With real estate prices gaining 25% in 2021, if you’re not already a property owner you’re probably feeling priced out of the market. A 10% or 20% downpayment is suddenly now out of reach. So what assets can you actually afford to invest in? Cryptocurrency is filling this gap for many younger home buyers looking to grow their savings into a home deposit. If that’s you, then keep reading because in this post we share 12 different ways that you can make money with cryptocurrency. We rank each money making method from beginner to advanced based on our knowledge and experience.
If you are new to crypto and ready to take the plunge, this post will help decide just where to allocate your time.
For all of these methods, you can start with $100 or $1M. Crypto doesn’t differentiate – there are opportunities for anyone, no matter your finances.
- Test your crypto savvy first!
- 12 ways to make money with cryptocurrency
- Where to start with cryptocurrency investing
- 3 beginner tips to manage risk early
- How to protect your crypto wealth
Test your crypto savvy first!
Before we get on with making moolah, let’s find out how crypto savvy you are so that you can work out which strategies might suit you best.
You’re a beginner if don’t have any crypto or digital assets but want to get started. Answer these 5 questions to find out if this is you:
- Have you set up a crypto wallet like MetaMask and do you know know how to keep it as secure as possible?
- Do you have an account with a large exchange like Binance?
- Do you have a basic knowledge of how the crypto market works?
- Can you buy, send, and receive crypto from an exchange to your crypto wallet, including on different networks?
- Can you connect your crypto wallet to a DeFi protocol, deposit your coins and then disconnect your wallet and all approvals?.
If you answered yes to all of these questions – congratulations! 🙂 7 of our 12 money making strategies are out there waiting for you.
If you’re not at this level yet, download our Quickstep Guide in the right menu ->.
Then follow the ‘4 steps to get started’ and ‘3 tips for beginners’ at the bottom of this post. This will get you sorted to Beginner level and answering yes to all of those questions!
A competent investor is someone who has been around crypto for at least 12 months and is building a digital asset portfolio. If you can answer yes to these questions, consider yourself (at least) a competent investor:
- Are you semi-active in managing your crypto asset?
- Can you confidently navigate the DeFi ecosystem – how to buy, sell and send crypto?
- Have you already staked coins and earned interest through lending?
- Do you use MetaMask and other wallets regularly?
- Do you know what a blockchain explorer is and how and when to use it?
- Are you clear on what moves prices up and down in crypto markets?
- Do you know the risks involved in different types of DeFi products and crypto?
- Have you bought and set up a hardware wallet to protect your crypto wealth?
If you answered yes to all of these questions – huzzah! We have 9 of 12 money making strategies that you can take advantage of (some you already are).
If you’re not quite there yet – stick with beginner level methods. Double down on your crypto research and focus on execution! Becoming an expert in one or two beginner strategies can still make you a whole lot of money!
You have already built a material digital asset portfolio. You are advanced if you can answer yes to these questions:
- Do you actively manage your crypto assets on a day to day basis?
- Do you have a high risk tolerance?
- Are you across complex crypto products like Automatic Market Makers and impermanent loss?
- Can you interpret and use price charts, trading indicators, trading patterns, and market trends?
- Do you know where and how to find alpha in the crypto market?
- Do you regularly use decentralised exchanges and more complex and risky DeFI products like bonding and borrowing to compound returns?
- Do you know and implement risk management strategies to protect your capital and avoid liquidation?
Congrats if you’re a total crypto gun! We might not be able to teach you much, but it’s worth having a read through to see if there’s anything new here you might have missed!
12 ways to make money with cryptocurrency
Just remember, none of this is financial advice. Crypto is a risky investment. It’s a hedge against a tanking global money and financial systems and a new technology. Treat it as such. Allocate a small amount of your investment portfolio. And never put in more than you can afford to lose.
