The year 2021 was arguably the most successful for crypto investors. Not only did the total market capitalization triple to $3 trillion, but a host of alternative crypto assets also gained traction. This means that there are now multiple ways of how to make money from cryptocurrency. In this article, we’re going to show you the 10 best ways you can use in 2022 to make money in the crypto industry.
1. Buy and hodl
|Buy and hold difficulty||Easy|
|Buy and hold capital required||Low|
|Buy and hold level of returns||Average|
Over the past few years, cryptos have become more widely accepted as alternative assets for investors. According to a Motley Fool Survey, 68% of high net worth Americans (those with a net worth of at least $1 million) have invested in crypto. The majority of these investors are millennials as a CNBC Millionaire Survey showed that 83% of millennial millionaires own crypto with 53% of them having at least 50% of their wealth in crypto.
And it’s not hard to see why more investors are interested in cryptos either. For instance, Bitcoin’s value rose by over 58% in 2021 while the S&P 500 rose by around 26%. Keep in mind, this was after a sharp selloff in the final quarter of the year so the annual returns could have been even higher.
How to buy and hodl crypto
Due to the shift in attitude toward crypto, holding digital assets has become akin to buying stocks and other conventional financial assets. Indeed, this is one of the simplest and best ways to make money through cryptocurrency.
All you need to do is identify the coin(s) you’re interested in, purchase it just like you would a stock and hold on to it before selling at a higher price, pocketing the difference. That is why you can make money with Bitcoin for beginners since the process is so straightforward.
Which are the best coins to buy in 2022
CoinMarketCap states that there are over 16,500 cryptos in the market at the time of publication. Meanwhile, there are about 41,000 companies listed in stock exchanges around the world according to OECD. Although the number of cryptos is lower, The New York Times estimates that about 100 new coins are created every other day.
Many of the newly created coins don’t make it to be recognized, let alone being listed on a crypto exchange. But a few go all the way to the top reaching astronomical heights and rewarding investors. This means it’s incredibly difficult to identify any single coin destined to go ‘to the moon’.
That being said, it’s not completely impossible to spot a truly promising coin and invest in it at the right time. It simply comes down to what you’re looking for in your investment, whether a long term or short term strategy. For long term investments, you want to identify a coin with a huge market cap and widespread utility such as Bitcoin and Ethereum.
On the other hand, minor altcoins tend to generate higher returns such as Dogecoin. But you must remember that such investments are riskier because lower liquidity means more volatility. It’s how Dogecoin is able to shoot up more than 20% in a day on 14 December 2021 following a tweet by Elon Musk.
Best platform for buying crypto
Once you’ve decided on the coin you want to buy, the next step is to find a source for your coin. This usually involves a crypto exchange, though P2P platforms are just as good provided you can trust the company. Then you will need a crypto wallet since crypto-assets can only be stored in a wallet. Fortunately, you can find all services in one place through an exchange like Binance.
It’s the world’s largest crypto exchange by daily trade volume, far surpassing the second largest platform. Plus, it encompasses a centralized exchange (CEX), decentralized exchange (DEX), P2P platform and a secure wallet – Trust Wallet. Since being launched in 2017, the platform has yet to be hacked, meaning that you can trust your assets are secure be it for a few days or years.
|Staking capital required||Average|
|Staking level of returns||Average|
Did you know you can make money with your own cryptocurrency? This is not the same as hodling but rather you get to earn from crypto without having to sell your assets. Think of it as earning dividends from a stock you own in a company, so you’re essentially becoming a shareholder in a particular crypto network.
The idea of staking came about through the proof-of-stake (PoS) consensus method. It arose as an alternative to the proof-of-work (PoW) consensus method first introduced by Bitcoin where miners perform intensive computations to validate transactions. Instead, PoS involves the owner of crypto to simply dedicate all or a portion of their holdings in a staking pool.
All stakers then become somewhat like shareholders, meaning they even get to participate in decision making. As a reward for the commitment, you’re rewarded with newly minted coins just like a miner would in a PoW blockchain network. What’s even more exciting is that the process is randomized by computer code so that everyone gets a fair shot, unlike PoW where mining farms filled with ASICs basically have the upper hand.
