If you were lucky enough to have purchased cryptocurrencies a few years ago, then there’s a good chance that you’re driving around in a lamborghini and eating caviar.
You see, back in 2010, bitcoin, the first ever cryptocurrency had a value of around 1 cent per coin.
Fast-forward to today. At the time of writing this, bitcoin recently hit an all-time. If you want to get hold of one of these puppies its going to cost you over $15000 per bitcoin!
To put it in some perspective if you purchased $20 worth of bitcoin back in 2010 – you would have over 30 million dollars worth of Bitcoin today. Insane, right?
Whats more insane is the story of the guy who paid 10,000 bitcoin for 2 pizzas in 2010! Yep that guy paid 75 million dollars for a pizza in today’s value.
It’s stories like these combined with the future potential of cryptocurrencies that are driving massive growth in the cryptocurrency market.
Every day, people are seeing huge returns in their investments over a relatively short-period of time. This is resulting in more and more people jumping on the crypto bandwagon.
Whether its day trading cryptocurrencies or investing more for the long-term, there is definitely ways to make money with cryptocurrencies.
So in this article I’m going to help you understand what is cryptocurrency and how to make money with it.
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What is cryptocurrency?
Ok so what’s cryptocurrency all about?
Cryptocurrencies like bitcoin are basically digital money, designed to be completely online and decentralised from any banks or government.
Unlike currencies like the US Dollar or the Euro, that are backed by governments and banks, cryptocurrencies operate on a distributed network using peer-2-peer technology to make payments and store money. All of this without the need of any third party.
Cryptocurrencies are stored on what’s called a digital wallet. A digital wallet is basically an application where you can send, receive and store your digital currency. Each wallet has an unique address made up of a complex string of numbers and letters.
Transactions take place when someone sends cryptocurrency from one wallet to another.
To ensure transactions are both secure and legitimate, cryptocurrencies use complex mathematical equations and a public ledger utilising blockchain technology.
No one controls this public ledger. Users, known a miners, process and verify these transactions using computer power and an internet connection. For every transaction completed, miners are rewarded with a small amount of cryptocurrency.
Anyone can participate in mining as long as you have the right computer hardware and of course, access to the internet.
So why use Cryptocurrencies? What are the benefits?
There’s a lot of hype around cryptocurrencies and it’s not just because these digital coins are turning people into millionaires.
There are several reasons why so many people are predicting digital currencies like bitcoin to be the future of money.
So why would you use cryptocurrencies over traditional fiat currency as a payment system?
Faster transactions – Cryptocurrencies like bitcoin allow for super fast transaction times. No more waiting days for payments to clear by the banks. Transactions can be completed in minutes, even if you’re sending it to the other side of the world.
Lower fees – Whenever you transfer or send money via a third party like your credit card provider, Paypal or Western Union – these companies take a good percentage of fees to process the payment. With cryptocurrencies there is no third party involvement so the fees to send digital currencies are very little.
Privacy with personal information – With cryptocurrencies like bitcoin, transactions are anonymous. Yes, there is a public record of transactions, but those records only display the digital wallet address. There’s no personal information tied to the wallet address or no third party storing your personal information.
Decentralised – Since there are no banks, governments, of financial institution controlling crytpocurrencies, you have complete control over your money. You are your personal bank. No one can block transactions or freeze your accounts.
Global access – Billions of people around the world have access to the internet but don’t have access to traditional banking systems. Cryptocurrencies like bitcoin make it possible for these people to create their own digital wallet to store their digital cash.
What are some common cryptocurrency and assets?
There are over 900 different types of cryptocurrencies and that number is growing.
Below I have listed some of the most popular cryptocurrencies and included the increase in market price for each coin over the last 12 months.
Some of these gains are crazy!
