How to Earn Cryptocurrency for Beginners?

Cryptocurrency is a relatively new class of assets that began with the creation of the first Bitcoin in 2009. The main benefit of cryptocurrencies is that they do not operate with a centralized authority. Therefore, they are more transparent. Additionally, they are based on immutable blockchain technology, which makes them secure.

The cryptocurrency industry is growing fast. The industry size crossed the 1.5 billion mark in 2020, is still growing. The prices of digital assets are also gaining each year, giving the investors decent returns.

Currently, everyone wants to earn some cryptocurrency. However, the digital asset market is uncertain, and most people do not want to lose their hard-earned money. Here are some ways you can use to get your hands on these digital assets safely.

1. Buy Cryptocurrency

Just like with most things in life, the easiest and most reliable way of earning cryptocurrency is to buy them.

Buying these digital assets is now easier than ever before. The industry has gained popularity in the past few years, and the demand for these assets have increased.

Similarly, the supply of digital assets has also skyrocketed in recent years, with more projects coming up. Currently, there are more than 8,000 digital assets in the market. However, the coins vary in functions, value, and even safety. Therefore, it is important to research before buying any token.

There are different ways one can use to buy cryptocurrency. The easiest and most popular method is through exchanges. These projects allow users to sign up and use their fiat currency to purchase listed digital assets. There are many platforms out there, and it is important to look for secure and easy-to-use ones. Exchanges also allow exchanging of digital assets buying a cryptocurrency using another cryptocurrency instead of fiat. For example, if you have USDT and want to buy Zurich Gold, exchanges will enable you to swap these tokens at the current exchange rate. The platforms also allow the trading and selling of digital assets. However, you should be aware that these exchanges charge transaction fees. The fees may vary from one exchange to another. The fees are also updated in real-time due to the fluctuation of the market. However, the fees are generally very low compared to those of the brokers for traditional assets.

One can also buy digital assets through cryptocurrency automatic teller machines (ATMs) such as Bitcoin ATMs. They operate more like the traditional ATMs for fiat currencies. However, instead of withdrawing cash, a user deposits the fiat money and receives a receipt for the digital currency purchase with instructions on how to receive the tokens to your digital wallet. Some cryptocurrencies are not accessible through ATMs. Additionally, cryptocurrency ATMs tend to have higher transaction fees. Therefore, it is advisable to buy cryptocurrency through exchanges.

Often, the process is straightforward. All one needs to do is sign up and deposit funds.

Platforms support different payment methods, including direct bank transfer, bank cards (debit cards and credit cards), and electronic wallets.

Some exchanges may require verifications from your bank, a process that may take days. You should check the sign-up and verification process before or use cash directly in your transactions if you are in a hurry.

2. Mine Cryptocurrency

Mining involves creating new cryptocurrencies and introducing them to the network. It is an excellent way of earning cryptocurrency, although it does not work for all cryptocurrencies.

Mining is a process of updating the ledger of a cryptocurrency – blockchain.

Cryptocurrencies do not have a central authority responsible for confirming the transactions. However, transaction confirmation is necessary to ensure that all the recorded transactions on the blockchain ledger are valid and accurate. The validation process is decentralized, meaning any person on the network can perform it. There are different methods of confirming transactions, one of them being the proof-of-work (PoW).

PoW involves using computers to solve some mathematical problems – a process called mining. The first miner to get the solution gets the chance to confirm a transaction. They are rewarded with a newly created digital asset. Some popular coins supporting mining include Bitcoin (BTC) and Ethereum (ETH, through Ethereum 1.0), Monero (XMR), Dash (DASH), Litecoin (LTC).

Mining can be resource-intensive due to high competition and the need to keep the transaction confirmation time short. Mining bitcoin involves guessing the correct solution to mathematical problems. Therefore, the many guesses a computer can make, the higher the chance of getting the correct solution. In addition, only the first person to get the solution right gets the reward, which makes the process highly competitive. Bitcoin miners use powerful computers called ASICs to compete against other miners. Buying and running such computers are very costly. The equipment consumes a lot of energy. They also require special storage places and cooling systems.

However, those who want to try their luck in Bitcoin mining do not have to invest hundreds of thousands on this equipment. They can join a mining network or pools, where many people pool the resources to break entry barriers and neutralize the risk. The only downside is that you will have to divide the rewards amongst yourselves, depending on your contributions to the network.

