How to Make Money With Cryptocurrency (2023)

Cryptocurrency is part computer science and part finance, but don’t let that intimidate you. It’s simple to get started and you don’t have to be an expert.

With a little smart investing and a little luck you can make money online, even in 2022.

First, learn what cryptocurrency is and how it works

Cryptocurrencies are a decentralized form of payment you can use to buy goods online. There are thousands of different currencies from the popular Bitcoin, Ethereum and Litecoin to the meme currency Dogecoin.

Cryptocurrencies run on the blockchain, which is a digital ledger of the currency's transactions and ensures the same coin is not spent twice. Transactions are processed on the blockchain network of thousands of machines - and in exchange for those computers' hard work, owners have a chance at receiving a crypto coin.

The new coins are "mined" (meaning minted, or created) when computers solve complex mathematical problems to work out the legitimacy of transactions on the blockchain.

While many people do pay for their purchases with crypto, it's more widely discussed as a form of investment - spurring whole websites that track the value of a single Bitcoin.

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Using exchanges or wallet apps like Coinbase, Crypto.com and BlockFi, users will convert dollars to cryptocurrency and count on their investment increasing in value, just like a stock.

Bit Digital, a sustainability-focused generator of digital assets and the largest bitcoin miner on the NASDAQ, recently launched a mining center in Buffalo, New York, and is working toward it using 100% sustainable power. The facility, located in an old coal factory, houses thousands of computers powered by hydroelectricity and is part of the larger trend of the crypto industry trying to go green.

Also like a stock, you don't pay taxes on crypto gains until you sell and cash out. The capital gains tax you would pay on Bitcoin or other crypto income will vary according to your income in that tax year - if you make under $40,000 per year, you would owe no tax on any crypto gains. They would be taxed at 15% if you earn up to $441,150 and 20% at any higher income, according to CNBC.

Many people invest in crypto because of the ease of buying, selling and trading on apps and websites, according to a CNBC survey.

A cryptocurrency could gain value if a major business announces they will accept it as a form of payment, when changes are made to the mining process, or when notable people like Elon Musk hype up a particular crypto asset. Additionally, value can go up if the demand increases while supply stays limited - for example, once there are 21 million Bitcoins in circulation, no more will be mined.

A cryptocurrency might lose value when a company no longer accepts it as payment, or when a lot of people try to sell at once.

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Here are some scenarios to help understand dollars and crypto.

  • Holding crypto in a software wallet is like carrying cash in your real world wallet. It’s readily available to you and waiting to be spent.
  • Putting crypto in a savings protocol is like putting cash in a savings account. The savings protocol pays you interest for using their service – similar to how banks pay interest for some savings accounts.
  • Depositing crypto in a vault and borrowing from yourself is like putting cash in a retirement account and taking a loan from it.
  • Trading tokens on a crypto exchange is like trading stocks on a stock exchange. Tokens represent blockchains and protocols like stocks represent corporations.

Do your research on crypto lingo

It's good to know what a blockchain is and how it works – but it’s not a necessity. Think about what happens when you buy something online – do you know how an Automated Clearing House works? How well do you understand the system of banks and payment processors that make up traditional finance? Lacking this knowledge doesn’t prevent you from using dollars, and likewise won’t prevent you from using crypto.

That said, what you need to know is that a cryptocurrency relies on a blockchain, a special type of digital network. There are different blockchains–like Ethereum, Cardano and Stellar. They work similarly, but have different features.

What is Bitcoin?

Bitcoin [BTC] is the most popular and most valued cryptocurrency. BTC transactions are processed and verified by people called miners. When miners process enough transactions, using specialized computers, they’re rewarded with some BTC. Essentially, the act of verifying transactions is what creates more BTC. So as long as miners want more cryptocurrency, the blockchain will function.

What is crypto mining?

Cryptocurrencies are decentralized, meaning the records of transactions are not stored on one hub server — they're spread across the blockchain. Users' computing power helps solve problems to make sure everything is accurate.

People who devote their computing power to the blockchain can be rewarded with some cryptocurrency in return. These users are called "miners."

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Cryptocurrencies like Bitcoin use massive amounts of power to keep systems running. Plus, there are massive "farms" full of computers mining for the coins. But some crypto companies are signing the Crypto Climate Accord, pledging to reduce their consumption and carbon emissions to a more sustainable level.

