by Bitcoin is the world’s most popular cryptocurrency and the biggest by market capitalization. Many people own bitcoins and wonder how to make money with them. This article will explain different ways to do that.
Table of Contents
1. Holding
Holding is the easiest way of making money from your bitcoins. This token has been around relatively long and has been through many bullish and bearish crypto markets. There’s always a chance that the value of your holdings will increase. Consider that BTC once traded for $65,000 but trades at nearly $31,000 as of writing.
If you are convinced that the crypto market will rebound from its current lows, holding onto your tokens is the right choice. This strategy is fondly called “Hold On for Dear Life (HODL).”
2. Lending
You can lend your tokens to other retail or institutional investors and earn interest. Many crypto exchanges and platforms make it easy to lend your coins out. You just need to connect your wallet to the platform and select the number of tokens you want to lend. Expect interest rates of up to 5%.
Note that lending carries risks. The borrower or the platform itself can default, as we’ve seen in cases like BlockFi and Gemini Earn. The higher the interest rate, the higher the risks. Be wary of any platform promising unusually high interest rates (above 10%).
3. Arbitrage
Arbitrage means simultaneously buying and selling an asset in different markets to profit from price differences. In this case, you can profit from bitcoin price differences on multiple exchanges. For example, you may observe BTC trading for $30,680 on exchange A and $30,700 on exchange B. You can buy tokens on A, transfer them to your wallet on B, and immediately sell them for a slightly higher price.
Note that arbitrage doesn’t guarantee profits because prices change within seconds. You may acquire tokens on A, and the price has reduced significantly by the time you want to sell it on B. It’s also a very competitive space because many traders build virtual bots to detect price differences and profit within milliseconds.
4. Credit Cards With Rewards
Many crypto credit cards allow you to earn rewards for purchasing items. Crypto exchanges and wallet providers usually offer these cards to let users spend the tokens in their wallets. Some offer sign-on bonuses to new subscribers.
With these types of cards, you’re not actually spending tokens directly. Instead, your tokens are converted to fiat currency at the market rate during each transaction. The card issuer makes money by charging transaction fees or a spread on the exchange rate.
5. Gaming
Many blockchain games allow players to earn cryptocurrency. Some games let you build and train virtual characters and sell them to other players for bitcoins. Some give bitcoin rewards to players that reach a certain level or achieve a specific milestone. Others incorporate gambling, allowing players to bet with BTC to win a prize pool. However, be careful about gambling because you’re likelier to lose than win. Never gamble an amount that you won’t be comfortable losing.
6. Mining
The current circulating supply of Bitcoin is 19.4 million out of a maximum supply of 21 million. These figures imply that there’s still ample opportunity to mine more tokens.
You can mine bitcoins using powerful computers that solve mathematical problems. You can add your computing power to mining pools or use a dedicated CPU. However, note that mining has become harder and will get more challenging as bitcoin nears its maximum supply. You’ll need to spend significant money on hardware to stand a chance.
