Top 5 Ways to Make Money on Financial Markets (Part 3)

3. Cryptocurrencies: big profit and big risks

Unlike common currencies, cryptocurrency is money that is not tied to states and national banks. Such systems are called decentralized, and the influence on the currency is performed by users themselves. But first, let's understand the difference between cryptocurrencies and tokens. A token works inside a specific blockchain system and is used for the so-called "internal market," while a cryptocurrency is not tied to a single blockchain and can be used in the "external market.

There are several ways to make money from cryptocurrency. One of the simplest is "buy and hold." This method will work if the value of the cryptocurrency rises, in which case the user can buy the cryptocurrency at a low price and sell it at a higher price. A more complicated method is mining. This requires equipment (powerful processor, video card), and miners are rewarded for the production of new coins in the form of cryptocurrencies. A passive way of earning - lending - has also become popular: a user buys cryptocurrency and then lends it to another user for some interest.

To make sure that cryptocurrencies are a booming industry, it is enough to look at the Bitcoin price growth graph over the last 5 years.

The benefits of making money from cryptocurrencies:

There are several main reasons why making money from cryptocurrencies is popular. These are:

• Affordability. To trade cryptocurrencies, you only need to deposit $10 or more into your trading account.
• The ability to make money quickly. Cryptocurrencies have high volatility. Sharp price fluctuations allow crypto traders to earn during the day.
• The high degree of protection. With proper storage of cryptocurrency, it is impossible to hack a wallet and gain access to the asset.
• Unlimited transactions. The blockchain network is one of the safest, it also allows transfers without limits on amounts.
• Prospectivity. Correctly chosen asset (or luck) - and the crypto traders can get a high income due to the active growth of the cryptocurrency.
• Variability. Several ways of earning on cryptocurrencies are available.
  
  

Disadvantages of making money from cryptocurrencies:

Making money from cryptocurrency is a popular but not ideal way. Its main disadvantages are:

• High risks. There is no guarantee that the selected cryptocurrency will rise in value.
• News impact. Many factors can affect the value of cryptocurrencies, from the growth of the issuing company to a publication on Twitter.
• Scammers. With the growing popularity of cryptocurrencies, there are many empty projects in which the cryptocurrency is not worth anything. Therefore, it is worth carefully analyzing new projects on the market.

Who is suitable for making money from cryptocurrencies

Earning on cryptocurrencies is a rather universal way, it can suit both experienced users and beginners. This is a great way to earn income in the short term. Long-term strategies are riskier.

Follow our updates for more useful information in our series of articles. You can also visit our previous article for a better understanding of this topic.