTC
- Sell the DGB and get $804,6
The profits will be the equal to
$804.6 − $798.6 = $6 (+0.7%)
However if you remove the transaction fees and the trading fees you will not earn much 😂! Also, Bitcoin is quite slow to transfer, the price would probably change when the coins will be transferred so it’s better to do arbitrage with other coins.
You can find more information about arbitrage in the article below.
Automated trading with Bots
Another solution consists of using trading bots.
There are a lot of free bots and also paid ones. If you want to find some open source and free ones just type “trading bot” on Github or follow this link: https://github.com/search?utf8=%E2%9C%93&q=trading+bot&type=
Before starting with a bot check if:
- It allows backtesting / simulation
- It has the strategy you need and you can set it
- If it’s low / high frequency
Here are the ones I tested, I didn’t make any profits, I even lost money with them 😅 but they run for real, the two firsts have a backtesting mode that simulates trading.
- Zenbot — My favorite one, there is also a discord chat to talk with the active community. There are more and more strategies being added, so feel free to play with it, it is very fun — https://github.com/DeviaVir/zenbot
- Gekko — Quite similar to Zenbot but it comes with a User interface, better for people who don’t like CLI. The negative point is that there are fewer strategies — https://gekko.wizb.it/
- Tribeca — One of the rare high-frequency trading bot, no backtesting, unfortunately — https://github.com/michaelgrosner/tribeca
Earning more cryptocurrencies
Another way to earn money is to get more coins.
Staking
There are cryptocurrencies that give some dividends as a reward for letting your wallet connected to the network, therefore securing the network and making it more decentralized.
Here are a few names:
- Neo — It gives you Gas, and you don’t even need to stay connected, you just need to store your Neo in its wallet where you own the private keys such as Neon Wallet (Software) or Ledger Wallet (hardware). Also a few exchanges such as Binance or KuCoin gives you the gas if you keep your NEOs there; the current dividend is around 4%
- Pivx — Keep your wallet online and get around 4.8% annual return in PIVX
- OKCash — Keep your wallet online and get around 10% annual return in OK
- More Proof of Stake coins here: https://www.poslist.org/
Read more about Staking in the following article.
If you want to know what is Proof of Stake I recommend my article.
Airdrops
Register to airdrops and get free coins 🎁. New coins are usually giving away free coins in order to get users into their community, to get followers or just to get known.
Join this telegram group to get notified every time there is an airdrop: https://t.me/freeairdrop
If you want to get free BTC and Airdrops I recommend you to register into Earn.com, here is my referral: https://earn.com/sandoche/referral/?a=ze0ne8woywsr80m3
It sends you some airdrops and also some BTC every time you accept a message and answer it.
To be honest, it’s quite time-consuming and I quickly stopped. Also, most of the coins are not yet listed in exchanges! Note that I have a friend who got 1000 XRP (Ripple) in the past as an airdrop! So if you are lucky you can get rich, or you will just lose your time.
Take advantage of Hard forks
When one blockchain split in two, a hard fork happens. That’s what happened to bitcoin many times. When Bitcoin Cash was created, every one who was owning one bitcoin before the hard fork in a wallet with the private keys would get automatically one bitcoin cash. The only thing to do is to access the hard fork currency’s wallet and to connect with the private key!
Here is a list of bitcoin forks: http://list.wiki/Bitcoin_Hard_Forks
Lending
Some trading platform accepts margin trading which is simply borrowing money from someone to make a more important position, and then give back the money. This means that you can also offer loans and give interests.
Poloniex offers this opportunity, read more here: https://poloniex.com/support/aboutMarginTrading/
Lending bots
Also, there are some Lending bots. I actually tried this one but I didn’t manage to make it work: https://github.com/BitBotFactory/poloniexlendingbot
There is also this website to automate this process, but I haven’t tried it, so please do your researches before using it: https://www.aivren.com/
With lending, you can get a maximum of 15% of annual return rate.
Mining
Mining is the process of creating coins, by running a computer, or most of the time a special device, that makes calculations. It works with Proof of Work cryptocurrencies such as Bitcoin, Ethereum, Litecoin or Zcash.
If you don’t know what mining is, I recommend you the following post.
ASIC & GPU-Mining
ASIC stands for Application-specific integrated circuit, it’s basically a device built to mine. Mining of cryptocurrencies such as Bitcoin, Litecoin (and most of their clones) are profitable only with ASIC.
Since I haven’t tried this, I recommend you to google about that, if you want to do mining with an ASIC.
Otherwise there is GPU Mining for cryptocurrencies like Ethereum (even though an ASIC has been recently released), Ethereum Classic, Monero, or Z-Cash.
I am actually doing GPU Mining with a friend, with 4 GPUs and it generates around 0.006 ETH a day. For a total investment of $2200, it’s indeed not profitable, and if the price of the ETH stays the same it will take me more than 2 years before getting profits. Also we initially wanted 6 GPUs but they got sold out very quickly and the prices of the GPUs doubled after one month! Totally crazy!
Since GPUs are evolving very fast, it’s doesn’t make sense that I give info about the hardware I used for my mining rig, so just google “How to build a mining rig” and ensure that the link is recent enough.
You can find on this website the most profitable cryptocurrencies to mine: https://whattomine.com/
Make others mine for you
Making people mine for you is a controversial way to earn money! But it is very simple. Thanks to Coinhive you can add this miner in 3 lines of javascript code that you copy paste in your website. Note that Adblock doesn’t let the miner work!
You can check this website and see how it looks.
