4 ways to make money from Blockchain technology

4 ways to make money from Blockchain technology

Why people are becoming more interested in Bitcoin and blockchain technology and what are they doing to take advantage of this technology?

The rise of bitcoin price in the past 10 years has created a lot of attention in the millennial generation. While some are just driven by speculation on prices and the possibility of making large amounts of money. Others believe on the technology and the importance of decentralize systems that provide open, secure, borderless, censorship resistant and private networks. However, regardless you are one of the many that believe on this amazing technology or just someone trying to make money this are some ways you can profit from the blockchain technology. 

1. Trading Cryptocurrencies:

Trading cryptocurrencies probably is the more common way that people are profiting from blockchain technology. People see attractive to trade cryptocurrencies due to the high volatility on the prices and the predictable of the market. Some cryptocurrencies can fluctuate more than 50% in a single day and most of those movement can be predicted with just some little information. Exchange listings, network upgrades, partnership announcements and many other tend to move prices between 15% to over 100% in some coins.

Here you can see some examples of how prices can be predicted:

Coinbase Exploring the addition of new digital assets Tweet:

On August 05 at 6:00 pm. UTC Coinbase tweet a thread in which they express the intention of adding 8 new digital assets on their platform. Matic Network was one of the 8 digital assets on the list.  The price at the time that the tweet went life was $0.0117 a coin. Two days after, the price reach his pick at $0.0202 per coin. This single event made the price of the coin to move more than 70% in two days period.

Chain Link Coinbase Tweet:

This time you can see how the tweet made by Coinbase on June 28 of 2019 about LINK being launch at coinbase.com and in the iOS and Android apps increase the price. Price went up from $2.67 to $4.45 a coin. An increase of more than 65% in just 16 hours after Coinbase tweet was release.

As you can see when trading cryptocurrencies most of the time big price fluctuations happen within couple hours to a day. This means, that you would need to be aware about what is going on the space. Specially if you have an open position on a small coin. In the same way price move up it would move down up to 95%. Some news like hacks, bans, exchange delisting’s, also tend to move the prices over 15% but to the downside. So, is important, and I recommend that if you have intention to trade small cap coins for speculation to close the position that same day.

Also, before start trading cryptocurrencies is important to understand how trading works, the types of trading and strategies. In addition, you will need to understand why discipline is so important to master in order to success as trader.

Benefits and Cons:

However, is important to understand that trading cryptocurrencies involve a lot of risk and require extreme knowledge and lot of discipline. 

2. Mining: 

Mining is a transaction validation method called proof of work (PoW). Proof of work requires users to validate transactions and create new blocks by solving mathematical problems. In order to solve those problems, miners need to have a hardware that allow solve the problems and validate transactions. As a reward for creating blocks of validated transactions and including them in the blockchain they received an amount of the native token. This method is being use for Bitcoin, Ethereum and Monero.

3. Stacking: 

The only requirements to start generating passive income by staking cryptocurrencies is to hold the token. Most proof of stake cryptocurrencies projects offer the possibility to stake tokens. Staking is a transaction validation method that reward tokens holders with the native token or gas that can be trade for bitcoin or fiat currencies. The validation method is currently used by project like NEO, Ontology, Dash etc.

Users choose to stake a portion of their coins so that they have a chance of being selected to validate block transactions. If selected, users are rewarded with new coins. Depending on a user’s wealth (or in other words number of coins they stake), the algorithm randomly assigns an existing coin holder to verify block transactions. What this means is that those who already hold coins are responsible for verifying transactions on the blockchain. Therefore, individuals who hold more coins have more opportunity to a be selected to verify a transaction and as a result, a greater chance of earning a reward.

In order to use the PoS algorithm, coin owners must be willing to hold their cryptocurrency in a digital wallet for an extended period of time. This process can be likened to leaving money in a long-term investment account as users must be willing to go for a long period of time without accessing the money, but in turn, are financially rewarded for doing so. Essentially, in exchange for staking coins, individuals can earn what can be likened to interest for holding their coins over a long period of time.

4. Holding: 

In general, most people that hold cryptocurrencies for long time believe on the technology, and they think that in the future the coin or token could increase in value. Often, token holders (people that hold tokens) keep the asset for at least a year.

Benefits

Keeping Coins or Tokens for over a year would bring you taxes benefits. Crypto-currencies are considered an investment property and not a currency. You will owe taxes when you sell or exchange for services, products or even other crypto-currencies. This mean the gain or loss from any sale of Crypto-currencies is a capital gain or loss, similar to stocks, bonds and mutual funds.

Long-term capital gains are defined as gains made on assets like stocks, bonds, real state and crypto-currencies that you held for over a year. On the other hand, short-term capital gains come from assets that have been held for less than a year.

While going for the long hold is not quite as exciting as performing short-term trades, it can be better in some cases. For starters, it forces you to evaluate your investments with a more clear thought process. Does this project really have a future? Chasing short-term profits can be detrimental to a lot of portfolios, and this strategy can keep you grounded. Before choosing any long-term holds make sure to completely evaluate the project, the team, and future use cases. While this part is a lot of work after you’ve found a good project your work is done.

What to need to evaluate before going long on a Crypto project

• The Team: The team behind the project is one of the easiest way to make sure that the project is legit. You would need to find out who they are, what they do, their experience. 

• White Paper: White papers will help you to identify if the project could have future value. Here you will find objective of the project, the road map Etc. With all that information you would determine is the project could have future value.

• Website: Always make sure that website look professional, look for red flags as poor design bad grammar. This would not be accurate all the time but 

• Economics:  This probably is one of the most important of all. Know how the economics of the project and the token distribution would be is important to determine the future value of the price.