Ok, time for the big reveal! 🙂 Here are 12 ways to make money with cryptocurrency, ranked from ‘beginner’ to ‘advanced’:
- Learn to earn – you earn small amounts of crypto to learn about crypto and by upvoting and posting on sites like reddit
- Hodl – buy and hold coins and tokens long term
- Lend – lend your crypto to others and earn interest
- Stake – contribute to a staking pool and get rewarded
- Compound – hybrid hodl and stake strategy
- Referral rewards – refer friends to crypto exchanges, get free crypto
- Airdrops – free magic internet money appears in your crypto wallet.
- Spot trade – trading price action on price charts
- Metaverse digital assets – you play online games or run a business in the metaverse and earn crypto as you go
- Nodes – its complicated, keep reading!
- Options & margin trades – complex trading products and strategies like leverage
- Yield farm – exactly what it sounds like – farming for yield
Next, we’ll run through each of these in detail.
1. Learn to earn
(Investing level: Beginner)
Did you know that Coinbase and Coin Market Cap will pay you in crypto to watch videos about crypto and fill out quizzes at the end? On Coinbase, you can earn between $3 and $10 to watch a video that teaches you about different cryptocurrencies. If you’re trying to learn about crypto anyway, who doesn’t love a bit of free money? The crypto is paid into your Coinbase account, so set this up first. You’ll need to have your ID verified on Coinbase.
You can also hang out on crypto reddit, learn heaps (it’s where all the tech nerds are 🙂 ) and get paid in a crypto called Moon. All you have to do is upvote posts and post on your own. Once you have some Reddit Moons saved up, you can swap them into money IRL. Here’s a handy guide for how to get your Moons into $$.
(Investing level: Beginner)
“Hodling’ is crypto lingo for buying and ‘holding’ cryptocurrency assets over the long term (even when the price dips 50%). Hodling is generally for capital growth over multi-year timeframes. Hodlers are taking a long term view that digital assets are here to stay and in the future will make up more than their current 0.05% of to the total market cap of global assets ($2T/$400T).
Ever heard of the saying ‘when in doubt, zoom out’?
It just means zoom out on the price chart, look at the long term price action, and hodl your crypto bags!
Hodlers look at things like ‘rainbow charts’ which aim to map out where the price action might range in the future, over the longer term. Rainbow charts apply logarithmic regression techniques to price history. Here is a recent BTC logarithmic chart posted to Crypto Twitter. BTC hodlers will point to the long term upward trend on this chart and keep hodling if the price action stays within the upper and lower bounds of the rainbow band.
We hodl cryptocurrencies that we consider to be ‘blue chip’ plays. If you take a look at this post about the best crypto for exponential growth, you’ll get an idea of some of our ‘hodl’ bags.
3. Lend (earn)
(Investing level: Beginner)
Lending is how you earn interest in crypto. Who doesn’t love a little passive income?
It’s similar to the traditional high yield savings bank account where you let the bank use your money and in return they pay you interest. But.. .in crypto you’re not lending your money to the bank. There are a couple of different lending models:
a) Decentralised lending – you lend to other people (P2P lending) via a ‘lending pool’
Here is an example of how P2P lending works. In this example, we lend US Terra stablecoin into a lending pool governed by the Anchor Protocol. Anchor pays us 19.5% interest at the moment. You can even take out insurance on your deposit in the Anchor smart contract. Check out our post on how to use Anchor Protocol here.
There are heaps of P2P lending pools in DeFi. You need to make sure you DYOR before your put your hard earned money in as you don’t want to get rugged!
b) Centralised lending – you lend to a company
You can also lend your crypto to a company (like Celsius or BlockFi). They use your crypto to engage in various crypto investing and lending activities, and pay you a cut of their profits.
The Celsius interest rate on Stablecoins like USDC and USDT is around 8%. If you want to join Celsius, use our link and you’ll get $50 in Bitcoin. All you have to do is set up an account, transfer $400 worth of crypto in and hold it there for 30 days. You will pay network fees (gas) to transfer your coins into Celsius so we’d recommend starting with at least $2000 worth to make sure you’re in the money. The free Bitcoin should help with gas fees also.