How to stake crypto
When you decide to make money staking crypto, it’s as easy as buying and hodling only you won’t have to sell the coins. It begins by identifying PoS cryptocurrencies, because not all networks allow for staking, and buying it. Some of the top PoS cryptos are:
- Cardano (ADA)
- Solana (SOL)
- Algorand (ALGO)
- Tezos (XTZ)
- Celo (CELO)
Each has a different rate of return but with some, you can even make $100 a day with cryptocurrency depending on the amount of capital invested. However, remember that a higher return rate shouldn’t be your only criteria for making the decision.
In fact, it may be advisable to go for a lower return rate if you’re investing for the long term because then your investment will be more secure. Just like returns from investing in a popular stock like Microsoft are not as high as, say, GameStop, so is the case when comparing Solana (SOL) to, say, Axie Infinity (AXS).
Also, take note of the minimum required stake for the coin you happen to be interested in. Depending on the value of the coin and the minimum requirement, it may not be wise to make the commitment. Keep in mind, some PoS cryptos also have a lock period during which you cannot sell the coin. This is not unusual and is also common in the stock market, but you need to be aware of it nonetheless.
Best platform for staking
Typically, the platform from which you buy the PoS crypto should offer staking for the coin. CryptoSlate Edge lists 285 PoS cryptos, but many of them can only be purchased directly from the creators of the coin. This is not very advisable since the crypto industry has been known to have scammers.
A better option would be to buy the asset from an exchange like Binance, where 79 PoS cryptos can be staked. Binance only lists trusted projects thus ensuring security for your investment. And since Binance provides complimentary services, you get the whole package and won’t have to look elsewhere.
3. Crypto trading
|Trading capital required||Average|
|Trading level of returns||High|
For those who are more familiar with cryptos, this is perhaps the best way of making money through crypto. Unlike conventional financial markets that operate within specific trading hours, the crypto market runs 24/7.
Therefore, traders can keep trading throughout the year without worrying about an opening or closing bell. Thanks to this, you can set your own hours regardless of your geographical location and potentially make money around the clock. High volatility in cryptocurrencies makes it particularly lucrative
At the same time, though, you must recognize that it is a lot more intensive compared to other methods of making money through crypto. Traders must be constantly on the lookout for trading opportunities and this can have a stressful effect especially for the inexperienced. Compared to stakers and hodlers who only need to keep their coins in a wallet and wait, it’s not hard to see why many newbies can’t find the best way to make money trading crypto.
The goal of trading cryptos is to make a profit off the daily price movements of a cryptocurrency. This is different from simply holding the coin in a wallet and selling it later at a higher price because you don’t need to store the bought asset in a wallet but rather in your trading account. Most crypto trading platforms will have a separate trading and storage (wallet) account for each function.
In this way, you can avoid the typical trading fees associated with exchanging crypto for fiat and vice versa. In addition, it becomes possible to trade crypto pairs, opening up a whole new world of opportunities. For example, you can now short a specific coin if you believe its value will drop and make a profit from the trade. This is not possible when holding or staking a coin.
They are usually represented as a ratio, such as BTC/ETH, where the values of Bitcoin and Ethereum are compared. This allows you to trade one coin for another should you believe the value of one will change relative to another. Some platforms will have cryptos paired to fiat currencies, such as BTC/USD, when you want to trade against a fiat currency.
How to trade cryptos
To give an example, Bitcoin and Ethereum are somewhat inversely related, meaning that the price of Bitcoin will often go up when that of Ethereum goes down and vice versa. As such, you can buy the BTC/ETH pair and make a profit given the relationship between the two coins.
In order to make this decision, crypto traders rely on trading strategies mashed on market analysis. Technical analysis involves studying price charts on a trading platform to establish market trends. Another strategy is a fundamental analysis where you trade based on news affecting crypto.