Some companies and other groups may run massive farms with lots of computing power to maximize their chances of "mining" a Bitcoin or other unit of cryptocurrency. Running this many computers and processors all at once uses massive amounts of energy, so there is a need for greener mining practices. NBCLX recently toured a New York crypto mining facility run on hydroelectricity thanks to Niagara Falls.

What is a savings protocol?

Blockchains use special apps, called protocols, that put your crypto to work. So in traditional finance you might have a savings account, but in crypto, you’d use a savings protocol. The language of crypto is rooted in computer science.

Beware of crypto scams

According to CNBC, regulators believe crypto scams are the top threat to investors and have urged caution in 2022.

The North American Securities Administrators Association told investors to be very careful and do plenty of research before buying into a crypto investment. The biggest red flag of a crypto scam is a guaranteed high return with no risk, the NASAA says.

It's also important to secure your crypto wallet so that scammers can't get in and send your money somewhere you're unable to recover it.

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Get a crypto wallet for buying, trading and storing

You’ll need a place to store your crypto –a wallet. You can choose a software wallet –like an app, or a hardware wallet – an offline devicesort of like a flash drive.

  • Most software wallets can be recovered if you lose your phone
  • Most hardware wallets can’t be recovered if you lose them

Since software wallets are online, they’re potential targets for hackers. Hardware wallets are offline and can’t be hacked, but they can be lost or stolen like a real wallet.

You can skip this step by downloading an exchange app like Coinbase, eToro, or Gemini, then connecting a debit card or bank account. This is the fastest way to start buying and trading crypto. Your assets will be stored in a wallet managed by the exchange, which adds some risk.

Think about it, if you’re a hacker trying to steal millions, your time is better spent hacking large exchanges to access thousands of wallets. Hacking a single software wallet is probably a waste of time. To learn more about crypto wallets check out this resource from Benzinga.

Put your crypto earnings to work

If you only want to trade crypto, a wallet and exchange is all you need. But there are other ways to use crypto to make money.

Decentralized finance [DeFi] is a system of peer-to-peer finance tools that provide options like interest accounts, loans, and advanced trading for people with crypto. DeFi disrupts traditional finance by removing middlemen [bankers, lawyers, brokers] from finance processes. DeFi advocates say this makes finance faster, more affordable, more transparent, more democratic and eliminates in-person discrimination.

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Getting started in DeFi takes more research. You can learn about different DeFi protocols on the web starting with The DeFi List. There, protocols are sorted by function, making it easy to understand what they do. Protocol developers share their mission statement by distributing a white paper. Here’s the white paper for Compound, a popular protocol, as an example.

To use DeFi protocols, you’ll need access to the decentralized web [dWeb]. To learn more about DeFi protocols, their history, and how they work, check out Finematics on YouTube.

Keep learning from cryptocurrency experts

There are a lot of experts on YouTube and Reddit. To get you going, here are some free online resources ranging from the basic to the meta.

FAQs

Can you really make money with cryptocurrency? ›

Can You Make Money With Cryptocurrency? Yes, you can make money with cryptocurrency. Given the inherent volatility of crypto assets, most involve a high degree of risk while others require domain knowledge or expertise. Trading cryptocurrencies is one of the answers to how to make money with cryptocurrency.

How do crypto beginners make money? ›

Invest in High Potential Crypto Presales like Dash 2 Trade – Best Method for Long-Term Returns. Earn Monthly TradFi Returns from The Uncharted NFTs. Passive Cryptocurrency Mining – Overall Best Way to Make Money With Cryptocurrency. Staking and Interest – Earn Passive Income on Idle Cryptocurrency Tokens.

Can you make 100 a day trading crypto? ›

Here's all you need to learn regarding generating income from day trading if you're only commencing out with cryptocurrency. By investing roughly $1000 while monitoring a 10% increase solely on a single combination, it is possible to earn $100 every day in bitcoin.

How much should I invest in crypto every month? ›

How Much Crypto Should You Own? Most experts agree that cryptocurrencies should make up no more than 5% of your portfolio.

How much should I invest in crypto as a beginner? ›

How much money do I need to start investing in cryptocurrency? In theory it takes only a few dollars to invest in cryptocurrency. Most crypto exchanges, for example, have a minimum trade that might be $5 or $10. Other crypto trading apps might have a minimum that's even lower.

