Every investor dreams of making sustainable returns from their ventures. Crypto investment is a sustainable way to generate income. But you must understand where to put your money. Volatility is one reason cryptocurrency investment is risky but also why many people adopt it. It can make you good returns in a short time.
Security is another consideration. Investments go beyond trading. You only want to engage in desirable projects with future-proof prospects. Your money can only be safe when you engage on blockchain networks with solid security features. Choose the crypto asset with lower security risks. Also, consider liquidity and investors’ sentiments when selecting a cryptocurrency. Is the digital asset liquid enough? Does it have an active market? Will investors still accept it in the future? Analyze these factors before you begin your journey in crypto investment.
These areas of crypto investment are a guide to getting higher returns. Research and invest wisely in cryptocurrency options that guarantee you maximum returns. Understand that the coin’s value against fiat keeps fluctuating.
Table of Contents
1. Crypto Trading
The least cumbersome investment in cryptocurrency is buying and selling digital assets. You can choose from various coins and tokens. Crypto trading is the most preferred option for newbies in this space. Analyze the market trends, research the potential, and determine your goals. You choose the crypto to buy, sign up on a trading platform, pay for the cryptocurrency you want, and trade it.
The volatility of cryptocurrency can scare you, especially if you buy some tokens and the price drops significantly. But never give up. Hold on to your assets and wait for the value to go up. You can choose between short-term and long-term trades. The bigger picture is the profits you can make. Prospect in the digital assets to select the one that suits your investment strategy.
2. Crypto Mining
Mining cryptocurrency is the use of special computers to solve complex mathematical puzzles. You will acquire coins as a reward for your mining process. The difficulty of the network and the popularity of the coins are what you must consider. For instance, Bitcoin is the most popular but hard to mine due to the high network difficulty. Also, since most of its tokens are already in circulation, the reward for miners is lower.
Newer crypto coins have a low network difficulty, making them easy to mine. You can start mining with your computer at home and receive block rewards. But the tokens you receive may be worth very little. If you are patient, you can wait till the value of the coins goes up. Other viable options are investing in cloud mining and pool mining.
3. ICO Investing
Initial Coin Offerings (ICOs) are a form of crowdfunding. Start-ups issue tokens on a blockchain network and offer them to interested investors. People who invest in ICOs can get returns when the project succeeds. ICOs are the riskiest investment in cryptocurrency since there is no guarantee that the projects will succeed.
Currently, there exist over 21,000 cryptos on the blockchain. Each of these assets comes with different promises and expectations. While big crypto players are worth tens of thousands of dollars, there are tokens worth less than a cent. Investing in ICOs is risky but can also be rewarding when done correctly. During the launch, ICOs offer tokens at a discounted rate. If the project succeeds, the value can go up significantly. Analyze each ICO to understand if it is worth the risk.
4. Coin Staking
You may not want to spend time and energy trading or mining cryptocurrencies. Consider staking coins to earn profits. Staking is an alternative approach to generating passive income from crypto investments. Staking means holding coins in your wallet to support a blockchain network and receive rewards in return. Coins on a stake will only be available after a specified period.
Staking is suitable for holders of coins that use the Proof-of-Stake consensus algorithm, such as Tezos, Cardano, and Ethereum. The process requires you to deposit some crypto into your wallet. However, the wallet must support staking. You will receive regular rewards from newly-minted coins or transaction fees. Expect around 5-20% in returns, depending on the network.
The word HODL came into the limelight because of a typo. A drunk crypto enthusiast wrote ‘HODL’ instead of ‘HOLD.’ This phrase has become the unofficial market advice to cryptocurrency traders. HODLing, in its current usage, means buying and holding cryptocurrencies for a long time.
You will not make money if you buy, watch the price drop, and then sell due to panic. You would make huge losses. For instance, in 2017, Bitcoin dropped from $20,000 to $3,200 by the beginning of 2018. Many crypto holders sold and lost their investments. But that did not stop Bitcoin. It has continued to rise, with the highest record going past $69,000. That teaches you something – patience pays. So, if you can hold your coins for an extended period, the rewards may be worth more than you imagined.
Investment opportunities in cryptocurrency are limitless. You can mine, trade, stake your coins, or HODL. Volatility is a permanent attribute of the crypto market. You can expect sudden price swings and unexpected events. It takes experience to master the trade, but you can still earn returns. Research each investment opportunity thoroughly, and always watch for new opportunities. Remember, only invest what you can afford to lose.
Alex is fascinated with “understanding” people. It’s actually what drives everything he does. He believes in a thoughtful exploration of how you shape your thoughts, experience of the world.