Making our money work for us and chasing that passive income stems in most of our minds.
Taking up a side hustle to earn some extra cash is not uncommon, and technology is making it easier than ever. In this article, we go through the five ways you can start earning money in crypto.
(Information for this article is adapted from @Shivsakhuja on twitter, none of what you read should be considered as financial advice)
1. Hold On To Dear Life (HODLer)
The first method in earning your racks in crypto is as simple as we all know it. Buy and hold.
We have to first ask yourself if you are a believer in how the technology of crypto is here to solve the current issues of the world or someone who just wants to make a quick buck out of it (fair enough).
Once you found your purpose in getting into crypto, buy coins with solid fundamentals.
These are the coins you expect will do well in the long term and not those meme coins your hear about during their occasional unsubstantiated pumps.
These are legit projects which provide real world use and a fair amount of utility to users. Doing a deep research into a company’s fundamentals would include, looking at the founding team, understanding their product and Tokenomics.
Once these fundamentals change significantly, you may start to sell.
- Tried and tested method as a passive strategy
- Ability to diversify with minimal effort
- Hard to go wrong if you are buying solid coins with reasonable allocation strategy
- “Patience is bitter, but the fruit is sweet” Requires patience in seeing your portfolio grow. (you could set aside an itchy fingers portfolio to curb this)
- Not the fastest way to see your money grow
2. Altcoin trading
Altcoins are a force to be reckoned with. We’ve seen the lights of $LUNA, $AVAX and $SOL 10 to 100 folds in a period of 12-18 months.
But with great reward comes greater risk. Small caps have more room to run, going from 10 million to 1 billion is easier compared to 1 billion to 100 billion. But these very small caps may get destroyed during bear market conditions.
You need to know where to look for the next big winners and not depend on your favourite youtubers in getting alphas, it’s likely too late.
Don’t get me wrong, this method is different from HODL-ing. You take advantage of narratives and trends and you have to be disciplined in taking profits. A short to mid term play, do not get brainwashed by what people tell you it is going to be.
- Great and amazing results during bull market
- Great way in multiplying your crypto portfolio
- Picking winners is not easy, most altcoins underperform ETH
- Required time and dedication in research and being part of communities
- High risk — Bear market will crush your portfolio
3. NFT Flippin’
The goal for NFT flipping is to get into them at launch or at cheap then flip them when the community/market hypes them up. Unpopular opinion, buy the rumour sell the hype.
Read more on the story of how this man traded a red paper clip to a house.
Alittle more effort has to be done though. Getting whitelisted for NFT projects has to come with your time and contribution to the community.
- Successful flippers may 10x their return
- Holders get the bragging rights
But those are probably the 1 out of 20 projects out there. The reality of it though, not everyone is able to get a nice slice of the pie, some falling victim to scams and rugs.
- It isn’t easy to pick the right projects. Many dies along with the hype
- There is extensive research and time needed to get on whitelists and engage with the community
- NFTs are not as liquid. You have to find a buyer, you are not able to sell them anytime.
4. Leverage trading
Probably not for the faint hearted. This may be attractive to new comers, almost like the poison fruit. Imagine a 50% gain turn into 500% with leverage.
Check out the lessons crypto degens learnt from leveraging 20x above
It is not as simple as betting the market will go up to down, there is alot more skill required like technical analysis, understanding the market, risk management etc the list goes on and on.
Setting stop loss is key as you do not want to get a text from your centralized exchange to inform you of your liquidation (been there done that).
- Leveraging regardless of market condition, bull/bear market plays will handsomely rewarded when done right
- Understand instruments to hedge or lever up
- Most people are unsuccessful, that’s the reality
- Required time and patience in acquiring new skills and tracking
- Taking risk without being in control
5. Yield farming
This strategy goes hand in hand with the HODL-ing method. If you are already holding on to a coin, you might as well earn yield on it.
You enjoy the upside of farming coins you plan to hold anyway.
The DeFi space is ever blooming, there are a multitudes of ways to earn yield on your goals.
These goals could be your active or passive ones. Your interaction with the protocols will expose your mind to the mechanics of how it all works.
Just a rough gauge, passive farming strategies can boost your crypto returns by 10-20% while active ones can go upwards of 100%
- Steep initial learning curve. There are lots of new terms and concepts which may be overwhelming.
- Time consuming to research, execute and track
- High yielding APR may be tempting but pose a high levels of risk
- Exposure to hacks and exploits
[Editor’s Note: This article does not represent financial advice. Please do your own research before investing.]
Featured Image: Chain Debrief
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