Bitcoin – Bitcoin is the first, and it is the most popular cryptocurrency traded today. Most people buy bitcoin first and then use it to trade into other coins, also known as alt coins
Price rise in 12 months – $630-$15000 (+2280%)
Ethereum – Ethereum is the the second biggest cryptocurrency after bitcoin. It runs on the Ethereum blockchain technology and first conceptualised in 2013 by a then 19 year old Vitalik Buterin. Talk about a wiz kid!
Price rise in 12 months – $12-$450 (+3650%) . If you put $5000 into Ethereum one year ago you would have $128,000!
Litecoin – Considered Bitcoin’s little brother, Litecoin was released in 2011 as a bitcoin alternative. It’s one of the most popular cryptos accepted as a form of payment by merchants.
Price rise in 12 months – $4 – $100 (+2400%)
Ripple – Is a real-time global settlement system that can facilitate instant and low-cost transactions and payments that is specifically focused on the banking market.
Price rise in 12 months – $.01-$.24 (+2300%)
Neo – Formally named Antshares, Neo has been touted the Ethereum of China. Neo isn’t just a currency. It plans on being a complete “smart economy” by also incorporating digital assets, digital identity, and smart contracts into the platform.
Price rise in 12 months – .09c – $40 (+44000%)
As you can see, in the last 12 months, there has been a huge increase in the value of cryptocurrencies. This happened right around May 2017 as huge money started to come into the market.
This is the price chart for Ethereum over the last year.
Even though we saw a massive increase in crypto in 2017, when you compare it to something like the stock market, the market cap of crypto is still relatively small.
The value of Bitcoin compared with other markets. UPDATE: Bitcoin’s market cap recently rose to over $150 billion. Source Steemit.
When you consider that the stock market is a 66 trillion dollar market, many experts believe that this may be just the beginning of a potential bitcoin and cryptocurrency boom.
How to buy cryptocurrencies
If you’re looking to get started and buy some crypto like Bitcoin or Ethereum these are some sites I recommend:
- Coinbase – Recommended for people living in North America, Europe & Singapore
- Cointree – Recommended for people living in Australia
- Zebpay – For people living in India
If you need help purchasing some coins I have written a step-by-step tutorial showing you exactly how to buy bitcoin on Coinbase.
Disclaimer: The information provided on this website is general in nature and does not take into account your personal circumstances, needs, objectives or financial situation. This information does not constitute financial advice. Before acting on any information on this website, you should consider its appropriateness in relation to your personal situation.
What about other cryptocurrencies like NEO, Ripple, etc.? How do you buy them?
If you are looking to invest in other coins, it’s best that you sign up to an exchange to where you will be able to trade your Bitcoin or Ethereum with various other cryptocurrencies.
In this article I take you through step by step on how to trade on Binance.
– First of all, let me say that before you rush in and buy anything – please do your research on the coins you are looking to invest in.
– Also, you need to be mentally ready for a highly volatile market. While it’s possible to make 100% gains in less than 24 hours, it can come down just as fast if not faster. So be prepare to ride the ups and down.
– Try not to be too emotionally invested and only invest what you are willing to lose.
So what are the ways you can make money with cryptocurrencies?
How to make money with cryptocurrency?
If you are looking to make money with cryptocurrencies there’s a few ways you can do it.
1. As a long long-term investment
If you just want to purchase some crypto and let it sit for a year a two without having to think much about it, then a long term investment is the way to go.
The price of crypto can has crazy ups and downs. Following the market closely can be distracting, not to mention hard work mentally. So if you don’t have the time or you really don’t want to worry about the market, than a long term investment is a good option.
At the time of writing this, the current market value of cryptocurrencies is around 350 billion. Many experts are tipping it to reach 1 trillion by 2018 and as big as 5 trillion by 2022. Now this may or may not happen. Most of this is all speculative, so please do your own research before investing anything.
Another option to make money through cryptocurrencies is to day trade.
2. Day trading/short-term trades
People who day trade, generally buy and sell coins with the intention to make a percentage of profit from the daily price fluctuations of crypto.
Because the crypto market is so volatile, day trading or short term trades can be a very profitable way to make money.
