Recently, cryptocurrency investments gained popularity as digital assets became one of the acceptable asset classes. Digital asset values made them popular as trading and investment instruments. According to statistics, over 430 million people currently use or own cryptocurrency worldwide, with 46 million people estimated to own crypto in the United States alone. This number represents 13.7 percent of America’s population using crypto in different shapes and fashions, like paying for goods and services, selling crypto for cash, or donating crypto as well as mining or receiving mined crypto.
Cryptocurrency investments may involve buying cryptocurrency from exchanges, through brokers, or investing in crypto funds or companies. It offers investors diversification from other asset classes such as bonds and stocks. It’s profitable, offers lower transaction fees, and online exchange of money. The market has grown rapidly, and investors can have control over investments and access to a wide range of investments which will be discussed in this article.
The entire crypto market is considered to be volatile, though profitable, therefore, investment should be considered by those who have a high-risk appetites and strong financial positions. Experts advise you should start crypto investment with any amount you can afford to lose. Investing 1 – 5 percent of your portfolio in crypto is a recommended percentage of your net worth to be tied up in crypto.
Every crypto investment is profitable, and investors can make high returns based on the type they chose. We have researched the most profitable types of crypto investment and will discuss them according to their level of profitability.
Investments in Blockchain Startups
Investing in blockchain startups or early-stage crypto projects is considered the most profitable type of cryptocurrency investment. It has the potential to secure your financial future, investment in digital currencies traded on a public blockchain can yield over 100 percent returns in a short while if the market is stable. Some investors may not want to own cryptocurrencies exclusively, so investing in blockchain companies becomes the best option.
Blockchain companies offer investors the opportunity to invest in their great ideas through private sales or Initial Coin Offering, ICOs. Investors can buy the company tokens as shares to have a stake in the issuing company. At the early stage, companies lower entry bars for investors to buy into their projects during Initial Coin Offering (ICO) at a very low price before they are listed on exchanges. For example, a blockchain company can offer their tokens at $0.07 during ICO and list the same token on a crypto exchange at $0.14. Any investor who had purchased such a token at the ICO or private sell price would be making a 100 percent profit by the time such a token is listed on an exchange. Decentralized blockchains are also good investments if you can get in at the right time and guarantee a good type of return.
Some of these projects operate on major blockchains like Bitcoin, Ethereum, Polygon, Binance, Tron, and more. Each project has a different purpose, and you want to align your goals with the companies you are investing.
Though it yields high returns, investing in start-ups can be risky, and investors may lose substantial amounts of money if the project doesn’t succeed. Sometimes investors can invest in scammy crypto projects and experience what’s known as rug pull. We recommend that investors should research the projects they are investing in or work with crypto investment analysts. Please contact us if you need assistance with choosing the right crypto startup investments.
2. Cryptocurrency Trading
Crypto trading involves buying and selling digital assets with the aim of making a profit from the changing value of the underlying assets. It is a popular way to make money in cryptocurrency, most trading is done on crypto exchange platforms, through broker-dealers and OTC platforms. Unlike traditional fiat currencies, cryptocurrencies are decentralized, they are not controlled by any government or financial institution. Trading may involve speculating on virtual asset price movements via a CFD trading account or buying and selling coins on an exchange. Traders can take a position on the price of individual cryptocurrency against the dollar.
Before you think of making money through crypto trading, you need to learn how to analyze the market and technical indicators. This will guarantee your success and profit margin in trading cryptocurrency. We advise that you don’t begin crypto trading until you are confident of your understanding of the market. Here are a few steps you can take to be successful in crypto trading.
Crypto Trading Tips
- Have a good understanding of what trading is
- Learn how to trade crypto
- Update yourself with the latest crypto news
- Research thoroughly for the best crypto to trade
- Open a CDF trading account
- Identify a trading opportunity
- Copy expert traders
- Start with a small amount based on your financial capability
3. Cryptocurrency Staking Investment
Staking enables you to receive cryptocurrency as a reward for using your crypto asset holding to verify transactions on the blockchain network. This process allows participants in a network to earn rewards by locking their coins into cryptocurrency wallets to validate network transactions. Your crypto will be locked for a certain period of time, and you receive a reward because you support the operation of the blockchain. Staking can be considered a less resource-intensive alternative to mining, it gives crypto holders the opportunity to volunteer to take part in validating transactions on the blockchain, with funds held in a cryptocurrency wallet.
