2020 was an excellent year for crypto, and the sector has continued to grow in 2021, hitting a market cap of nearly $1 trillion by the end of January. Keep reading to discover the best ways to earn bitcoins in 2021.
Best Ways To Earn Bitcoins
Below are the best ways you can earn bitcoins in 2021
#1. Mining Bitcoins
Earning Potential: Very low
Bitcoin mining is one of the earliest methods of earning cryptocurrency. Meanwhile, it’s one of the best ways to earn bitcoins.
Cryptocurrencies based on the Proof-of-Work (PoW) consensus mechanism make use of decentralized blockchain networks in which miners contribute their computing power to the ecosystem’s maintenance. Meanwhile, bitcoin miners receive block rewards and a share of transaction fees in exchange for verifying transactions and adding new blocks to the chain.
Bitcoin mining was once a lucrative business model for earning crypto, but its profitability has significantly decreased in recent years. However, the mining industry has historically been dominated by large farms with access to low-cost electricity and loans to bulk-order next-generation hardware.
How To Start Mining
To begin, we must cover some upfront costs associated with purchasing mining hardware. We will use Bitmain’s Antminer S19 Pro ASIC miner as an example, which has a hash rate of 110 TH/s, consumes 3,250 W, and costs $2,684 at the current market price. However, with our $10,000 allocation, we could purchase nearly four S19 Pro miners.
Meanwhile, coinburrow mines some new generation assets ( NFTs and Defi ) and also has an expert who manages mined crypto using an auto trading algorithm to maximize profit margins.
#2. Earn crypto with Trading
Risks: Variable (low in the case of our example)
Cryptocurrency trading is a term that refers to the practice of traders taking short-term positions in order to profit from price movements of digital assets. However, this system has existed since the industry’s infancy, with traders benefiting from excellent products and services developed over time. As a result, users can trade digital assets on a plethora of cryptocurrency exchanges. This is also another one of the best ways to earn bitcoins.
Meanwhile, the level of risk associated with cryptocurrency trading is determined by the trading strategy employed by users. We will use a small portion of our capital for each position in our test, with stop orders in place to mitigate risk. Additionally, we will trade exclusively on the spot market, using no leverage.
Because predicting the return on investment for cryptocurrency trading is extremely difficult. However, we will use a fixed model to determine how much we can earn trading crypto. As such, the following factors must be considered:
- Win/Lose Ratio: The percentage of trades that we win versus those that we lose. In this scenario, we will win 50% of our trades and lose 50%.
- Risk/reward ratio: This metric indicates the potential rewards associated with each dollar invested. Here, we’ll use a 3:1 leverage, which means that for every $1 we risk, we’ll earn $3. We will earn 3% on winning trades and 1% on losing trades (before deducting exchange fees).
- Excahnge Fee: These are fees charged by the cryptocurrency exchange for each trade executed on the platform. It is critical to understand that service providers immediately deduct this cost upon entering or exiting a position.
- Trading Frequency: This metric indicates how frequently we execute trades. Assume that 30 trades are made each month (360 a year).
- Average position size: The average size of a position that we enter. Maintain the $500 limit (5 percent of our initial capital).
However, we can determine our average profits and losses, as well as our total revenue, expenses, and return on investment, using the aforementioned factors.
#3. Hoding Crypto
Earning Potential: High
As with the previous methods, “holding” crypto is one of the earliest and most common methods of earning digital assets. Although cryptocurrency trading entails regular, short-term purchases and sales, keeping or investing in digital assets entail a longer commitment on the part of users (ranging from a few months to several years). Meanwhile, this strategy entails purchasing a cryptocurrency and storing it in your wallet for a moderate to an extended period of time until selling it.
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#4. Earn By Staking
Earning Potential: High
With the introduction of Ethereum 2.0, the Proof-of-Stake (PoS) consensus process is becoming increasingly common among cryptocurrency projects.
Unlike the PoW model, PoS and its variants do not require validators to use their computing power to maintain the blockchain via mining rigs.
