Thanks to the growth of cryptocurrencies over the past few years, these assets have now provided different opportunities for investors to benefit.
Back in the day, most people understood that the best way to benefit from crypto was to buy and hold - a strategy that many named “hodling.” However, things aren’t so clear-cut anymore. Sure, hodling still works as a strategy and can help people to increase their fortunes over time. However, the market itself is more complex.
Most important is the fact that most large coins don’t give big gains anymore. Bitcoin is up just about 10 percent from the start of the year. Ether has been able to drive more gains, but their increases are still lower than what you’d get from some of the smaller altcoins. Coins like BNB, ADA, and more have delivered much better results than the bigger coins. So, unless you have the foresight to invest in these, you might not get overly high returns.
Now that hodling doesn’t seem to be the best strategy, you might be wondering how best it is to use your coins to get money. Well, there are some strategies that you could use and which will work for you.
Day trading is perhaps the surest way to make money from your coins on an everyday basis. When you trade, you’re making speculative bets on the movements in the price of a coin over time. You could go long when you think the coin will increase in value, or you could short it if you’re expecting a drop.
With crypto trading, the rule remains the same as with traditional stock trading - buy low, sell high. The point is to make sure that your portfolio’s value increases as the market moves. Over time, you will be able to pick your positions and profit from them.
However, it is worth noting that trading isn’t so direct. You need to train yourself and be ready for when the market moves, so you can profit directly. Trading takes a lot of time, research, and dedication. Most people who trade spend months or even years trying to hone their skills. But, with consistency, you should be able to make some major gains over time.
You should also keep the volatility of the crypto market in mind. A lot of coins experience wild swings, and you should be able to protect yourself from these risks so as not to get wiped out in your positions.
Interestingly, there are also crypto trading games that help make the cryptocurrency market gamified. With these trading games, you can compete with other traders for prizes and various rewards. For instance, the League of Traders (lot.trade) allows multiple crypto traders to compete and level up over time. As you hit different milestones, you get your rewards.
League of Traders is the perfect example of how gamification is looking to transform the crypto trading landscape. The tournaments are available to the individual traders, allowing them to come into a universe and compete on a fair playing field. Winners get rewards in the BUSD stablecoin or the game’s LOT tokens.
In addition, League of Traders is suitable also for the exchanges (both CEX and DEX type) to use the platform for launching their own tournaments. Registration is free for the users, and traders get the opportunity to test their skills against the best in the industry. With the opportunity to win prizes, such tournaments benefit everyone.
Gamification has helped the crypto market a lot, and it is pretty much the same with crypto trading.
Giving Out Loans
If you perhaps don’t have the time to trade every day, you could also give out crypto loans. Essentially, these loans are given out to people who need to get their hands on cash but don’t want to liquidate their crypto portfolios. They put their portfolios as collateral, and they can get their money back once they repay their loans.
Crypto loans are especially profitable because they help all parties. Lenders get to enjoy sizable returns on their investments, with the loans having attractive interest rates. At the same time, borrowers can borrow for long time frames, so they have enough time to spread their payments over.
As a lender, you don’t have to do any work. Simply commit your funds to a lending platform, and they will take things up for you from there. If you’re looking for a stress-free investment with plenty of upsides, this is something you should definitely consider.
Staking Your Coins
Staking is a relatively new concept - especially compared to trading and loans. But, it is picking up quickly and you have the opportunity to get in as well.
To understand staking, you need to go back to BItcoin itself. When Bitcoin launched, it operated on the proof-of-work (PoS) consensus algorithm. This means that miners looking to get more BTC would need to solve huge equations and use a lot of computing power to break down the Bitcoin blockchain. Several other cryptocurrencies use the PoW algorithm as well - including Bitcoin.
But, PoW has been heavily criticized for several reasons. Most important is the fact that PoW is incredibly energy-intensive. It is also not sustainable for the environment - a point that many environmentalists have been quick to use as they criticize cryptocurrencies.
So, proof-of-stake (PoS) was born. Here, cryptocurrency owners stake their coins and add them into staking pools. Once in the pools, the blockchain selects a wallet at random to mine a block of transactions. The wallet is eventually rewarded with units of the coin, marking the process as complete.
Today, several top coins use PoS - including ADA and SOL. Ether is also expected to join that line soon, with the launch of Ethereum 2.0 expected to come in 2022.
Staking is especially great because it is stress-free. All you have to do is stake your coins in a pool, and you can kick back. If your wallet is chosen to mine transactions, you get your rewards easily. Even if you don’t get selected, you at least have your capital intact. If the value of the coin increases, you still gain. It’s a win-win scenario.