Cryptocurrencies provide many opportunities for additional income. As their value grows, so does the number of members of this community. Ways to earn on cryptocurrencies can be divided into two main areas – this is trading and mining of cryptocurrencies. Let’s consider all the advantages and disadvantages of each of them.
There were no many cryptocurrency exchanges when Bitcoin first appeared and brokers did not provide access to trade in these instruments. The only opportunity to monetize your interest in cryptocurrency was mining. Enthusiasts believed in the potential of Bitcoin, saw the growth of its course – albeit insignificant compared to the 2017 rally – and bought special equipment for mining.
However, over time, the amount of reward decreases and the number of miners is constantly increasing. This leads to increased competition and this “arms race”.
Since the way of mining was discovered using GPU and special ASIC, device performance has increased millions of times. In parallel with this, the minimum threshold for entry into this sphere also grew.
It takes several tens of thousands of dollars to purchase equipment that will bring tangible income and also the patience of all those who want to join the mining can be stretched. Do not forget about the monthly expenses for electricity.
Of course, the main advantage of mining is to get a relatively stable income in cryptocurrency, especially if you work in a mining pool. However, the income expressed in fiat money will constantly “float” along with the change in the cryptocurrency rate.
Analyst of the regulated broker AMarkets Vadim Kravchuk believes that it is the decline in income when Bitcoin prices fall – the main reason why miners are switching to crypto-trading.
The simplest example is the purchase of Bitcoin at almost any time in 2017 and its subsequent sale. Since January, the price of the main cryptocurrency has steadily increased, so that the transaction would be closed as a plus.
If mining requires special equipment, then in this case you only need capital on the trading account. However, given the availability of leverage and a fractional lot, for example, with an AMarkets broker, you can start working with a smaller amount – to buy Bitcoin you need to have not $ 8,000, but less than $ 1,000.
Plus trading is that you get access to multiple cryptocurrencies, while mining often focuses on one token, which later, if necessary, can be exchanged for another.
Remember during the negative news from China, traders earned by opening short positions, while the miners were in a bad position and in a hurry exchanged bitcoins.
It becomes very popular to buy and keep different cryptocurrencies until they grow at least twice. This makes a certain sense, because it does not come to spend a lot of time on the frequent opening of transactions and the income will be higher on average than from mining and you will spend less nerves than during classical trading.
This article is for those who are just introduced to the world of finance and investment. If you want to learn more about trading, take a training course from broker AMarkets