Validators, on the other hand, stake a certain amount of their tokens to validate transactions and add new blocks to the chain. However, stakeholders receive incentives in return for their coins, allowing them to earn a passive income (similar to Defi lending) from the cryptocurrency they own. Meanwhile, they can also increase their chances by joining staking pools and services, which enable users to pool their tokens and share income. You can also consider this method as one of the best ways to earn bitcoins.
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#5. By DeFi Lending
Earning Potential: High
Cryptocurrency lending has become a reality, thanks to the growth of the Defi industry.
Users provide liquidity to the platform by lending digital assets through Defi services. Lenders receive a passive income from the coins they lend in return. However, Defi lending has gained a lot of traction in the crypto space because it has low risks (especially if you lend stablecoins) and offers far better interest rates than conventional finance solutions (e.g., savings accounts, government bonds).
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Moreover, cryptocurrency technology has given rise to a slew of new roles and technological positions, including master nodes, lightning nodes, and even mining nodes, all of which can gain cryptocurrency passively and on a near-regular basis. In addition, many forms of affiliate programs have been launched in recent years that users may enter to passively monetize their funds, such as lending or staking, as discussed above.
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How To Earn Cryptocurrency In Passive Ways
Operation of a lightning network
In recent years, multiple solutions to the scalability issue in Bitcoin, Ethereum, and other major cryptocurrencies have been implemented. Lightning networks are made up of networks of transactions that are not directly connected to the main blockchain, making them significantly faster than standard transactions. These networks provide bidirectional channels in which routine daily transactions can be completed more quickly than with traditional payments since they are stored on blockchain layer 2, not mainnet.
Affiliate Marketing Programs
Another technological advancement in recent years that created new opportunities to earn cryptocurrency passively was the establishment of new major cryptocurrency exchanges. These businesses must succeed in a highly competitive environment in which their rivals have already benefited from a variety of advantages and technological advancements. Thus, new cryptocurrency exchanges attempt to sell affiliate programs in order to boost their development around the globe. Individuals, social media influencers, cryptocurrency content networks, and societies are all potential partners for these exchanges’ affiliate programs.
Decentralized networks need certain nodes to operate as servers, providing network access. These nodes are referred to as master nodes, and they are rewarded by various cryptocurrency networks. Perhaps, for passively earning cryptocurrency by supplying technological services for the network’s operation. However, users must make a significant technological investment to operate a master node.
When a standard cryptocurrency network undergoes a hard fork, users of the previous blockchain receive equal quantities of cryptocurrency on the current blockchain. This passive earn cryptocurrency happens only once every few years. But has the potential to generate a sizable amount of passive income. As you might be aware, the Bitcoin Cash hard fork in recent years has provided such an incentive for Bitcoin users.
To take advantage of this form of occurrence, users must hold a significant amount of cryptocurrency on the previous network prior to the hard fork. That means that only users with sufficient funds at the appropriate time and location will benefit from this form of passive income cryptocurrency. However, consider the whales with thousands of Bitcoins in their wallets who discovered they still own the equivalent sum of Bitcoin Cash to appreciate how good this form of passive income might be!
The cryptocurrency market is a modern financial market that has shown over the last decade that it is not a passing trend but rather a technological advancement that will evolve over time. As in every other industry, the cryptocurrency market offers trading opportunities for users to gain and benefit from cryptocurrency. However, this is not the end of the tale, as several positions and statuses are necessary to operate cryptocurrency networks. Which are rewarded by passively receiving cryptocurrency without the need to engage in market trading.
The cryptocurrency market is a new financial market that has demonstrated in the last decade that it is not a passing fad or trend and can be viewed as a technical development that will evolve over time. Join the trend now or may have to regret it later. Hopefully, you have grabbed the best ways you can earn bitcoins for yourself.
Over To You: Are you currently in crypto earning & investing, how has been your experience so far? Share your thoughts with us.