The invention of Bitcoin, pretentiously called “electronic cash”, did not remain a forgotten civilizational refinement of the century that is gaining momentum. There were enthusiasts who saw a deep meaning in the original way of making a profit using cryptography methods. Over time, lovers of earning extra money on digital assets reached out to them.
Today, the concept of “cryptocurrency” is well-known, but few know how to use an outlandish resource. In principle, the methods of accumulation are traditional – extraction of resources, profitable investment of funds, trade. With regard to the topic of our reasoning, the peculiarity lies in the use of specific tools. Also learn more about sell bitcoin.
Disclaimer: Selecting the best cryptocurrency to invest in is difficult if not impossible to do without hindsight. Learning how to invest in crypto is a high-risk activity and regulators such as the Bank of England advise against spending any money you cannot afford to lose.
Let’s start with the usual – trading. The English versions of this term – trade, trading – have taken root and people who trade on special exchanges call themselves traders. As a rule, these are established market participants who have their own funds for investments (we will not focus on moneyless swindlers-good luck catchers).
Buying, selling and re-acquiring cryptocurrency is the trader’s algorithm of actions. The first condition for the success of a beginner is a thorough immersion in the topic, a willingness to study special literature, not to neglect lectures and specialized seminars, or better, to take a course of special training. Then – the tedious, painstaking work of tracking the market, development trends, and analysis of trading strategies. Only after that – invest money or look for sources of credit. The best crypto books may be able to help you speed up the learning part of this journey before you feel confident enough to spend a penny on tokens.
Before starting to participate in the auction, it is important to realize that the volatility of the cryptocurrency (sharp price fluctuations, volatility) goes off scale, and requires constant attention, and caution. The safest option is training accounts that help you master the tools of the exchange, and get your hand on the virtual balance. You should start acting gradually, at first operate only with small assets and be psychologically prepared for the first losses. This will help in the future to gain confidence and not panic.
At the same time, the applicant for crypto earnings understands that technological progress has introduced special programs that automatically search for ways to trade positions in a split second. World exchanges use algometric (high-frequency) trading. Such programs are called bots (Czech robot) and are conditionally divided into:
- “Simple”, with pre-specified functionality;
- “Robots” that do not make transactions, but give recommendations.
Although the use of algorithms in trading is a complex process, sometimes not only professionals resort to it. Beginners, over time, should think about attracting “Robots” as assistants, who give recommendations. The idea of global prospects for the development of software products will not hurt.
In the development of the topic of trading in “crypto”, it should be said about long-term transactions. In principle, this is an investment, and in international practice, the term “hodl” (hodl) is used.
At the stage of mastering the basics of trading for beginners, this attracts not by obligatory immersion in the depths of technical analysis. A trader spends money and buys an asset at the time of a major decline in the exchange rate with the hope of playing on the price rise in the future.
But, besides trading, the most popular tool for making a profit is mining (mining – production). Appropriate equipment (video card processors, specialized ASIC devices), electricity and a cool room will help to achieve the goal. The advantage of mining is you don’t have to believe that Bitcoin is a good investment to make money, as you can sell any Bitcoins you earn on the open market shortly after receiving them as payment for successfully mining a block.
Owners of material resources often earn on the “production” of Bitcoins. But this is within the power of successful firms or wealthy users, and it is better for beginners to focus on altcoins, coins that are alternative to the “progenitor”.
This reduces the cost of the process, and when combining several miners, income is guaranteed to the pool and to each participant individually. With apprehension, beginners perceive offers to receive digital currency on a smartphone. and they do it right – practice does not confirm rave reviews about advertised projects.
It is possible to mine cryptocurrency without the equipment mentioned above. Ten years ago, Proof of Stake technology appeared (proof of ownership). The invented algorithm promises to make a profit if you have a constant balance on your own wallet and regularly stay in the network. The amount established by the regulations is placed as if on a bank deposit to receive interest. This process is called stacking. Those interested should take a closer look at this perspective. We are talking about remote servers – masternodes – with the corresponding software resource. Home computers, laptops will play the role of such servers. Having replenished the opened wallet with coins, the user waits for the blocks to appear for a couple of days, installs the program and activates the storage. The main condition is to activate and synchronize the storage itself, but do not forget about the impossibility of using the funds located there for other transactions.
Of course, the range of earning options in the described area is wider. Experienced traders work with the so-called stablecoins, which are backed by traditional assets and are great for profit-taking. Others guard “shoots” – anomalous price deviations in one direction or another, with luck, they buy an asset at a favourable rate. Remuneration is practised for attracting new users to work. The referrer (client of the company) receives bonuses by inviting referrals (users), in accordance with the terms of special programs called referrals. Large crypto exchanges, such as BitMEX, EXMO, regularly develop and implement complexes of such events.
It is easy for a novice trader to make sure that the digital transactions market does not standstill. From time to time, innovations are born in the cryptocurrency sphere that excites users. So three years ago, during the implementation of the project for the initial placement of tokens (it was called ICO), the cost of Ethereum increased sharply, which was the result of rush demand. True, it began to resemble a financial bubble and the then-popular concept failed. But the impulse of a new idea flared up and another project arose – IEO, in which the creators of the projects do not select investors, but the cryptocurrency exchanges choose platforms and performers to promote coins to users. Over time, crypto exchanges acquired appropriate venues for holding events called Crowdsales (English “crowd” and “sale”). People began to cooperate pooling money to fund successful developments. But this scheme has not remained unchanged. The emerging way of earning, due to the speed of the operations carried out, left late investors behind. That is why the exchanges, having changed their approach, turned the program into a lottery.
Time confirms the vitality of digital technologies. In the ending year, the increased interest in cryptocurrencies has not faded away, Bitcoin and altcoins are growing in price. It should be used for earnings, savings. We hope this brief overview will help new traders take the first step in mastering the complex but exciting process. We wish you success, arrived in the first year of the third decade of the century.