The value of certain coins can rise as high as 100% in a day. I have even seen 500%+ in a single day!
However, It can also drop that much as well. So it is extremely risky if you don’t know what you are doing. I don’t recommend doing this unless you really understand the market and the technical side of trading.
If you want to learn more about trading cryptocurrencies these are some recommended courses:
- Cryptocurrency Investing: Buy & Trade Bitcoin & Altcoins
- Cryptocurrency & Bitcoin Profits for Beginners
- Learn How to Trade Cryptocurrencies for Profit
- Cryptocurrency never losing formula – Bitcoin trading
If you want, you could also do mix. Have some coins stored away for long-term investments and have some money for short term trades.
This is what I do. Now I don’t know the technical side of trading, so the short-term trades are from the advice or tips of other experts within the crypto community.
If you are like me and don’t have the time to learn solid technical analysis then here are some people or groups that you might like to follow:
- Crypto Coin Trader (Facebook)
- Cryptocurrency Collectors Club (Facebook)
- The Crypto Syndicate (Slack)
There are hundreds of Facebook, Slack & Telegram groups you can find. Those are the three that I follow most.
Another way to make money via crypto is through mining.
Cryptocurrency mining is the process by which transactions are validated and then stored on the public networks. These transactions are carried out by people using high powered computers to solve mathematical problems. These people are know as miners. When miners process these transaction they rewarded with a small amount of cryptocurrency.
Now I don’t know much about mining. I don’t do this as a way of generating income or coins. I know you need a lot of computer hardware to do it, so that kind of rules me out if I want to travel lightly. So I just stick to the trading side of things.
If you want to read up more on mining here’s a good article.
One of the most important aspects of owning cryptocurrencies is security. Because there is now so much value in crypto, hackers and cyber hackers are now targeting exchanges and individuals in an attempt to steal their coins. Some tips for security:
- Unless you are trading coins don’t keep your coins on an exchange. Store them in a online digital wallet. Some good wallets include Jaxx, Exodus & Myetherwallet.
- Back up your wallet and its private keys. Make copies and store them offline.
- If you can, store your coins them completely offline store them on an offline wallet such as a Ledger Nano S. I recently bought one of these and is definitely worth the investment.
- Never use gmail addresses to sign up for anything crypto related. Use an encrypted email service like ProtonMail.
- Always use unique and complex passwords for your crypto accounts
- Always use 2 factor authentication to log in to crypto exchanges and wallets. Google has a good one. Set it up on your phone and save a backup of the keys in case you lose your phone.
- Get a solid antivirus for you computer.
- If you have a decent amount invested into crypto, I recommend purchasing a dedicated computer just for crypto. I recently bought a small Lenovo laptop that I only use for trading and moving coins around. No other websites or browsing.
For more detailed advice about crypto security read this article.
Cryptocurrencies like bitcoin have seen tremendous growth in past few years. It has made lot of people very wealthy. Will this growth continue? No one knows for sure as the market largely driven by future speculation.
If you plan on investing in cryptocurrencies, here are some key takeaways:
- Because of the high risk involved, only invest what you are willing to lose.
- Thoroughly research the coins you are looking to invest in.
- Make security you number one priority when storing your cryptocurrencies.
- Try no to be too emotionally invested. The ups and down of the crypto market are huge. Be prepared for this.
If you want to get started with cryptocurrencies, I have written an article that will show you how to buy bitcoin step by step.
If you have any more questions on crypto, hit me up in the comments. While I wont give any financial advice or price predictions of coins I’ll be more than happy to help with any other questions related to bitcoin or cryptocurrency.
*This post may contain affiliate links. If you click on them and purchase something we get a small percentage of the sale. More info here*
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As the co-founder of Fulltime Nomad, Johnny really believes the world is too big to stay in once place. In 2013 he broke away from his non-location independent job to chase his passion of travel and living abroad. Now he helps others do the same.