To begin mining:

Calculate the mining profitability
Get Bitcoin Wallet
Find a Mining Network
Pay the joining fee
Download the mining program
Start mining

3. Stake Cryptocurrency

Some cryptocurrencies do not support mining. Their underlying blockchains use different methods of transaction validation mechanisms, which aim to improve on speed and scalability of the network. Some of those networks use Poof-of-Stake (PoS).

As the name suggests, PoS uses staking as a criterion for selecting transaction validators. PoS allows users to lock a certain amount of funds on a computer that is connected to the network. Such computers are called nodes, and the locked funds are known as stake. The network then randomly chooses the user to help validate and add the next transaction (block) to the network. Some factors that influence the contest’s outcome are the number of tokens a user has staked, the duration that the coins have been staked, and randomization (to avoid monopoly by a single entity).

Though staking, blockchains can continue to be updated in a decentralized manner without coming too many resources to acquire powerful computers.

In addition to being less resource-intensive, staking is also environmentally friendly.

Mining consumes a lot of energy, thus contributing significantly to the industry’s carbon.

Staking may look like a lottery game. The more coins one stake, the higher their chance of being chosen to validate the transaction. Additionally, one should have a certain minimum amount as a stake to get into the draw. Therefore, this method works best for increasing their cryptocurrency stocks.

Even though it is less expensive to set up and run a mining node, it can still be expensive and demanding, especially to beginners. However, just like in mining, there are solutions to break such barriers.

The first solution is staking through an exchange. Exchanges provide the easiest staking solutions. Some exchanges allow users to stake coins through their validators at a small fee. Such exchanges eliminate the hassle of running a validator. However, you will have to forfeit the control of your coins to the exchange.

Another solution is joining staking pools. Like mining pools, staking pools involve users who pool resources to get a better chance at validating the next coin.

It allows a user to deposit less than the minimum staking amount and still stand a chance of participating and getting the reword. However, not every pool is suitable for any user. One should research before settling on the platform they want to use.

Area to consider include the reliability of the validators, the fees, customer support, the signing up requirements such as users giving up their private keys to the exchange, and even users review.

Finally, one can also buy a pre-configured validator, to avoid the hustle of setting up one. However, you will still be required to keep up with the ongoing maintenance, which may be a hustle, especially if you are not tech-savvy.

Read more about What is Staking?

4. Participate in DeFi Yield Farming

Yield Farming or Liquidity Mining is a way of earning cryptocurrency by temporally lending your digital assets to a decentralized finance (DeFi) platform. The primary product of the DeFi market is decentralized exchanges (DEX). To enable trade, DEX relies on investors to provide liquidity to the protocols.

Yield farmers earn a share of the platform’s fees paid by other platform users.

Farmers can contribute their assets for as long as they choose. Users receive money daily for the duration they have contributed their funds. The duration can range from a few days to a few months. The more a user lends, the greater the reward they get.

The yield farming pool’s reward is measured in annual percentage yield (APY). The pools are always competitive since APY is always high. Zurich, for example offers up to 50% APY However, the rates fluctuate and may differ from one platform to another.

Therefore, liquidity farmers move their investment assets from one platform to another.

Farmers also pay a gas fee each time they leave or enter a liquidity pool. Additionally, blockchains such as the Ethereum network experiences significant network congestion, making it difficult to hunt for high-APY LPs.

5. Accept crypto payments

Some platforms, such as Shopify, allow merchants to accept cryptocurrency payments. Shopify, for instance, enables users to accept more than 300 crypto coins. The process is usually simple. For Shopify, you only need to enable an alternative payment method from your account and link your wallet. Other platforms such as WooCommerce requires users to download additional plugins such as CoinGate or BitPay.

6. Use cryptocurrency and payment platforms

Some cryptocurrency and payment platforms offer financial applications to help users earn more cryptocurrencies using the funds they already have. Such platforms offer cashback functionalities, which enable users to earn while spending their money.

Using cards from a FinTech company can help users earn up to 5% back on all their spending.

Final Thoughts

Even though there are many ways one can use to earn cryptocurrency, some may be very expensive – such as mining Bitcoin. It is important to do research and look at the most effective way to earn coins at minimal risk.