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Monday, April 15, 2024

How to make money from cryptocurrencies

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IN my previous article, I briefly discussed cryptocurrencies, and the risks involved in investing in such asset class. Today, I will expound more on the ways you can earn and benefit from this booming trend, as well as how to avoid losing money in the process:

Ways to earn in crypto:

1.  Buy and hold for the long-term: you buy cryptocurrencies like Ethereum and Bitcoin and plan to hold them for years to come, in the hopes that their value grows much higher compared to the price at which you bought them.

2.  Savings: In Cryptocurrency Exchanges like Binance, you can make your cryptocurrencies work for you by putting them in either Flexible Savings or Locked Savings. Both offer slightly higher returns as compared to just letting your currency sleep in your digital wallet.

3.  Staking: If you want your cryptocurrency or native game tokens to earn even more tokens, you can stake your money in pooled funds or liquidity pools. The more you stake, the proportionally higher are your rewards. The reward rate is often noted as APR (Annual Percentage Rate) or APY (Annual Percentage Yield). Lock-up periods can vary from as short as 7 days to as long as 360 days, depending on the pool.

4.  Farming: In several play-to-earn cryptocurrency games, you own several NFTs or Non Fungible Tokens similar to unique gaming characters. These aforementioned NFTs can earn for you by letting them do farming. A successful farming activity can earn you more native tokens, which are convertible to cryptocurrencies, which can then be converted to fiat currency (like USD for instance).

5.  PVP: Your gaming NFTs can also join player vs player events. Whoever wins gets rewarded with in-game tokens which can be converted to cryptocurrency as well.

6.  NFT Marketplace: NFTs or non-fungible tokens aren’t limited to gaming characters like Axies or Plants or Blades. They can also represent unique, limited art pieces. They can also be virtual real estate properties or virtual land where your NFT characters can interact with. You can earn from these as well by buying and selling said NFTs. Note that not all NFTs are sold equally. Very few are beyond rare, some are uncommon, and most can be just ordinary pieces.

7.  Spot trading: This is the term for short-term cryptocurrency trading. Technical Analysis is one of the techniques you can use for this earning method.

8.  Crypto-lending: Some Exchanges offer the option of lending out cryptocurrencies. You can set the rate at which you want to lend them as well as the lending period, whether it be 7 days, 14 days, or 28
days.

Now that I have enumerated the various ways you can benefit from the cryptocurrency boom, here are some words of advice to consider before making any substantial purchases:

1.  Always do your own research: There are a lot of gurus, mentors, vloggers out there who will promote their own picks of cryptocurrencies. At the end of the day, it is your money you are putting at risk, and they hold no responsibility or accountability over the decisions you make. So study well before jumping.

2.  Don’t invest out of greed: A lot of investors were drawn in to invest in a cryptocurrency that first sprang out from a meme called SQUID. Riding in on the recent popularity of the Korean series called Squid Game (no actual connection to the meme or cryptocurrency called SQUID); this cryptocurrency soared by 230,000 percent in the past weeks to $2,861.80, only to plunge by 100 percent to less than half a cent in a span of 5 minutes (yes, cryptocurrency can be that volatile). This is called a rug pull, drawn from the act of the floor rug being pulled under your feet. A lot of investors instantly lost their money.

3.  Risk only money that you can lose: Cryptocurrencies are highly volatile when it comes to market value. If you find that the stock market is already volatile for you, then cryptocurrencies may not be your cup of tea. Save enough money first for your emergency fund and other short-term needs before venturing into this uncharted territory.

 Then he said to them, “Watch out! Be on your guard against all kinds of greed; life does not consist in an abundance of possessions.” Luke 12:15

Raymond Anthony Quisumbing is a Registered Financial Planner of RFP Philippines. Follow him at Twitter at OhMyFinancePH. To learn more about personal-financial planning, attend the 93rd RFP program this January 2022. To inquire, e-mail info@rfp.ph or text at 0917-6248110.

Read full article on BusinessMirror

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