Making money from cryptocurrency is not just a trend. This is a real opportunity to increase capital or even provide yourself with the main source of income. Of course, there are quite a few risks because cryptocurrencies are highly volatile assets. But volatility can also be an advantage in both the long and short term.
Meanwhile, the answer to the question of how to make money from cryptocurrency is much easier than it seems. That’s because there are only 10 ways, each of which is optimal in a certain situation. After reading this article, you will know exactly can I get a crypto loan, as well as which ways are right for you and how to make money from cryptocurrency without and with investments, with the highest profit potential.
Bitcoin secured loans
According to Bloomberg, Goldman Sachs, the largest bank, has already started offering its clients to take out a loan secured by bitcoin. Experts confirm that the largest banks are not only interested in blockchain and cryptocurrencies lately, but also offer relevant products.
This form of credit will suit those who keep their main savings in cryptocurrency, but from time to time feel the need for the usual money. On the one hand, it is very convenient, but on the other hand, an important point is the volatility of bitcoin and other cryptocurrencies, which can collapse or significantly increase in price in a few hours.
Goldman Sachs takes this into account when making a loan: if bitcoin or another cryptocurrency falls in value, you have to increase the collateral, otherwise, the bank can sell the available pledged funds. Earlier this spring, Goldman Sachs announced the availability of over-the-counter cryptocurrency trading for its clients.
Types of loans secured by cryptocurrency
The device of lending platforms can be divided into two large groups:
- More centralized, custodial. This refers to holding collateral with a trusted third party who has some range of authority to control the user’s assets. This same party sets the usdc interest rate and serves as the counterparty to transactions. An example of such a platform is Salt Lending.
- More decentralized, it attracts single traders and small investors. Often such projects are based on the Ethereum blockchain. The use of smart contracts creates a system where users do not need to trust a third party, everything happens automatically. An example of such a platform is Nexo.
To choose the right platform for a bitcoin secured loan, there are a few things to consider. First, do not take the risk of contacting little-known platforms that offer too favorable conditions at first glance. Experts in this field will confirm that such schemes are most often fraudulent.
Next, you need to find such cryptocurrency companies whose terms suit you on all parameters – that is, which give a fair loan amount based on the amount of collateral. That way, you both get the loan you need to meet your needs and, at the same time, save the benefit of a possible increase in the value of crypto assets.
Stacking is a way to confirm transactions and create a block in the blockchain. It only works for cryptocurrencies that use the Proof of Stake algorithm. For example, Ethereum 2.0, Tezos, Solana, and others. You get rewarded for this in the form of new coins. The more coins you have, the more chances you have to create a new block.
It’s possible to do the stacking yourself, but you need to understand the technical details of cryptocurrency. Sometimes it’s also expensive – some blockchain networks have an entry threshold. For example, to validate Ethereum transactions, you need to have 32 coins. A simpler way is to give coins to a recognized validator, such as a staking exchange.
Where you can do staking
Here’s where you can do staking:
- Cryptocurrency exchanges. Binance, Coinbase, Kraken, and ByBit give the best percentages. But keeping money on exchanges is risky because they sometimes get hacked.
- On staking platforms. This kind of staking is also called soft. Here are examples of such platforms: Stake Capital, MyCointainer, and so on.
- On hardware wallets. This is a small device for storing cryptocurrency. On the outside, it resembles a flash drive. It may have a USB connector or buttons to enter a PIN. On hardware wallets, crypto is more tamper-proof.
A wallet has an address, which is a specific place in the blockchain where coins can be sent. When you’re stacking on hardware wallets, it’s important to keep coins at the same address. That is, you can’t move coins around because you will lose the reward for creating the blocks.
Types of staking
There are several classifications of staking. For example, by the way coins are received. Stacking can be delegated to an exchange, for example, or become a validator, that is, confirm transactions and create new blocks yourself.
Delegating is much easier. That’s usually what’s meant when they talk about stacking. You simply block your coins with a recognized validator. You get rewarded for this, and the validators will take a small percentage of your profits.
To be a validator, you have to:
- Understand the technical details of how cryptocurrencies work;
- Have enough cryptocurrency because this way, you have more chances to create a new block;
- Have a reliable internet connection, which is used in data centers.
It is also possible to divide staking into:
- Fixed – when the user determines in advance how long he gives coins for staking. For example, for three months. Until this period expires, he cannot take back his coins. Usually, the payment here is a bit higher than in flexible staking, so this option is chosen by those who want to earn more.
- Flexible – here they don’t specify a final staking date. That is, you can pick up your coins at any time. Staking interest will accrue until you withdraw the crypto. This option is suitable for those who are used to having free access to their assets.
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