I also tried it in on one of my websites, Vivaham: https://www.vivaham.fr but it doesn’t really bring much. For this website with an average of 700 sessions of 7 minutes per month, I earn about 0.0005 XMR/month which is today (April 2018) worth $0.10!
Disk space-mining
Another way of mining is with hard drive spaces, I haven’t tried it but Burst Cryptocurrency uses a Proof of Capacity technology. Which means instead of mining with a GPU and using a lot of electricity, you use empty spaces of hard drives.
There is even someone who managed to mine with a Raspberry Pi and solar pannels.
Building a cryptocurrency related project
Another way to make money is to build your own cryptocurrency.
Please note that the purpose of building a cryptocurrency / decentralized platform is not to make money but to solve a problem!
Create a coin
There are many altcoins, a lot of them are totally useless such as TrumpCoin, PutinCoin or Macron. They are sometimes called Shitcoins.
Fortunately, a lot of coins have a purpose and a use case, or they try to!
So why not building a coin that solves a real problem, and reserve a part for paying the team members. It’s more like a bounty for the work done. But that’s one way to make money! Indeed it requires a lot of work: creating a team, solving a problem, creating the communication materials, the website…
There are different ways to create a coin. I made this tutorial to easily create a Proof of Stake coin.
Create a hard fork
As mention before you can take advantage of hard forks but also create one. Again, it’s a lot of work, you need to build a community and do a lot of marketing. Don’t forget the most important: it should solve a problem and have a real purpose.
I have never built a hard fork, but I found a generator to do it. Use it as your own risk.
Run an ICO
ICO stands for Initial Coing Offering, it’s a mix between an IPO and a Kickstarter campaign. Basically, it’s to raise money for a project. One important point to succeed an ICO is to give the coin (token) a real purpose, otherwise, people will not buy it. Once the ICO is successful it’s possible to list it in exchanges!
The biggest Public ICO raised 257 million of dollars, see below the list of the biggest ICO.s
Doing an ICO is technically a lot easier than creating a coin, you can use Ethereum and follow tutorials to create a Smart Contract that will create your ERC20 coin. Then another smart contract to exchange an amount of coin when a certain amount of Ethereum is received.
Here is a handbook to run an ICO.
I also tried (and failed 😬) to run an ICO with some of my friends. We wanted to raise around $40k in order to learn the process and write an ICO Guidebook. The main reason we failed is that the token we sold didn’t have any purpose. If you feel adventurous feel free to reuse our source code: https://github.com/BicoTeam
As for altcoins there are also some useless ones such as The Useless Token: https://uetoken.com/
Note that the name ICO is sometimes miss used most of the ICO should be called TGE: Token Generation Event. Read this if you want to know more: https://medium.com/@cryptoginger/stop-calling-everything-an-ico-4baae3d48100
Build a Decentralized App (DApp)
A Dapp is like an App that runs in a decentralized way, for example, if a Dapp runs in Ethereum it runs through a smart contract (a piece of code) that is executed by one node when it is triggered.
There are many DApps already made and you can find some in this store.
The most successful one is Cryptokitties: https://www.cryptokitties.co/, a game where you collect cats and breed them, then you can resell them!
I haven’t done yet a DApps but I will do it in the future. It will be part of my Learning Challenge.
Indirect solutions
Last way I know to earn money is without interacting with a cryptocurrency.
Help a cryptocurrency community and receive bounties
One way is to help a cryptocurrency community as a contributor putting your skills in the open source world. You can find that in the cryptocurrency website or in their forum. Here is an example: https://pivx.org/reward-system/
I got some bounties helping the PesetaCoin community with some design work! They are indeed given in the currency you are helping out.
Find a job in a cryptocurrency related company
Another way is to find a job in a cryptocurrency related company. Many companies are doing ICOs so they raised a lot of funds and are hiring people to succeed in following the roadmap they committed to!
Buy stocks of a cryptocurrency related company
The last solution I have in mind, and I haven’t tried, it’s investing in stocks in a cryptocurrency related company. There is a company that had a 394% raise because it added blockchain to its name: https://www.bloomberg.com/news/articles/2017-10-27/what-s-in-a-name-u-k-stock-surges-394-on-blockchain-rebrand
Also, the company NVIDIA, since the GPUs are used for mining, sees a lot of growth! But again do your own research before doing anything!
Conclusion
Here are a few ways to earn money, try them and see where it leads. I tried a few of them and I don’t earn enough to eat and sleep! I hope you will be more lucky than me!
If I forgot something feel free to comment and to add your ideas.
What’s next?
This article is part of my Learning Challenge about Blockchain & Cryptocurrencies. Like this one, I made 5 others article related to the topic.
- Why Cryptocurrencies Matter?
https://medium.com/learning-lab/why-cryptocurrencies-matter-37dd736bc8d0 - How Cryptocurrencies Work (Technical Guide)
https://medium.com/learning-lab/how-cryptocurrencies-work-technical-guide-95950c002b8f - Proof of What? Understand the Distributed Consensuses in Blockchain
https://medium.com/learning-lab/proof-of-what-understand-the-distributed-consensuses-in-blockchain-1d9304ae4afe - How I Integrated Blockchain to My Existing Product (Kanbanote)
https://medium.com/learning-lab/how-i-integrated-blockchain-to-my-existing-product-kanbanote-c97c74dafb6c - How to Build Your Own Cryptocurrency (PoS) in Just a Few Minutes
https://medium.com/learning-lab/how-to-build-your-own-cryptocurrency-proof-of-stake-in-just-a-few-minutes-6d526bca4a91
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