Also, arbitrage becomes possible when the pair is not correlated. It becomes especially pronounced when a popular coin is paired with a lesser-known altcoin because of illiquidity. However, arbitrage is an advanced trading strategy and is not recommended for beginners.
What to trade for maximum profit
Deciding on an individual crypto or crypto pair to trade is just as difficult as picking a cryptocurrency to buy and hold. Nevertheless, successful traders are always on the lookout for high volatility because it generates opportunities. Altcoins usually have higher volatility than the top coins in the market with sharper price swings and more profit potential.
Should you decide on this strategy, it’s important to remember that the same volatility can lead to huge losses, so only trade when you’re confident in your knowledge and skill. For a more conservative trading strategy, pick your trades based on fundamental analysis, sticking to major coins with lower volatility.
Best platform for crypto trading
As mentioned briefly earlier, you need a trading account if you want to trade cryptocurrencies. Most crypto exchanges will offer a trading platform as well but we recommend Binance. With over 400 coins listed and over 1,600 crypto pairs including fiat-crypto pairs, you should have more than enough to choose from. Not to mention that the Binance trading platform also offers all the technical analysis tools used even by professional traders.
|Mining capital required||High|
|Mining level of returns||High|
Crypto mining is similar to staking (discussed above) except that it relies on a PoW consensus method. Success at validating transactions means that the miner is rewarded with a newly minted coin on the blockchain network they’re on. In fact, this is how new coins are created on most crypto networks.
Naturally, Bitcoin mining is the most popular option given that it’s the most valuable coin. For each successful hash, the reward is 6.25 BTC. During the month of November 2021, Hut 8 Mining Corp. based in Canada stated that it mined 265 BTC – about 8.8 BTC per day, explaining the $50.3 million CAD revenue for the third quarter of the year.
How to start mining crypto
For you to become a miner, you will need to have a powerful computer with a graphics card. WhatToMine estimates that, with a graphic card such as Nvidia’s RTX 3080, you can make up to $7 per day. The final profit would depend on the cost of electricity in your location but on average a miner can make $180 per month.
While it’s not nothing, it would take years to recoup the cost of the computer and its components, which is why miners nowadays turn to ASICs. Compared to computers, ASICs are specifically designed for crypto mining and would generate more revenue. The Antiminer S19 Pro is one of the best available and costs nearly $3,000. At this cost, you can generate over $30 per day – nearly $1,000 per month.
Is crypto mining still profitable in 2022?
The most important factor contributing to profitability is the price of electricity. Mining is a power-intensive process that consumes a lot of electricity so it’s important to keep the cost down. This is why most mining farms are located in countries like Kazakhstan and, more recently, some regions of the US like Texas. If you don’t live in a region with cheap electricity, then mining may not be an ideal solution.
Your choice of mining equipment also accounts a lot toward your profit because you have to balance the cost against returns. As we have seen above, ASICs are cheaper and generate more revenues, so it’s becoming increasingly difficult to mine on a computer. Even so, the coin you’re mining also matters a lot.
For example, mining Bitcoin on a PC will only generate little profit even with the best hardware. But other coins like Vertcoin and Ravencoin can still be mined on a PC because their protocols do not allow ASICs to mine them while Monero can be mined using a CPU. The problem is that these coins’ values are lower and may not be worth the cost of electricity put in.
To avoid all these problems, companies have been set up to create mining pools, whereby you won’t need to buy any equipment. Instead, you purchase a share of the company and earn the profits just like dividends in a stock. It becomes one of the best ways to make money on crypto because you don’t need to put in any effort.
Best crypto mining pool platforms
As you can imagine, most investors have turned to mining pools to avoid the hassle of mining at home. Consequently, numerous mining pools have been established to satiate this need including one from Binance called Binance Pool. It’s probably the best way to make money mining Bitcoin because you can earn up to $18 per day.
5. Crypto futures and ETFs
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|Crypto futures and ETFs capital required||Average|
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The first Bitcoin futures product was launched on 11 December 2017 on the Cboe Futures Exchange. A week later, Bitcoin futures were introduced on the world’s largest futures exchange, CME. It was an exciting time for crypto because it signalled the introduction of crypto into the mainstream financial markets and progress hasn’t slowed down.
