Cryptocurrency 101 – How to earn money with Crypto

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f someone asked me last year if I wanted to buy cryptocurrency I would’ve said no way you’re nuts!!!, now I look at the numbers and it makes total sense to me seeing the numbers and how some cryptocurrency has earned the trust of the market and has skyrocketed their prices along the time.

 

The idea of writing this post came from a Christmas conversation with a friend, I realized that he had no idea what cryptocurrency was, and what could you do with it besides “speculate” with its price.

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1. What is Cryptocurrency?

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There are different definitions of cryptocurrency, but the one that I like the most is that is a form of payment that can be traded, exchanged, circulated like a common currency with the difference that it doesn’t depend on a central bank, monetary authority, government or bank.
 

It is based on blockchain technology, which is a technology that secures by cryptography and makes it almost impossible to counterfeit or spend double. ( you would have to modify all of the files of that coin to make it happen).
 

Cryptocurrency It is often used as an investment vehicle and the most famous one is the BITCOIN which has been valued at more than $65,000.[/vc_column_text][vc_empty_space height=”35px”][/vc_column][/vc_row][vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column][vc_empty_space height=”34px”][vc_single_image image=”1444″ img_size=”large” qode_css_animation=””][vc_empty_space height=”21px”][vc_column_text]

2. Blockchain?

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Blockchain is the name of the technology that is the heart and soul of cryptocurrencies. It is a distributed database built on a network of files that records transactions and tracks assets.

The major contribution that Blockchain has done is in generating trust and efficiency in the exchange of information, providing a fast, transparent and reliable solution to transactions.
 
As you know all businesses run on information, and the most accurate and fastest that it is handled the better, especially in industries like finance and economics where numbers have to be very precise, or real estate where you have to have the contracts, measures conditions, and various other aspects very precise when dealing with properties.
 

2.1 How does Blockchain Technology Works?

Have you ever worked with a database? Common databases usually are centralized in a network or a computer. Not everyone is capable of changing the database, making it possible only for trustworthy mediums. When these trustworthy mediums get corrupted you lose trust in this database.

Imagine a database that everyone can change within certain rules and parameters. These rules make that every time this database is changed, this modification is registered and shared so everyone can know who made the changes and can be tracked and reviewed.
 

One of the key elements of blockchain technology is the way the data is structured, it is grouped in blocks. When these blocks are filled with data, they are grouped and closed and tied in links to the previously closed group forming a “chain”.This makes an irreversible timeline of when this data was added and registered into the chain.
 

2.2 Key elements of the BlockChain

Distributed Ledger Technology: The information is replicated, distributed and synchronized along with all the blocks of the blockchain, making the information almost impossible to modify. (You would have to modify all of the blocks). This is the opposite of having centralized DATA, like central banks, or monetary institutions.
 

Immutable Records
The blockchain is designed to be immutable. Every time you do a transaction the blockchain algorithm validates that transaction via a digital signature. If the message is altered, the algorithm invalidates the whole signature and hence everybody knows that it was tampered with, making it impossible to finalize the transaction.
 

Smart contracts
A smart contract is a program stored in the blockchain that validates a transaction when the conditions established are met.
 

It is used to automate workflows, you can program that when advancing different stages of a project it triggers a payment and, at the same time, it can notify everyone of the stakeholders, advance certain tasks, trigger other obligations, etc.[/vc_column_text][vc_empty_space height=”35px”][/vc_column][/vc_row][vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column][vc_empty_space height=”35px”][vc_single_image image=”1441″ img_size=”large” qode_css_animation=””][vc_empty_space height=”11px”][vc_column_text]

3. How can you earn money with Cryptocurrencies?

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3.1 Buy / Sell

Most people get into the cryptocurrency world to buy at a low price, hold (or Hodl in the cryptocurrency world) and sell at a high price. There are various exchanges where you can buy wait for the price to fluctuate and take advantage of this like Coinbase, Etoro, Nexo or others.

3.2 Staking your Cryptocurrency

Cryptocurrency staking is the process where you commit a certain amount of your coins/tokens to a blockchain network for the validation process of the different transactions.
 

