5 Strategies to Make Money with Bitcoin (Strategies 1-3)

How to Make Money with Bitcoin?

Bitcoin circuit boardBitcoin is a crypto currency, but it’s not the ONLY cryptocurrency. There are approximately 1,000 other registered crypto currencies in the marketplace. Some can offer even better returns on your invest than Bitcoin. But whether you decide to focus on Bitcoin or one of the other currencies, there are 5 ways you can make money in the cryptocurrency market.

Staking

Bitcoin in pilesVery simply put, staking is buying and holding. You buy a cryptocurrency today and hold it until it increases in value and then sell it. It’s worth mentioning that you don’t have to buy a full coin or token. For example, if you have $1000 you want to invest in Bitcoin, but the price of a Bitcoin is $20,000, you simply purchase as many Satoshi (Bitcoin’s divisible units) as $1,000 will buy.

Mining

Virtual Bitcoin on clear glassMining simply means processing transactions on the blockchain. And with a decentralized system, anyone with a computer can process transactions. A single computer is able to mine on a small scale, but large mining farms have hundreds, sometimes thousands of computers that process insane amounts of information, called hashes, every second.

If you’re not ready to invest millions of dollars into building a mining farm, but you want more hashing power than just your computer, you can build a mining rig. It’s a computer with multiple graphic cards that increase your processing power exponentially and allows you to mine a substantial amount of Bitcoin.

With this configuration, you need to consider the cost of building a rig and the extra cost of electricity. Rigs can be expensive to build and electricity consumption is high, but depending on what you build and the price of electricity in your area, it may be a feasible way to start earning a decent amount of cryptocurrency.

A more economical way to try out the cryptocurrency mining industry is to buy mining contracts from cloud mining companies. These companies run mining farms and mine cryptocurrency for you, so you’re essentially renting a mining rig.

The difficulty with this system is finding a cloud mining company that is legitimate. This part of the industry is susceptible to fraud, as there is no real proof that the cloud mining company is actually mining and not just running a Ponzi scheme.

Although this part of the industry is sometimes a little less than trustworthy, the Cloud mining companies listed on this post have been researched and seem legitimate. There are no guarantees in life, so performing your own due diligence before investing is always recommended.

Lending

UPDATE: Both large lenders, Bitconnect and Davor have discontinued lending. Lending still exists, but I no longer take part in this part of the industry. Proceed with caution.

Silver Bitcoin with blue arrowBecause the cryptocurrency market is so new, we naturally compare this market to the financial markets we are familiar with, so the returns we’ll be discussing here seem unrealistic compared to our understanding of the currency market that we are familiar with.

For example, the average annual bank interest rate on a checking account is .04% and a savings account is .06%. If we average the interest of the two accounts at .05%, we’ll earn 50 cents per year on a $1,000 deposit.

How does that compare to the cryptocurrency market? It doesn’t. There is literally no comparison.

If you choose to lend your money in this market, you can expect returns of .5% – 2% interest per day. This compounding interest rate allows you to increase your investment exponentially. And if you reinvest your interest, your return on investment increases even faster.

But let’s take a step back for a moment. What is lending? Very simply, lending is exactly as it implies, you lend a company currency for a specific time and they pay you a daily interest rate. Your loan can be as small as $100 and you still get paid daily interest. The chart below was created using the actual interest rates from one of my lending accounts.

Chart explaining lending

The interest rate is variable depending on the market activity, but it’s significantly different than a bank.

Notice on Day 14, $10 from the Daily Profit was reinvested and the Investment Amount increased by $10. This reinvestment strategy increases your daily profit and is repeated every time your Daily Profit is $10 or more. Using this strategy for 1 year nets you $4,993.20 and after 2 years, it’s $91,950.80. This is the magic of compound interest.

The next natural question is, what do the companies do with the money that enables them to pay you such a high interest rate?

Although the companies are intentionally vague about how they make money, there seems to be a couple natural income streams. First, they have their own tokens or coins that they exchange with you for Bitcoin. Since you lend them the coins, they remain on the platform and essentially, the company has written you an IOU. So they have the Bitcoin you used to pay for their coins and they have the coins that they owe you. Over time, the expectation is, both the company coins and Bitcoin will increase in value, so they can stake your loan and the Bitcoin to make money on the increasing value.

The second way these companies make money is by trading it on the exchanges. The cryptocurrency exchanges work in a similar fashion to the Foreign Exchange (Forex) markets, but there are significant advantages to trading on the Cryptocurrency exchanges as opposed to Forex. We’ll talk more about that in the Trading section.

NEXT: 5 Strategies to Make Money with Bitcoin (Strategies 4-5)

DISCLAIMER
Terry Telford is not registered to provide investment advice and is only providing an opinion. Information contained in this report, on terrytelford.com, and any other published media is not an offer or solicitation to buy, hold, or sell any security.

Terry Telford is not a broker/dealer or financial adviser and is not affiliated with an investment firm. Terry Telford and/or any companies affiliated with Terry Telford are not responsible for any gains or losses that result from the opinions expressed herein. Terry Telford makes no representation as to the completeness, accuracy, or timeliness of the material provided. Material is subject to change without notice.

When making an investment decision, investors must rely on their own due diligence. It is always recommended to investigate the company, person, or entity issuing the investment before making any investment decisions.

Any type of investing involves a degree of risk and should only be considered by persons who can afford to lose their investment.

NOTE:
The cryptocurrency market is evolving daily. It’s a highly volatile market, so investors can make a lot of money in a short period of time, but they can lose money too.

This report does not constitute financial advice. It is based on the results that I have experienced personally and is presented only as a source of information.