Staking is a crypto version of a high-interest savings account because it allows users to receive rewards while holding funds in a crypto wallet. The rewards serve as interest received in a savings account for allowing your money to be available for bank use. Staking is only possible via the Proof of Stake (PoS) consensus mechanism. It’s a good way to make money in crypto investment, some cryptocurrencies and blockchain networks offer substantial staking rewards. It is a way of earning passive income in the crypto world equivalent to earning interest or dividends.
Not all cryptocurrencies are suitable for staking, Cardano (ADA), Tron (TRX), and Ethereum (ETH) are some of the cryptocurrencies one can stake. Here are the steps you can take to start staking.
- Buy a cryptocurrency that uses Proof of Stake (PoS)
- After purchasing your crypto, transfer it to a blockchain network
- Join a staking pool
4. Cryptocurrency Investments in Mining
Cryptocurrency mining is a process by which new cryptocurrencies are created and transactions are confirmed. Through this process, cryptocurrency transactions are validated digitally on the blockchain network and added to the blockchain ledger. The process involves solving cryptographic hash puzzles to verify blocks of transactions that are updated on the decentralized blockchain ledger.
Mining may be profitable but not as it was before due to instability in the crypto market. Crypto prices were noticeably low, and some mining farms struggled with the high cost of mining power. Due to market and environmental forces, investing in mining may not generate returns as high as the other types of investments.
Anyone can participate in mining using a computer cable for crypto mining. Miners do the work of verifying transactions, tracking Bitcoin asset ownership, and ensuring the Bitcoin network remains secure. A cheaper way to mine crypto is through crowdfunding which doesn’t require the purchase of equipment or payment of electric bills. But it has some drawbacks including a lack of flexibility in choosing a coin to mine and the risk of fraud.
5. Arbitrage Trading
Crypto arbitrage is a type of trading that allows investors to capitalize on the slight price differences of a digital asset across exchanges. It involves buying cryptocurrency from one exchange and transferring it to another exchange where the currency is sold at a higher price. This type of trading is low-risk and offers consistent returns, allowing traders to take advantage of price differences for the same cryptocurrencies on different exchanges or platforms.
You need to calculate and do a lot of research before going into crypto arbitrage, it’s possible for investors to make a loss on the arbitrage and end up worse than before.
6 Investing in Cryptocurrency Lending
Crypto lending is a decentralized finance (DeFi) service that allows investors to lend out their crypto holdings to borrowers for interest payment. The lenders can make huge deposits into their wallets and the fund will be lent out to borrowers on the same platforms in return for regular payments. Lenders can earn a generous amount of deposit more than a traditional bank interest on a deposit. Funds can alternatively be invested to earn additional yield.
Digital asset lending can be a lucrative form of investment, however, it still has some drawbacks in the area of security of invested funds. Deposits are not insured by any deposit insurance, and lenders can lose all their money if the platform provider goes insolvent.
7. Cryptocurrency Investments in Stablecoins
A stable coin is a cryptocurrency whose value is fixed to another asset, such as US dollars or euros. It bridges the gap between fiat currency and cryptocurrency by aiming to achieve stable price variation using different working mechanisms. The leading stablecoins can be a good addition to your crypto investment portfolio. It allows investors to move in and out of different cryptocurrencies while staying within the cryptocurrency realm. They are a good source of investment for those looking for a less volatile cryptocurrency. Investors can earn interest on stablecoin holdings by lending them out through a variety of platforms.
Investment in stablecoins offers good benefits such as being a good source of income and a store of value. however, there are risks to consider, before investing, such as lack of regulation and decentralization.
8. Tokenized Cryptocurrency Investments
Tokenization is a process of replacing sensitive data with a unique identification symbol that retains all the essential information about the original data without compromising its security. A crypto token is a representation of an asset or interest that has been tokenized on an existing cryptocurrency blockchain.
Both issuers and investors can benefit from tokenization by increasing efficiency in creating, issuing, and managing assets and creating more secure, transparent, and accessible markets. Investors can make money by investing in tokenized projects such as real estate, NFTs, and the metaverse. Here are steps you can take to start your tokenized investments.
- Find an exchange or platform that trades the tokenized stock you are interested in
- Create an account on the selected exchange
- Fund your account
- Buy the stock token of your choice
While making plans for your next step to make money investing in cryptocurrency, a point to note is that crypto assets are generally high-risk investments due to market volatility, and ununiformed regulations. Ensure to study the market well, make reasonable research, and consider the possibility of losing money due to market conditions. You can start making money on crypto investment by considering the less risky option among the ones listed above. Experts advise that the best way to make cryptocurrency investments is by starting small and increasing your portfolio as you make progress.
Sometimes it would be better to work with a trusted crypto investment analyst that can guide you through. Feel free to contact us if you need the assistance of a trusted crypto investment analyst.