Cryptocurrency—it’s the new buzzword for those seeking to grow their wealth in the digital age. Cryptocurrency or crypto for short is essentially a digital or virtual currency protected by cryptography. Because of this, it can’t be counterfeited and double-spent. You can compare this to the standard fiat currency in your country such as AUD or USD except it’s decentralized, meaning it’s not controlled by any institution. Instead, using blockchain, a network of computers functioning as public ledgers, and transactions are verified.
Consequently, interest in this kind of currency rose as its decentralized attribute allows it to be unsusceptible to any economic events and disasters such as recessions and inflation. On top of this cryptocurrency’s value is known to have a very volatile nature making others want to trade and invest in it. This is caused by the fact that its value is not regulated by any institution such as the government thereby making crypto’s value dependent on its investors’ perceptions. One example of these cryptos is Ether which is a cryptocurrency under the Ethereum blockchain. It’s worth noting that Ethereum shouldn’t be confused with Bitcoin as the former is a blockchain with multiple applications and its own crypto, while Bitcoin is simply a cryptocurrency.
Now you might be interested in this cryptocurrency and blockchain as you may be hoping to start investing in them or simply to add them to your current portfolio. Nevertheless, it’s a great option as there’re numerous ways to invest in them. Moreover, it’s a great way to protect your financial well-being in the event of an economic crisis. With that said, if you’re interested in this blockchain, here are different ways you can profit from it from the blockchain’s coin to its other applications:
The first and most popular way to invest in Ethereum is to invest in its cryptocurrency, Ether. Now, it’s worth noting that there are numerous ways to invest in Ether which can be categorized into short-term and long-term investing. However, for this method, long-term investing will be mainly discussed.
Long-term investing often involves holding your crypto and assets for more than a year. Furthermore, those who invest this way can be referred to as passive investors. This also means that you won’t keep buying and selling large quantities numerous times within a given time period. Essentially, you can see long-term investing as a set-and-forget approach.
Now, there are several ways to invest long-term in cryptos such as hold on for dear life (HODL) and cryptocurrency exchange-traded funds (ETF). HODL, or buying and holding, refers to the strategy of buying crypto and keeping it long-term with the intention of profiting from its long-term appreciation. In fact, before all cryptocurrencies started out with a value of less than a dollar but are now worth hundreds if not a thousand.
Another way to invest long-term in Ether and crypto, in general, are ETFs which allow you to invest in a group consisting of a diverse number of assets. By doing so, you can lessen the risk in case a single cryptocurrency fails. Now, if you’re considering buying and selling some Ether coins, you may want to consider getting the best Ethereum wallets to safely store your crypto.
Next, you have trading which can be seen as a short-term version of investing in Ether. With short-term investing, you’re essentially holding onto your assets, or in this case your crypto, for less than a year. Individuals that do short-term investing are often called active investors or traders.
It also means you buy and sell more often than long-term investors with frequency ranging from several times a day, week, or month. More specifically, when you trade several times within a day, this is called scalping. Meanwhile, if you’re trading several times a week or for a few months, this is called swing trading. Now, you may also consider day trading, but don’t confuse this with scalping as the latter means more frequent trades, less profit, but also less risk. Meanwhile, day trading means less frequent trades, and more profit, but more risk.
Now, if you’re looking to make a quick profit then trading Ether may be the best option for you. Essentially, this can be very risky but it’s also a great way to profit from the market’s volatility.
If you have Ether or other crypto coins in your wallet already, one way you can profit from Ethereum aside from its appreciation is by lending to borrowers. You can compare this to being a bank that loans out money and gains interest from it except it’s decentralized. Now, you may be wondering, “why would others even borrow crypto?”. Well, not only is it becoming a valuable asset but it’s also becoming a payment method aside from fiat currencies.
By using platforms specialized in crypto lending and choosing the right rate amount, you can profit from your Ether from installment interest payments. Before doing this, it’s crucial that you choose a reliable platform. In fact, some are willing to reimburse a percentage of the amount you lent in case the borrower doesn’t pay you back.
The next way to profit from Ethereum is to mine its native coin. Mining any cryptocurrency is the process of validating transactions over a blockchain and validating them using a proof of work (PoW) system. This works with your computer creating a block of transactions and adding it to the blockchain after first solving a computationally difficult puzzle. Afterward, you will be paid the transaction fee.
You can call mining the lifeblood of any blockchain system as it helps with verifying transactions within a decentralized system. In the past, mining could be done with just a desktop computer. However, as puzzles become more and more complex, you now have to use special hardware to get the job done. In addition to hardware or a mining rig, you’ll also need mining software and a crypto wallet.
It’s worth noting that there are several ways to mine Ether and any other crypto such as pool mining, solo mining, and cloud mining.
Pool mining is the simplest kind as you will be working with a network of miners. Working together is highly beneficial because mining Ether is becoming more and more difficult. Then after the job is done, the reward or transaction fee is divided equally according to the computing power that each individual contributed.
Meanwhile, solo mining requires more power and can be more difficult. This is because solo mining means you’ll be solving puzzles on your own with hopes of doing it at the right pace. As such, you’ll need to have a farm of computers and loads of hardware to successfully mine fast enough.
However, if you don’t want to buy a lot of hardware for mining, you can use cloud mining. For this method, you will be renting another miner’s hardware, hire them to mine the crypto for you, and then pay them a fee for it. But, note that this makes you vulnerable to scams and fraud.
Stake Your Ether
Another way you can profit from Ethereum is by staking your Ether. This is often compared with mining as it helps with verifying transactions over the blockchain. Staking your crypto including Ether is the process of locking up your crypto holdings or committing it to a blockchain to help it and then earn a reward or interest.
Those who do this are called ‘stakers’. Along with keeping their crypto in a blockchain, they’re tasked with approving and verifying transactions in a blockchain such as Ethereum.
You can compare this to keeping your savings in a bank and gaining interest over time.
Last but not least, you can profit from Ethereum by investing in non-fungible tokens (NFT). As previously mentioned, the Ethereum blockchain isn’t limited to just cryptocurrency as it has other applications. One example of these applications is NFTs, a popular thriving investment that’s also controversial. NFTs are run on the Ethereum blockchain and unlike cryptocurrency, its non-fungible attribute means it’s unique and irreplaceable much like a piece of art.
In fact, it’s no surprise that the most common kind of NFTs are artworks. However, it’s worth noting that it’s not exactly the artwork that makes this valuable. Instead, the NFT functions as a certificate that you have the original which is what makes it valuable. But know that NFTs aren’t limited to digital artworks only as they can also be objects and more. If you wish to profit from Ethereum through NFTs you can either sell an NFT or buy and sell one.
As technology has progressed, others have found ways to let it intersect with other industries and sectors such as finance. One prime example of this is blockchain and cryptocurrency, two technologies that are currently disrupting the financial world. Now, more and more people are hoping to join and invest in these technologies too. However, you may wonder how you can profit from it. Hopefully, the list of ways mentioned above to profit from Ethereum has helped you to understand how it works to grow your wealth.