Go from a regular investor to a crypto pro
Mastered the basics of cryptocurrency? You might have decided you’re ready to do something other than let your assets sit in your account and hope that they make you rich someday (although there is nothing wrong with Hodling).
It’s time for “Step 3” — where you really learn to make your crypto work for you.
There’s more than one way you can use crypto to grow your wealth
Naturally, some methods are simpler than others to put into practice. Depending on your level of expertise and how much effort you’re prepared to put into managing your assets, you might prefer to opt for a more active or passive option.
From the most passive to the most active, here are six methods available to you:
Now, let’s go through each one.
Everyone wants to be wealthier, but how much thought have you put into what wealth really means to you? No deep, philosophical definitions needed — we’re talking in practical terms.
Some currencies hold no meaning and therefore value to us (like the Nigerian naira for anyone with no dealings in Nigeria). Then there are the currencies continuously losing their purchasing power, like the Venezuelan bolivar — even those currently living in Venezuela prefer to hold other currencies so they can continue to cover their living costs.
Before you start thinking about how you’re going to grow your wealth, you need to decide whether you place more value on Bitcoin or other more traditional currencies.
If you value US dollars above crypto, we’d recommend skipping to a different strategy, like trading.
But if you favor Bitcoin, you might want to consider something called “HODLING” (also known as “Stacking Sats”). Yes, it’s purposely misspelled. The idea is simple: after you buy Bitcoin, you hold it.
Some people combine this with Dollar Cost Averaging, which involves buying Bitcoin at regular intervals to avoid the affect of huge swings in value — you might not buy in at the lowest low, but you’ll also avoid buying in at the highest high. Many exchanges let you schedule your purchases, so you don’t even have to carry out the process manually.
HODLing is pretty much the simplest way to increase your wealth that you can imagine — all you have to do is buy bitcoin and leave your money sitting in your wallet. What could be easier?
Earning Bitcoin through rewards might not be quite as straightforward as HODLing, but it’s a close second. A few sites and credit cards give crypto rewards to people who use their products, meaning free cryptocurrencies for minimal effort.
You can start with the following platforms:
Fold Card: A Visa debit card that enters you into a spin wheel every time you make a purchase, which guarantees you a prize of varying value. You might even win a whole bitcoin.
Brave Browser: Install Brave instead of your usual browser and you’ll earn Brave’s cryptocurrency, Basic Attention Token, for viewing ads.
Lolli App: Another browser extension, Lolli lets you earn a percentage of your spend back when you buy from any of 1,000+ retailers online, including big names like Nike.
Why not sign up for one or two of these services and give them a try?
A favorite among crypto enthusiasts, staking involves agreeing to “lock up” your cryptocurrency for a set period in return for a reward. It’s kind of like a fixed-term saving account or bond, but way more profitable (assuming all goes well).
You can only stake Proof of Stake coins, which rules out Bitcoin — but there are plenty of other cryptocurrencies you can stake, such as Theta. A few wallets (like Exodus) and exchanges (like Binance) also offer this functionality.
But be aware that some of these platforms might require you to hand over your keys to a third party. With some staking options, this can be bad news since you may lose custody and could in a worse case lose ownership.
KEEP IN MIND
At Bitcoin First Steps, we believe in “not your keys, not your coins.” As soon as you give away your keys to a third party, there’s a chance of you losing access to your coins altogether. Earning interest and trading both require you to transfer your assets to another platform, which carries a certain amount of risk.
That’s not a dealbreaker for everyone, but make sure you know what you’re getting yourself into!
It’s not just traditional financial institutions that offer interest on their products — an increasing number of crypto services are now offering the same thing. The process is pretty much identical: just deposit your funds into the account, hold them there, and enjoy your interest payments.
However, there’s one not-so-minor difference: when your money is in a crypto account, it isn’t protected by insurance.
One of the leading choices is BlockFi, which offers up to 8.6% on its crypto interest accounts (accrued daily and paid monthly). Unlike many other options, you can also withdraw your crypto at any point. Many other exchanges and wallets have similar offerings, including Coinbase, Gemini, and Exodus (which pays interest on the stablecoin DAI).
You’re probably at least somewhat familiar with trading already: it involves exchanging one asset with another (e.g., USD for BTC) to take advantage of price swings. For instance, if you believe that the price of Bitcoin is going to increase significantly over the next few days or weeks, you could exchange your USD for BTC. Then, assuming you were right about the price increase, you could exchange the BTC for USD when you think BTC has hit a high point.
Some platforms even let traders use leverage, meaning they only need to put down a small deposit for their trades — it’s risky, but can lead to huge wins when you get it right (or big losses when you don’t). This process involves using an instrument called a CFD, which sets up a contract outlining the terms at which you’ll buy or sell an asset (instead of buying the crypto directly through an exchange).
Here’s an option that doesn’t even occur to most people: receiving their employment income in Bitcoin (or another crypto). It might sound far-fetched, but some employers offer this, and there are also ways to do it without them being proactively involved.
Admittedly, the prospect of receiving your principal income stream in the form of an asset that isn’t widely accepted will sound daunting to all but the most diehard crypto fans, but it makes sense for some people — especially those who own businesses and/or work in the crypto industry.