10 Ways to Save Money While Buying and Selling Cryptocurrency
Cryptocurrency has become all the rage. It’s essentially an international digital currency that allows you to leave governments, banks, and other middlemen out of your transactions, which can ultimately save you money.
Cryptocurrencies like Bitcoin, Ripple, Ethereum, and Litecoin are not mined, printed, or minted like traditional currencies. Due to how they are produced, there can only be a limited amount of coinage, creating a unique situation that allows for new possibilities in making money.
Cryptocurrency can be bought with your country’s currency, much in the same way you might exchange your American dollars for British pounds if you flew across the pond. In fact, like any other type of investment, cryptocurrency can be bought and sold for profit, and there is an active marketplace for those who attempt to surf the waves of the digital market.
If you think you might want to play around with the idea of engaging in the cryptocurrency exchange, here 10 tips for maximizing your profit while buying and selling cryptocurrency.
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10 Ways to Save Money While Buying and Selling Cryptocurrency
One: Shop Around for the Best Deal
This is a basic principle that applies to acquire any investment, but it bears repeating with cryptocurrency. Since the venue is relatively new, yet proliferating with new players every year, users can shop around to look for the best deals as well as new forms of their unique digital coinage.
Digital currency was first created in the 1980s, and almost four decades later, there is no longer just one form of digital currency, although Bitcoin is the most famous. Like the traditional currency that we’re all used to dealing with, the different forms of cryptocurrency have values that fluctuate. Their values rise and fall with the ebb and flow of supply and demand, responding to global trends and events in the news, and many of the other factors that prompt changes in values.
Take a look at cryptocurrency exchanges where you can see various stats listed, including the price. Other attendant stats, similar to those you might see related to stocks such as supply, volume, and growth, can help you assess where the cryptocurrency value is going. Although much like stocks, this can prove to be a volatile science best left in the hands of experts, the stouthearted, and wild cowboys who don’t mind a rough ride.
From this information, you might be able to piece together which currencies are currently at the best value to buy, which of course will later result in more profit if you sell them or trade them for services.
Two: Passively Earn Digital Dividends
Those who buy and sell (or buy and hold) stocks are familiar with the power of dividends, which seem only marginally rewarding, but can snowball into a massive benefit that yields an ample passive income for investors.
In a similar way, there are some cryptocurrencies that will pay you dividends just for owning them. And, no, they don’t require you to stake them in a wallet (which is comparable to putting cash away in a CD where it can’t be touched as it matures). NEO, COSS, KuCoin, and CEFS are just four examples of digital currency companies that offer dividends. Companies may also offer reduced fees for holding their currency, which is another good way to trim down some of your losses.
The drawback of the dividend strategy is that in order for it to really pay out in a way that generates a usable passive income, you need to have a lot of whatever is generating the dividends. If you don’t have that, another way to offset slow growth is to invest in dividend-paying currencies that will also see stable growth, in case you want to later sell them.
Three: Staking a Claim
Staking may evoke gold-rush imagery of setting up a tent by your stretch of the river. However, when it comes to cryptocurrency, it actually refers to storing your crypto coins in a live wallet, whereupon you’ll be rewarded for securing the blockchain with more coins—almost like earning interest at the bank through a CD.
Staking benefits the company that creates the currency by securing the blockchain. Blockchain is a digital ledger or transaction history, which is invaluable to cryptocurrency companies. This is because it provides their currency with trustworthiness and value while circumnavigating the need for traditional record keeping, which saves on costs.
By becoming a “block” (essentially a stopping point) along the “chain” of the coin’s history, you’ll be rewarded for just passively holding the coins, which is an amazingly easy way to earn extra cryptocurrency, which can then off course be traded out for goods, services, and your country’s own traditional money.
Four: Work for Cryptocurrencies
If you are a web developer, tester, designer, or content creator, you can work directly for cryptocurrency companies who will pay you with their digital coinage. There a few different websites that list cryptocurrency related jobs or freelance work, such as Jobs4Bitcoins, XBTFreelancer, and Coinality.
If you have some extra time on your hands, or feel financially comfortable with the traditional cash you have on hand, consider going to work for companies like Bitcoin or Ethereum, and you’ll get your hands on some digital coinage without having to pay for it.
If you decide to unload the digital currency you’ve received in exchange for work at a certain point in the future, you can choose to cash out when the price reaches a favorable point, essentially meaning that the work you did previously pay a whole lot better than it would have if you had opted to receive traditional funds.
Five: Accept Cryptocurrency as Payment
Do you have an e-commerce store, or sell some particular service through an online venue? If so, you might have a great opportunity to save money while acquiring cryptocurrency, especially if you already have a different primary source of active or passive income.
There are many different payment processors such as Square that accept cryptocurrency. If you choose to accept these digital coins as payment, you’d be joining the good company of several large venues that are satisfied with crypto payments, such as Etsy, Newegg, and Intuit.