This is a process you can only do in cryptocurrencies that us a Proof of Stake (PoS) consensus algorithm. This is an alternative to the algorithm used in other cryptocurrencies like Bitcoin that use a Proof of Work algorithm (PoW). In this case, this algorithm relies on complex calculations carried out by powerful mining rigs which end up being a very high consuming energy process.
 

The cryptocurrency staking can be an eco-friendly, energy-efficient alternative to mining because as the users commit their coins/tokens assets for the validation of the calculations, they get rewarded with new coins for their commitment.
 

The top PoS cryptocurrencies by capitalization are CARDANO, SOLANA, ALGORAND, TEZOS, CELO, MINA, VEGA.
 

That way if you have some of these assets without moving or doing anything, staking might be a good manner to earn interest with high potential (and high risk).
 

3.3 Day-Trading

A trade is an economic transaction that involves the buying and selling of services or goods with compensation given by the buyer to the seller in exchange for those goods (or services).
 

If you take this into cryptocurrency it translates to the exchange of a coin or token, for a form of value (other cryptocurrencies, money or assets).
 

Most of the time you buy a cryptocurrency for a couple of hundreds of dollars, and then you sell it back pursuing to maximize your returns, this process could take days, months or even years.
 

When you do a Day trade it means that this same transaction was done during a 24hr time frame, meaning that you could do various trades buying and selling your positions in a matter of hours, minutes or seconds.
 

According to a study from CNBC (Momentive Invest in You survey), at least 24% of the people that have cryptocurrencies do day-trading, and more than 50% buy and sell in less than a week.
 

Personally, I have to say that Daytrading is not for everyone, as they say in numerous studies, 95% of the people that get into day trading lose money. I do believe this percentage is not that high, but it certainly is difficult to manage emotions when day-trading.
 

3.4 Run Master Nodes

First of all, What is a Master Node in cryptocurrency?
A master node is an essential part of cryptocurrencies because, unlike regular blocks that add new blocks of transactions to the blockchain, they verify the new blocks and have special roles in governing the blockchain itself.
 

The main task of master nodes is to motivate operators of the various nodes to execute their roles in operating a blockchain, something like a full node (or computer wallet) that maintains a real-time record of blockchain activities.
 

Cryptocurrencies pay node operators a fee to keep a record in real-time of their transactions on their native blockchains because it is complex and requires someone to maintain a minimum number of assets under their master nodes.
 

Cryptocurrencies that have these types of master nodes are Proof of Stakes (PoS) coins, such as Bitcoin, Ethereum, Dash or Pivx.
 

3.5 Earn Dividends on your Crypto

Did you know that after buying crypto, some exchange websites can reward you just by holding them as a Dividend?
 

Yes, just as magical as it sounds, numerous exchanges pay for having a coin, most of the time are the exchanges that want to promote their coins (like Gemini for example). You don´t have to trade, stake or do anything.
 

Where is the catch? You have to check if these coins that you want to buy to earn dividends have a good daily transaction volume because if the volume is too low it will be difficult to sell them.
 

On the other hand check on the yearly graph of the coin, see how was it’s performance this last year. These coins will reward you with dividends in the same coin and if you earn a 5% annual, but the coin is losing 30% yearly is not worth it.
 

Try to buy a coin that is gaining price and rewarding you with dividends, that will make you advance. Otherwise. You’re making someone else gain the money.
 

3.6 Cryptocurrency Microtaks 

What are microtasks? These are small and manageable tasks that anyone, in most circumstances, can complete online for a tiny fee. Often, companies do market research or studies with these micro tasks and reward the people that do them, the most common example: Online Surveys, but you could be asked to download software and rate it, watch videos, etc. 
 

We did a post about Honeygain, which is software that makes it possible to share your unused internet in exchange for bitcoin. 
 