Ethereum futures came a few years later when the CME made the announcement on 7 February 2017. Since then, more crypto futures were listed on mainstream financial exchanges such as Bakkt but the product has been more common through crypto exchanges. Nevertheless, these products have gained a lot of popularity and become a viable alternative for investors keen on making money in crypto.
What are futures and ETFs?
Futures contracts are derivative products that track the value of an underlying asset. In the case of the CME Bitcoin futures, it uses a Bitcoin Reference Rate (BRR) based on Bitcoin price from a number of Bitcoin spot exchanges. So, when you purchase a Bitcoin futures contract, for example, you only purchase the right to buy Bitcoin at a future date but not the actual BTC.
But since the contract is accepted, it basically acts as the actual asset and can be traded at any time. Naturally, this makes it very attractive to speculators who don’t want to own any crypto but want exposure to the market.
ETFs are a bit different because they are funds holding actual assets. They require more regulation explaining why, to this day, the SEC is yet to approve any spot crypto ETF. To get around this hurdle, a number of Bitcoin and Ethereum ETFs have been created; only they track Bitcoin and Ethereum futures and do not purchase actual BTC and ETH as a conventional ETF.
Is it worth investing in futures and ETFs?
Security is the main reason why investors choose crypto futures and ETFs. These products have to be approved by financial regulators before they are offered at an exchange, unlike cryptocurrencies that are largely unregulated. Thus they make for a safe investment even on a long-term strategy and a good method for hedging against risk in the economy.
Short selling is also possible meaning you can make a profit in a bullish or bearish market. And futures also accommodate margin trading so you can increase your performance. Just keep in mind that margin trading carries a lot of risk for those who don’t know how to use it properly.
Best platform for Bitcoin and Ethereum futures and ETFs
The easiest way to buy futures and ETFs on Bitcoin and Ethereum is to buy through an exchange like CME. You will need a broker, though, because individual retail traders are not allowed to do so. Your preferred broker will depend on your location and the requirements they set, but you should expect to pay brokerage fees for their services.
This is the reason most investors turned toward crypto exchanges that also offered futures trading. Binance futures are the second most popular after ProShares Bitcoin Strategy ETF (BITO) in open interest – $5.66 billion against $5.68 billion – as of 22 October 2022. In contrast, Binance futures offers margin trading, not to mention being easier to access without having to pay high brokerage fees.
6. Buy crypto company stocks
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|Buy crypto company stocks capital required||Average|
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Another way to gain exposure to crypto indirectly is by acquiring stocks in companies that are associated with crypto. Here are 3 categories to consider:
At the time of publication, Coinbase is the second most popular crypto exchange by daily trading volume behind Binance. It went public in April 2021 on the Nasdaq through a direct listing. Although it wasn’t the first crypto company to be publicly listed on an exchange, it was the first major entry to the mainstream market.
At the end of the first day of trading, it was valued at $86 billion, but it has since dropped to $50 billion. Since Coinbase makes its revenue from charging crypto trading fees, its stock price is directly tied to the value of cryptocurrencies. Indeed, this is the reason its market cap has decreased since its direct listing because of the drop in crypto prices.
What’s even better is that Coinbase lists over 100 coins, so investing in the stock is like acquiring a basket of cryptos. Diversification is important in any portfolio, making the Coinbase stock a stable and potentially profitable investment. A major stock in the financial market, it can be purchased from most online brokers including eToro with no commissions.
Bit Digital and Hut 8 Mining
Crypto miners earn rewards for validating transactions on a blockchain. Thus, it follows that the more transactions there are, the higher the rewards for miners. This has been the case over the past few years as more people embraced crypto, driving the revenues made by miners. Some of the most successful miners have done so well that they’ve been listed on stock exchanges such as Bit Digital and Hut 8 Mining both listed on the Nasdaq.
