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6 Different Ways Traders Try to Profit on Cryptocurrencies in 2021

Cryptocurrencies are one of the most discussed topics on the planet today. Since the inception of the first crypto asset in 2009, the cryptocurrency industry has seen enormous growth within a short space of time. Currently, one of the richest men on the planet, Elon Musk, is heavily invested in bitcoin and dogecoin.

The crypto-financial space and cryptocurrency world has been very profitable and has provided a platform for many early adopters and investors to gain an incredible amount of wealth for their investments. Some early investors include famous individuals like the Winklevoss twins, Changpeng Zhao, and Anthony Di Iorio.

As part of their investment into the crypto-financial space, the Winklevoss twins bought $11 million worth of Bitcoins in 2013. Investing in Bitcoin paid off for the Winklevoss twins as they are now considered billionaires and leaders in the crypto-financial space. They also own other crypto-assets like Ether.

In addition to their investment in Bitcoin, the Winklevoss twins launched the Gemini exchange in 2014 to facilitate the easy transfer of crypto assets between users. According to the Bloomberg Billionaires index, each of the twins is worth about $1 billion.

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Other early investors like Changpeng Zhao launched the world’s largest crypto exchange Binance. According to Forbes.com, Binance is the largest crypto exchange in the world, with $500 million in daily trading volume as of early 2019.

Similarly, Anthony Di Iorio is a co-founder of the crypto-asset Ethereum. He also has investments in crypto assets like Qtum, Vechain, and Zcash. The investments of early adopters and investors into the crypto-financial space have yielded rich rewards.  Most early investors and adoptors are now considered billionaires and leaders in the financial world.

Indeed many profitable opportunities abound in the crypto-financial space for investors who are willing to part with their money, take a risk, and invest in cryptocurrencies. This article will review some investment opportunities in the crypto-financial space for investors hoping to profit off cryptocurrencies. Some investment opportunities in the crypto-financial space include:

  • Mining of Crypto Assets
  • Airdrops and forks
  • Staking and Lending
  • Trading cryptocurrency for profit
  • Long Term Buying

Mining of Crypto Assets

An investment option available for investors in the crypto-financial space is the mining of crypto assets. The mining of cryptocurrencies rewards investors with new coins. However, the mining of crypto assets can be costly and may not appeal to investors with limited funds.

Mining of cryptocurrencies involves getting new coins by solving complicated mathematical problems using high-powered computers for the mining process. The mining process uses crypto miners as auditors for crypto transactions. As a result, the mining process involves authenticating data blocks and inputting transaction records to the blockchain. The blockchain serves as a public ledger for all cryptocurrency transactions carried out.

In the case of Bitcoin, Miners will receive new Bitcoins after they have verified 1MB worth of Bitcoin transactions. Similarly, the miner must be the first to provide the right answer to a mathematical problem. Other crypto assets you can mine include crypto assets like Ethereum, Litecoin, Monero, Electroneum, Zcash, etc.

Airdrops and Forks

Airdrops and Forks provide another opportunity to make profits in the crypto world. Airdrops are free coins distributed by a crypto exchange when launching a new project or cryptocurrency. The aim of creating airdrops is for generating and increasing the awareness of users of the new project. Airdrops also help to increase the user base of a new project.

Forks are free coins offered to users whenever there are changes or upgrades to a project. Whenever airdrops and forks occur holders will get new coins as a reward.

Long Term Buying

One of the most effective ways to turn a profit in the crypto finance space is to buy and hold crypto assets in the long term. Although the crypto market is very volatile, buying and holding crypto assets in the long term is considered to be the best strategy for prospective investors and has offered a high return on investments in the long term.

To fully benefit from long-term buying, investors must select the right types of cryptocurrencies. To select the best cryptocurrency check this review by Investopedia.

Trading cryptocurrency for profit

Another way to make money off cryptocurrencies is to trade them for a profit. Unlike long-term buying, trading cryptocurrencies reward the investor with profits in the short term.

To effectively trade cryptocurrencies, investors must possess some skill and experience in reading trading charts. Similarly, they must be able to use different indicators to predict the direction of trades in the short term. Investors who trade cryptocurrencies usually buy or sell actual crypto assets by speculating the direction of the crypto asset.

Investors can also trade derivatives of crypto assets by choosing to trade in the long direction or the short direction. Derivatives of crypto give investors the opportunity to profit off bullish and bearish price movements in the crypto markets.

Staking and Lending

Another way some investors make money from cryptocurrencies is by staking and lending. Staking in crypto means keeping in a cryptocurrency wallet and receiving rewards for the kept coins.

In effect, investors are lending their coins to the exchange or network. The network uses the coins to secure its platform and verify transactions. Investors can also lend coins to other investors and receive interest from the crypto loans that they offer.

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