How much should you put into crypto to make money? ›

In fact, investing 5% of your portfolio in crypto is an often-quoted percentage of your net worth to tie up in crypto assets. Some experts recommend starting much lower, with just a 1% investment in cryptocurrency and the remaining 99% of your portfolio going to stocks and other traditional investments.

How much profit should you take in crypto? ›

Most of the time, the key is focusing on the percentage of profits you've already made. People have different preferences depending on how much risk they're willing to take. However, most traders target at least 50% before they take profits. That being said, you can target 100% profits too before you decide to take.

How do I make monthly income from crypto? ›

Here are twelve ways to earn passive income with different types of crypto.
  1. Proof-of-Stake (PoS) Staking. ...
  2. Interest-Bearing Digital Asset Accounts. ...
  3. Lending. ...
  4. Cloud Mining. ...
  5. Dividend-Earning Tokens. ...
  6. Yield Farming. ...
  7. Run a Lightning Node. ...
  8. Affiliate Programs.

How much do crypto traders make a month? ›

How much does a Cryptocurrency Trader make? As of Oct 22, 2022, the average annual pay for a Cryptocurrency Trader in the United States is $112,925 a year. Just in case you need a simple salary calculator, that works out to be approximately $54.29 an hour. This is the equivalent of $2,171/week or $9,410/month.

When Should U sell crypto? ›

They buy when a cryptocurrency is at a high, sell when the price plummets, and then miss out if the price bounces back. If the price has dropped and you no longer think the cryptocurrency is a good investment, then you should sell. However, a price drop should never be the only reason you sell.

Is $10 enough to invest in crypto? ›

If you are just getting started with bitcoin, buying $10 can be a great first step to learning about bitcoin and how to use it. By starting with a small amount, you do not have to worry about making costly mistakes. Once you are comfortable with bitcoin you can always buy more.

Can crypto make you a millionaire? ›

CRYPTO: ETH

There are no guarantees that you'll become a millionaire, but if you invest in the right places and hold those investments for the long term, it's still possible to see significant returns.

What is the best crypto to buy right now? ›

The Best Cryptocurrencies to Buy in 2022

Dash 2 Trade - Crypto Analytics Platform with Automated Trading. RobotEra - Newly Launched P2E, NFT and Metaverse Crypto Presale Project. IMPT - Best Crypto to Invest in with Earn Rewards for Burning Carbon Credits. Calvaria - Popular P2E Game Token with Low Fees and High ...

What should my first crypto be? ›

Research the cryptocurrencies you want to buy

As a new crypto investor, it's wise to stick to more established cryptos like Bitcoin and Ethereum (ETH) until you have a stronger sense of how the market works. If you want to branch out into smaller coins, always do your own research.

Is it worth investing small in crypto? ›

We definitely don't recommend investing all your life savings on cryptocurrency markets. It's best to see it a bit like gambling so only invest small amount of your disposable income and be prepared to lose the lot. Never invest more than you can afford to lose.

What crypto should beginners buy? ›

A large-cap coin is considered to be of lower risk, and could be the safest cryptocurrency for beginners. Mid-cap tokens are more volatile but may have better growth potential.

What crypto gives most in profit? ›

The Most Profitable Cryptocurrencies to Invest in
  • DeFi Coin – New high-growth DeFi cryptocurrency with high yields and token swaps.
  • Bitcoin – Most adopted cryptocurrency with huge potential as supply dwindles.
  • Decentraland – Metaverse cryptocurrency with a fast-growing gaming ecosystem.
14 Oct 2022

How much should I put into crypto a week? ›

One “expert” recommends that investors allocate 2% to 5% of their net worth, while another in the same article cautions no more than 1%. In another article, a financial planner says investors can allocate as much as 10% of their risky investments to cryptocurrencies, and possibly more for younger investors.

Is it worth buying crypto? ›

Crypto can be a fantastic long-term investment, but it's not right for everyone. Whether it belongs in your portfolio will depend largely on your financial situation and tolerance for risk. Before you invest, double-check that your finances are stable and you have a healthy emergency fund.

How do I start day trading crypto? ›

The simplest way for you to get started is to open an account with one of the leading centralized crypto exchanges (e.g. Coinbase or Kraken), fund your account with fiat currency, and buy your chosen currency. From there, you can use one of the below day trading strategies to start day trading crypto.