Their stock prices are almost perfectly correlated to that of crypto prices, meaning that investing in these stocks is the same as being invested in all the coins they mine. Like in the previous example with Coinbase, this means you gain exposure to a basket of coins in a single asset rather than purchasing multiple coins individually. Also like Coinbase, it’s easy to buy the stocks through an online broker.
Nvidia and AMD are renowned for making computer graphic cards necessary for crypto mining. This is why the price of these cards skyrocketed when people sought to start mining from their homes. The good thing about the stocks is that these companies also produce chips for other purposes, so you get to diversify beyond crypto while being exposed to the sector.
For a more crypto-specific chip maker, look to Canaan Inc. that manufactures ASICs. Its ASICs are known to be highly efficient and effective and the company’s revenues reflect customers’ interest. As you would expect, its stock price is almost perfectly correlated to that of the crypto market, providing an alternate way of investing in the broader crypto market.
7. Crypto funds and trusts
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|Crypto funds and trusts capital required||Average|
|Crypto funds and trusts level of returns||Average|
What are unit trusts?
Unit trusts are different from ETFs and futures because they are not traded through an exchange. Instead, they are created and offered by a company that holds a specific asset. As crypto ETFs are still in limbo, crypto trusts have become the easiest way for investors to make profit in cryptocurrency without having to buy actual crypto.
This is important for those investors who are not familiar with the technology behind crypto but would still like to get exposure. When you invest in such a trust, you’re basically purchasing a stake in the trust and gaining dividends from the returns it generates.
Platforms to purchase crypto trusts
So far, the most popular crypto trusts are provided by Grayscale. The first one created in 2013 was Grayscale Bitcoin Trust and it currently holds over $27 billion in AUM. Over the past year, the trust has had a 8.38% rate of return. While this is not impressive, it’s important to remember that this has been due to the falling crypto prices during that period. All the same, it’s one of the best ways to invest in Bitcoin.
Several more trusts have been created by Grayscale including:
- Grayscale Basic Attention Token Trust,
- Grayscale Ethereum Trust,
- Grayscale Filecoin Trust,
- Grayscale Solana Trust,
- Grayscale Litecoin Trust, etc.
But these trust units aren’t perfect as an investment, mainly because of the fees charged at 2% annually. ETFs have much lower annual fees, hence making crypto trusts more expensive. Michael Sonnenshein, chief executive of Grayscale Investments, admitted this to Forbes and vowed to slash the 2% fee once the SEC approves crypto ETFs although he didn’t say by how much. To get a share of the trust, you also need at least $50,000 as the minimum investment, which may be out of reach for many people.
If you’re still interested in this investment vehicle and want to make money from Bitcoin with lower fees, try Osprey Funds. It’s also based in the US and fully regulated but its fees are much lower at 0.49% annually. The Osprey Bitcoin Trust now has $118 million in AUM meaning it’s smaller than Grayscale’s, but the cost may be worth it for some investors. You also get access to other coins through:
- Osprey Polkadot Trust,
- Osprey Solana Trust,
- Osprey Polygon Trust, etc.
|Loans capital required||Average|
|Loans level of returns||Average|
Imagine you have crypto in your wallet and are planning to hold on to it for a while, do you want to just let it lay idle? Of course not. Now you can learn how to make free money with Bitcoin if you know how to loan out your money and earn interest.
How it works
To understand crypto lending, simply think of how a bank makes money. A bank uses customers’ deposits to lend to borrowers while charging interest for the service. Thanks to blockchain, now you don’t need a bank and can lend directly to borrowers and pocket the interest.
Just like there are always borrowers at a bank, so is the case in crypto meaning you will always have someone interested to borrow your crypto. As a result, interest rates can be high and generate a good profit for the lender. For example, lending Bitcoin can generate between 3 – 8% annualised yield. Less popular coins have higher interest, obviously, so you can earn even higher profit.
Where to loan out your crypto
Many companies have become major crypto lenders after noting the demand in crypto lending. Binance is one of those companies and it has become one of the main lenders thanks to its popularity and reputation as a safe platform. It offers both flexible and fixed savings plans for investors who want to earn interest.