Celsius is currently open to deposits for US citizens. BlockFi has been stopped by regulators in some US states from operating its yield earning product (for new users) because of financial product licensing. Here’s a post that delves into the issues a bit more.
It’s important to know that no-one has lost their money because of the regulators bans – existing customers are grandfathered.
(Investing level: Beginner)
Staking is like lending because you do it to earn interest or rewards. But with staking, you are rewarded for contributing your crypto to a ‘staking pool’ run by a blockchain node operator.
Blockchains rely on decentralised nodes to operate and validate (as correct) each block (group of records) in the chain (ledger). The act of validating blocks is rewarded with native coins that come from the fees users pay to use the blockchain.
Proof of Stake blockchains generally require node operators to stake a bunch of native coins to run a node. Staking pools are akin to node operators crowd sourcing these coins. The more coins node operators have in their pool, the more likely they will be selected (by the blockchain software) to validate blocks on the network. For each block they validate, a node operator is rewarded in native coins. They then share their rewards with everyone that stakes in their staking pool.
The easiest place to start staking
It sounds complicated, but it’s really not.
If you have coins on Binance its literally two button clicks to stake your coins and earn rewards. The APY returns can be in the double digits – some of our coins are earning more than 20% APY on Binance. There are also triple digit returns (for riskier coins).
The thing to know about staking is that there is flexible and locked staking. Locked staking usually pays more. But you’re locking your coins up in the pool for a period of time – usually 30, 60 or 90 days. If you redeem your coins before the end date, you forfeit your rewards.
Also, the higher the APY, the riskier (more volatile) the coin or project. You can buy a coin and stake it, and earn 2500% APY. But with it there is a good chance the underlying value of the coin goes to zero or close to it. 2500% interest on $0 is … $0. Manage your risk accordingly.
We stake on Binance because it’s just super convenient between trades. You can start on Binance with this link. We get a small commission on your trading fees if you do. It’s a nice way to thank us for the post, don’t you think?
(Investing level: Beginner)
Compound strategies are when you hodl strong performing cryptocurrencies and stake them or lend them out at the same time. Here’s an example:
We are investors in LUNA, which is a Layer 1 cryptocurrency blockchain. LUNA has provided us with some good capital gains and we think it’s a strong and growing ecosystem. We’re going to be holding it for some time. So while we hodl LUNA, we stake it. We have some of it staked in Binance and some in different LUNA dApps. We get exposure to LUNA’s price growth over time and while we hodl it, we’re getting around 10% to 25% interest.
What blue chip stock do you know that returns a 10% to 25% APY dividend? Welcome to crypto! 🙂
The easiest way to deploy this strategy is using Binance. Remember to join Binance with our link, so you save on transaction fees when you buy and sell coins.
6. Referral rewards
(Investing level: Beginner)
Referrals aren’t going to make you rich in crypto, but it’s a nice passive way to earn some coins, which you can then compound in to more coins. Huzzah!
A lot of crypto exchanges will offer you a referral fee if you bring them new sign ups. The way it works is, you sign up with our referral fee to get a bonus. You then offer the same referral program to your friends and family to sign up, and you get the referral fee.
You can get anywhere from $10 to $50 BTC for referring new customers. Free money for doing not much at all!
Here’s a list of crypto exchanges or products that have referral rewards, and our referral links to set up an account with them! Muchos Gracias financial freedom seekers!
(Investing level: Beginner)
This is basically when a crypto project or exchange sends free crypto coins or tokens into your crypto account or wallet. Sounds pretty fly, right?
Airdrops of kind of like a shareholder dividend in traditional markets – a premium payment for holding a particular coin.
Airdrops are used by projects as a way to coax investors to invest in their project and buy their coins. Airdrop announcements can push the price of a coin or token up in the lead up to the Airdrop.
Sometimes you have to take some kind of action to qualify for an Airdrop, so pay attention to the Airdrop instructions. Here is one example of how an Airdrop might work: Binance will announce an Airdrop with instructions in their App. The instructions say that they will take a snapshot of all Binance accounts on a certain date at a certain time. Any holders of a specific coin (Coin A) captured in the snapshot get airdropped free tokens (Token B) into their account.