How much does the average person make off cryptocurrency? ›

As of Nov 19, 2022, the average annual pay for a Cryptocurrency Trader in the United States is $112,931 a year. Just in case you need a simple salary calculator, that works out to be approximately $54.29 an hour. This is the equivalent of $2,171/week or $9,410/month.

Can you make a living off trading cryptocurrency? ›

If you want to know if it's possible to make a living trading cryptocurrencies, the answer is easy: Rather not, at least not for the average Joe. There might be some exceptions who really managed to live from their crypto investments only, but there was surely a big portion of luck involved.

What crypto will make me rich? ›

10 Best Cryptocurrencies To Invest In 2022
  • Bitcoin (BTC) Market cap: Over $846 billion. ...
  • Ethereum (ETH) Market cap: Over $361 billion. ...
  • Tether (USDT) Market cap: Over $79 billion. ...
  • Binance Coin (BNB) Market cap: Over $68 billion. ...
  • XRP (XRP) Market cap: Over $37 billion. ...
  • Terra (LUNA) ...
  • Cardano (ADA) ...
  • Solana (SOL)
16 Sept 2022

Is crypto worth investing in 2022? ›

Experts remain conflicted on whether bitcoin has bottomed out yet. Some say it already has, while others says bitcoin could fall as low as $10,000 in 2022. This volatility is a big part of why experts recommend keeping your crypto investments to less than 5% of your portfolio to begin with.

How does cryptocurrency make money daily? ›

Cloud mining, Affiliate programs, and more are the ways you can make money with cryptocurrency in 2022.
  1. Cloud Mining. ...
  2. Affiliate Programs: Get Paid to Refer a Friend. ...
  3. Buy and HODL. ...
  4. Day Trading Cryptocurrency. ...
  5. Work for a Cryptocurrency Company. ...
  6. Stake Your Crypto.
9 May 2022

How do people get rich off crypto? ›

10 Ways to Get Rich off Crypto

Investing in Presales - Buy Newly Launched Crypto Tokens at Presale Prices. Day Trading - Buy and Sell Crypto Throughout the Day to Make Regular Gains. HODLing - Invest in Crypto and Hold on a Long-Term Basis. Staking and Interest - Earn Passive Income on Idle Crypto Holdings.

How much should I invest in cryptocurrency as a beginner? ›

How much money do I need to start investing in cryptocurrency? In theory it takes only a few dollars to invest in cryptocurrency. Most crypto exchanges, for example, have a minimum trade that might be $5 or $10. Other crypto trading apps might have a minimum that's even lower.

How can I get rich in 5 years? ›

How to become wealthy in 5 years: 14 strategies
  1. Become Financially Literate Through Self-Education.
  2. Spend Less, Earn More, Invest the Difference.
  3. Do Something You Love.
  4. Invest in Properties.
  5. Build a Portfolio of Stocks and Shares.
  6. Focus on Contemporary Areas of Growth.
  7. Be An Innovator.
  8. Do Quarterly Goals & Reports.
6 days ago

How do you get big money fast on crypto? ›

Buy and HODL. This is the most common way of earning money from cryptocurrencies. Most investors buy coins such as Bitcoin, Litecoin, Ethereum, Ripple, and more and wait until their value rise. Once their market prices rise, they sell at a profit.

What is the fastest way to get money out of cryptocurrency? ›

At a Glance: You can use a third-party exchange broker or peer-to-peer transaction to sell your bitcoin. This is a faster and more anonymous method, as you sell your bitcoins directly to another person.

When should I take profits on crypto? ›

One of the best times for taking profits in crypto is when you spot the formation of a bearish chart pattern. Death crosses, head and shoulders, shooting stars and other bearish patterns often signal trend reversals, and should be incorporated into any crypto profit-taking strategy.

Which crypto will boom in 2022? ›

Ethereum. The second largest crypto by market cap is likely to grow in 2022 and 2023, according to crypto enthusiasts. According to some predictions, Ethereum could reach a worth between $8,000-$10,000 by the end of 2022.

Which coin will make me a millionaire in 2022? ›

Ethereum. Ethereum is, to date, the most successful altcoin in the digital asset domain. Its native token ETH has soared immaculately since its inception. Currently, investors are waiting for the biggest upgrades in the history of the crypto market, powered by Ethereum Merge.

Is buying crypto worth it? ›

Investing in crypto assets is risky, but can be a good investment if you do it properly and as part of a diversified portfolio. Cryptocurrency is a good investment if you want to gain direct exposure to the demand for digital currency.

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