Of course, it can be more tempting to receive traditional currency, and that’s definitely an option you would want to keep open, given the fact that most people will be paying the currency that circulates in their country. But opting to receive digital currency as well can provide you with some great digital coinage that can be leveraged for a large profit.
Six: Earn Free Coins from Faucets…then Sell Them
Wouldn’t it be awesome if there was a fountain that just spewed out gold coins? Well, when it comes to cryptocurrency, there is—sort of.
Many websites and companies will issue payment for small, menial tasks in the form of cryptocurrency, such as solving captchas (those puzzles that separate humans from robots), playing games, watching videos, or clicking on ads. If you’re like most people, chances are you have some free time on your hands here and there, so you might have random chunks of time that add up to a few solid hours every month, which could yield a modest amount of cryptocurrency.
Unfortunately, the payout for these small tasks is usually something small, like a Satoshi, which is a hundredth of a millionth of a Bitcoin. (At the time of this writing, you would need over 160 Satoshi to have a single penny.) Because of the low payout, this is not really a financially solid option for acquiring cryptocurrency. However, it is still worth mentioning, because you can acquire cryptocurrency for free and then cash out, essentially making something from nothing.
Seven: Mine Cryptocurrency
Mining cryptocurrency does not mean manufacturing new currency as the name suggests; rather it actually involves getting paid for auditing the blockchain.
To keep it simple, when it comes to regular old currency, there’s usually no way you could use the same currency to fraudulently make multiple purchases. Once you hand over the money and take the item, the money is gone (at least for you).
But when it comes to digital currency, there is a danger that hackers could manipulate the system and use the same coins twice or more. Cryptocurrency involves examining the blockchain and solving complex mathematical problems to make sure that hackers are not double dipping their coinage.
Unfortunately, over time, cryptocurrency mining has grown more and more complex, requiring large complexes of advanced machinery and enormous amounts of electricity. Mining Bitcoin is no longer a lucrative proposal for the average Joe. There are other digital currencies that could be mined, especially if you have a decent graphics card on your computer.
The rewards you earn for auditing the blockchain are coins that you’ve essentially “mined.” Of course, once you’ve earned those coins, you can engage in any number of strategies to make them lucrative for you (buying, trading, etc.).
Because cryptocurrency is an international sensation beyond the control of banks and governments, prices can fluctuate across markets, even for the same coinage. Buying a certain type of cryptocurrency for a lower price in one venue, and then dumping it in a separate venue for a higher price is called arbitrage.
The very nature of cryptocurrency as a coinage beyond traditional boundaries creates a certain volatility that drives prices up and down drastically, creating huge regional variations in value that assist those engaging in the arbitrage strategy with decent returns.
Additionally, other factors such as the explosion of new currencies, the instability promoted by hacking attempts, and the difficulty in regulating this exploding market also facilitate massive price differences between exchanges, enabling excellent returns for buying low in one place, and selling high in another.
HODLing is internet slang for “holding,” a reference to a traditional buy and hold strategy that, in the world of stocks, has been successfully employed by legendary investors such as Warren Buffet, who buys stocks and holds them, either for life, or at the very least for a long period of years.
Buying relatively stable cryptocurrencies and holding them ideally allows their value to increase over time, especially since cryptocurrency is usually only created in limited amounts (for example, Bitcoin will be capped at 21 million coins). As the value increases, investors hope that the increase will be of a higher percentage than increases in traditional currencies like the U.S. dollar or the Euro, allowing for a future cash-out with a big profit, especially if those traditional currencies decrease in value.
This strategy takes a little time (actually a lot of time), patience, and foresight. Additionally, since cryptocurrency is not backed by any bank or government, it may be a risky item to hold, so consider offsetting that risk by continuing to diversify your investments, as any good investor should.
Ten: Lending Cryptocurrency
This final option for making money with digital currency is pretty traditional, but in the world of cryptocurrency, there are some benefits that don’t apply to the usual route of lending traditional cash.
As the word suggests, lending just involves giving someone else cryptocurrency to do whatever they want to do with it, with the agreement that they’ll give it back to you after a certain amount of time, with interest.
Because there is no oversight agency to regulate cryptocurrency, interest rates are higher than they are with traditional loans, giving lenders a potentially huge advantage with the opportunity to make lots of money lending their digital coins.
The downside of this free-for-all component to the digital currency venue is that with relatively little regulation, there is also relatively little accountability, and almost no recourse to rectify incidents where the entity you’ve lent the money to decides to not return it.
Due to the level of risk that is entailed by this unsecured lending, loaning out digital coins is probably best reserved for a party that independently has the ability to enforce collection of the loan (that sounds ominous, doesn’t it?) and/or has a lot currency to spare, just in case anything goes wrong.
We hope that this article has provided a helpful look at different ways to make money buying and selling bitcoin, whether it involves mining currency, accepting coins as payment, or doing odd jobs to obtain coins that can then be leveraged as investment pieces.
The digital world of cryptocurrency is only poised to grow more complex and proliferate with additional players, but with that complexity comes a new opportunity for those looking to make a profit from “the final frontier” of coinage.