Another example is the Brave web browser, they have an alternative where you accept to see some advertising and get rewarded for it. (in that case, you get rewarded in BAT) 

3.7 Work for Cryptocurrency Companies 

Well, this seems to be pretty logical. Working for a cryptocurrency company and having them pay you in their cryptocurrency, it’s like getting paid in company stocks. 
 

Cryptocurrency companies have all kinds of jobs, from software and coding developers, web designers, digital marketers, content creators, people specialized in obtaining investors, etc; all you have to achieve is show them how your skills can be of help to them. 
 

Most of the time these works are remote, so you can have the flexibility to work from wherever you want. 
 

Here is a list of sites that pay in digital assets for services rendered: 

• Coinality 
• bitWAGE 
• JobsforBitcoin 
• Angle.co 
• XBTFreelancer 
• Coinworker 
• 21.co 
• Earn.com 
• Bitfortip.com 
• Bituro.com 

3.8 Crypto Arbitrage 

Have you ever noticed that there are differences in the prices of assets of different exchanges? If you compare the prices between the bitcoin price of, let’s say Binance and Etoro at any given time could be a couple of cents, well if you could obtain a profit from these differences it could be a very small but low-risk investment. 
 

In February 2022, the Facebook channel “NAS Daily”, told a story of how a guy from MIT made millions by buying Bitcoin on an American exchange and selling it on a Japanese exchange that had an almost 10% difference in price. After a couple of months, he was able to capitalize a good amount of money and became a millionaire. 
 

This is a very common discrepancy and a great way of capitalizing on small differences in prices between different exchanges, which represents a minor gain but at a very low risk. 
 

Why does this happen? 

The price of the different assets that are subject to a centralized exchange depends on the most recent bid-ask matched order on the exchange order book.  
 

In decentralized exchanges it is different, they use a method called “automated market maker” which relies on crypto arbitrage traders to keep prices in line with those shown in other exchanges. Instead of a match on the order book here, the system relies on the liquidity of the pool. 
 

 The best of this is that traders don’t have to wait for a counterparty (an opposite trader) to buy or sell assets at a certain price. Trading can be executed at any time. 
 

Across most popular decentralized exchanges, the prices of both assets in the pool (A and B) are maintained by a mathematical formula. This formula keeps the ratio of assets in the pool balanced. 
 

3.9 Cryptocurrency Faucets

This is a concept similar to the Microtasks, with a slightly tiny difference. 
 

A crypto faucet is more an initiative that distributes tiny amounts of cryptocurrencies to reward task completion but this time the idea is to do marketing for some cryptocurrencies and promote their use. 
 

It is called “faucet” because the rewards are small, just like little drops of water leaking from a faucet. Just as similar as the microtasks, you’re going to get rewarded for viewing ads, watching product videos, completing polls, competing quizzes, completing captcha, among others.  
 

Although is not a very lucrative way of earning cryptocurrency it is a good way to start and get acquainted with cryptocurrency. 
 

3.10 Create Cryptocurrency Content

Do you have a website, but it’s not for e-commerce? Then you can still earn some coins. 
 

Since Google banned or restricted crypto-related businesses from advertising through its network, the advertising industry had to adapt. 
 

Countless crypto ad networks (such as Coinzilla) appeared to fill the market’s advertising needs. Their platforms created vast networks of crypto publishers, where advertisers could place their banners. 
 

In return for displaying ads, the publisher gets paid. And while most networks will pay out their users in only one currency (such as EUR or USD), many also do payouts in cryptocurrency. 
 

3.11 Cryptocurrency Airdrops

An Airdrop is a type of campaign used to take advantage of a project that is being created. 
 

IT is used to create a community around this project, so the Airdrop creates notoriety and makes people share information about this new project while at the same time they are rewarded with tokens. 
 

In this case, they will be performing different tasks to help get this new project launch, obtain more users, get more notoriety in general, and in exchange, they will get these tokens. 
 

Once the project hits the market, those tokens can be traded for other coins or sold for cash.

 

Some of the most common tasks include:
 

• Following their social media channels; 
• Sharing posts about the project; 
• Signing up on their project platform; 
• completing forms and polls about the project; 
• Downloading the project app; 

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