Thinking about how to make money from cryptocurrency? Many people start with trading. Especially those who already have experience in trading on the exchange. Technically, the algorithm is the same: you buy a cryptocurrency when it is worth less and sell it when it is worth more. But this is only one option, you can also make money on falling prices. However, the question can I lend crypto on Сoinloan is still relevant? Let’s break it down.
Let’s start with steaking. When thinking about how to make money on cryptocurrency for a beginner, many see the prospect not in trading coins but in their mining. In addition to the well-known mining, there is another way. It is called stacking (or stacking). Without going into detail, this method differs from mining in that the user does not need technical power as coins are not mined by computing to confirm transactions but by providing the system with coins that already exist.
This mechanism assumes that anyone who owns, say, Ether, can mine more Ether. Without investing, trading, or other mechanics. All you have to do is find an exchange that allows you to make money from staking and make a deposit. The nuances are two. First, you can snatch a big score if you start mining a new promising coin. Second, there is a risk of losing everything altogether if the coin’s quotes start to slump badly and its mining falls off. All types of cryptocurrency earnings involve similar risks.
Thinking about how to make money from cryptocurrency? Many people start with trading. Especially those who already have experience in trading on the exchange. Technically, the algorithm is the same: you buy a cryptocurrency when it’s worth less and sell it when it’s worth more. But this is only one option, you can also make money on a fall in price. This type of trade is called short. It’s time to ask – how can I borrow money instantly? A short is when you borrow money from your broker, committing to pay it back after some time at a fixed price.
For example – you take 100 ETH from your broker and immediately sell it for 1000 USD for 1 ETH. In two hours, the Ether price falls to 900 USD per ETH, and you buy 100 ETH to give back to the broker. It’s easy to calculate, that way, your profit for each Ether coin will be 1000 – 900 = 100 USD. That is, you earn from the difference in quotes between two points in time: the first point in time – when you borrow ETH from the broker and immediately sell it, and the second point in time – when you buy ETH at a lower price and return it to the broker.
- Advantages: high-profit potential in the short term, you can use different combinations of technical and fundamental analysis methods, and you don’t need a big investment.
- Disadvantages: you need to know the market very well, watch the quotes of the assets all the time, choosing the one where there is an opportunity to earn right now.
How to earn cryptocurrency through mining?
Mining cryptocurrency was especially popular at a time when virtual currencies were just starting on the financial market. It is not uncommon to use it even now. Its essence is to perform the processing of digital currency transactions that users make. The miner gets paid for this work.
No serious effort is required. The transactions are processed by the equipment. But on the other hand, the algorithm itself is complex. Therefore, the miner will need equipment of high power, which will cost a lot of money. In particular, a few powerful GPUs. Or special equipment for mining, which is tuned for a certain coin. To be successful in mining, you will need a start-up capital of a few hundred thousand dollars. You will have to wait for all the investments to pay off before you start getting a net profit. On average, this happens in about a year.
It will be right to use the services of a technician who can properly connect and further service electronics. For beginners, this option is not particularly suitable. It is more for those who have already gained some experience in this area.
The pros of earning from mining:
- To start earning income from “mining” cryptocurrency, no special knowledge and large investments are required.
- Passive income. When mining, you do not need to be constantly present near the equipment. You can earn on a cryptocurrency farm and work somewhere else.
- The anonymity of your income.
- Your investment will pay off fairly quickly – in just a few months.
- To make serious money, large-scale mining will require a room. And it must be dry and actively ventilated.
- Video cards require constant cooling, otherwise, they will simply fail.
- Every year the remuneration for mining some cryptocurrencies decreases (e.g., it happens with bitcoin).
- High electricity costs.
Investing in cryptocurrency
Investing works like this: you have to buy with real money the cryptocurrency whose long-term prospects seem the most “solid”, and store it in a safe place for a long time, sometimes even several years. Then, when the rate of the crypto-currency, in the investor’s opinion, has risen enough, it can be sold at a profit.
The main difficulty lies in the volatility of cryptocurrencies. When the rate starts to fall, it is very important to determine whether you need to rush to sell your savings before they have completely depreciated or if it is only a temporary crisis, so there is no point in panicking. Using your knowledge and skills, you can make patience pay off many times over.
Why do you need cryptocurrency loans?
Cryptocurrency collateral loans are an alternative to exchanges and exchanges. Such loans are needed in order not to sell cryptocurrency at an unfavorable rate and thus preserve a digital asset that can grow in value.
The main difference between loans with cryptocurrency collateral and their traditional counterparts is the high volatility of digital assets that act as collateral. This is also the main value of such a service: if the collateral grows in value, the transaction will be profitable for the borrower. For the lender, the profit is always fixed in USD.
Where is the collateral stored?
There are two options for storing collateral:
- The collateral is held by a third party. This option is offered by platforms that lend with their funds. They get the users’ cryptocurrency into temporary possession. This option is also offered by some p2p services that provide a platform for interaction between lenders and borrowers. The borrower transfers the collateral to the address specified by the service, and the lender releases the money. When the loan is repaid, everything happens in reverse order.
- The p2p platform stores the collateral at the multi-sig address. In this case, the platform acts as a guarantor of the transaction. For each transaction, a new multi-sig address is created from the public keys of the borrower, the lender, and the platform, to which the collateral is transferred. One private key remains with the borrower, one with the lender, and one with the platform. Funds are released when 2 of the 3 keys are entered.
Biterest keeps the pledge on the multisig address. The platform does not store funds or users’ private keys. Neither party can access the pledge until the transaction is closed.
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