Through a flexible savings plan, you’re free to withdraw your funds at any time along with the interest you earned. However, the level of interest is low because Binance must maintain liquidity and withdrawals tend to take out liquidity. Meanwhile, locked savings have a higher interest up to 25% within 15 days.
Once you have deposited your crypto into either savings account, Binance will find a borrower so that you won’t have to do it yourself. This is the beauty of working with a centralised company like Binance unlike P2P lending where you would have to find a borrower yourself.
How safe is it?
Naturally, you want to know how safe your savings will be; and this comes down to which platform you used. Binance ensures safety by requiring borrowers to meet specific collateral requirements up to 100% of the coin’s value if it is highly volatile. Should the value of that coin fall below a certain level, the loan may be liquidated to prevent further losses for the borrower. Besides, Binance is well known and trustworthy, so you don’t have to worry.
9. Decentralised Finance (DeFi)
|Decentralised Finance (DeFi) difficulty||High|
|Decentralised Finance (DeFi) capital required||Low|
|Decentralised Finance (DeFi) level of returns||High|
Similar to how investors purchase, say, corporate bonds, crypto investors can do the same across a blockchain. Decentralised finance (DeFi) only eliminates the middleman (a bank) and facilitates the transactions using smart contracts. This way, you can invest in the projects you like and make money fast with crypto.
How it works
DeFi investments start with a decentralised app (dApp) aiming to perform a specific goal. One example of a successful DeFi project has been UniSwap, which allows for the exchange of cryptocurrencies across the Ethereum network. It’s useful for coin holders who want to exchange one coin for another without having to first convert to fiat and pay the associated fees twice.
As an investor, you can invest your crypto holdings in the project by placing them into a liquidity pool. It is this pool that enables transactions in a variety of cryptocurrencies because investors can place any coin into the pool. In return, the investors earn a share of the transaction fees based on the coin you placed into the pool. Some coins have higher fees if they’re not very liquid and can generate higher profits.
Many different kinds of dApps are currently operating across a variety of blockchain networks. Some of the most popular nowadays are those involving gaming and the metaverse. As an investor in these dApps, you can become a member of the DAO, allowing you to participate in decision-making while earning rewards.
Best platform for DeFi investments
As you may have assumed already, there are numerous platforms where one can invest in DeFi. After all, dApps can be built on multiple blockchains. The key is to find a safe platform you can trust because cases of fraud and scams are common given the anonymity involved. During the year 2021, CNBC reported that $10 billion was stolen through DeFi scams and theft, showing just how prevalent the practice is.
To be safe, use a trusted crypto exchange like Binance, which only lists trusted crypto projects like ChainLink (LINK). This particular DeFi project generates an estimated APY of 2.39%. It may not be a lot, but is almost guaranteed because the token has a market cap of over $12 billion. Meanwhile, other DeFi projects may promise over 10% returns but carry a lot of risks that may not be worth it.
Once you have a Binance account, it’s easy to dedicate a portion of your holdings to any of the DeFi projects listed. Withdrawing your funds is also just as easy and can be done at any time, transferring from DeFi to your account.
|Stablecoins capital required||Average|
|Stablecoins level of returns||Average|
Since Tether became one of the most popular stablecoin, many other variations have cropped up. Traders and investors alike recognized the importance of a coin pegged to the US dollar to enable faster transactions and exchange across cryptocurrencies. So, it shouldn’t be a surprise that stablecoins are some of the most heavily traded cryptos day-to-day.
How to make money from stablecoins
But this raises the problem of liquidity because a lot of it is required on any given day. Fortunately, anyone can contribute to this liquidity by lending stablecoins, some of which have been known to generate between 4 – 12% interest annually. All you need to do is acquire the stablecoin through a crypto exchange and then dedicate it to a liquidity pool.
Where to lend stablecoins
Binance, being the most popular crypto exchange by trading volume, needs a lot of liquidity in stablecoins. Not surprisingly, you can deposit your stablecoins into a number of stablecoin pools including Tether and Binance USD on the same platform. Interest on BNB is the highest at a 5.23% APY at a flexible plan.