Other times you need to connect your crypto wallet up to a specific project website at a certain time to be captured in the snapshot and receive the Airdrop.
Airdropped coins and tokens aren’t usually worth a lot of money at the time of the drop. But they can grow in value (some significantly) over time.
8. Spot trade
(Investing level: Competent)
This is just trading the price charts like you might in traditional markets. The main difference with spot trading crypto is the wild swings, both up and down, that traders can take advantage of. These wild swings of 20% in a single day mean that you can make good money with just a few solid trading techniques provided you know them well. You don’t need to be a professional trader necessarily.
You DO need some good risk management trading skills so that you don’t lose your undies because of these price swings. This is why overall we have it ranked trading as ‘Intermediate’. If you don’t know how to read a price chart, identify a trading pattern, set a buy, sell, take profit or stop loss order – stay away!
9. Metaverse digital assets
(Investing level: Competent)
Don’t click away yet just because you read the word metaverse! I know, I know the very thought of a virtual reality world has some people’s eyes glazing over. But just hear me out. Because before long we’re going to see mainstream media introducing the first Metaverse millionaires. Do you want to be one?
Some Metaverses come with virtual economies where you can buy digital assets just like you can IRL, and use them to generate revenue. You purchase the digital items as NFTs and can deploy them in that native metaverse. For example you can buy NFT petrol stations, shops, cars, stadiums – and use them to generate income like a real business might.
Right now you can buy a taxi in the Metaverse ‘Polkacity” for 1ETH (around $2000). You then use this taxi to ferry people around in the Polkacity Metaverse and earn their native token POLC. You can sell your digital assets to others and you can swap the POLC you earn for other crypto, like Ethereum, and then into dollars. So Metaverse money turns into real money.
There are a few things to know about Metaverse earning.
- You have to purchase the assets – so you’re investing in the game and its future. You only make money from your asset if other people are in the Metaverse!
- You earn in native coins that can go up or down in value. The coin price can significantly impact your ROI, especially if the price tanks. You may get rich, or you may never get your investment back.
- Most of these VR worlds are early stage, some of them still in beta. Which ones catch on and which die a tragic death is uncertain.
This all means that it is risky to buy in. Game makers have been successful enticing early participants into their virtual worlds by paying high interest rates (in native coins) for holding their NFTs. APYs in the hundreds of percent are not unusual to attract users.
(Investing level: Advanced)
The jury is still out on whether nodes provide a sustainable and long lasting passive income stream. Let’s take a look at node income starting with the basics.
What are Nodes?
Nodes are decentralised points in a blockchain network that help run the blockchain by validating transactions (validator nodes) and storing data (full nodes). Essentially, nodes help carry out certain functions and help the performance of the blockchain.
Sometimes, depending on the type of node and the network, a node is deployed via a piece of hardware that looks like a hard drive, and supporting software and server set up.
Other times nodes are deployed in the Cloud. Cloud-based nodes are often referred to as Nodes as a Service (NaaS). NaaS support Blockchain as a Service (BaaS) – which is private blockchains for companies, run by BaaS providers in the cloud. BaaS is a new and fast growing market. Think of Software as a Service and you’ll start to get the idea.
How do nodes generate passive income?
The concept is that nodes are paid for helping the blockchain operate. But where does the money come from? The answer is, it varies by node type.
For validator nodes, their revenue generally comes from the fees that users pay to use the network. To run a validator node isn’t easy. You need specific technical knowledge and hardware to do it. If you invest in validator nodes (as with staking in proof of stake protocols), you share a portion of the node revenue.
BUT… full nodes are currently not paid in this same way. Many are still in the ‘proof of concept’ phase in terms of proving their value to blockchain providers. This is a catch 22 because NaaS providers need full nodes up and running to prove their worth. But running full nodes costs money. So to get nodes up and going, NaaS providers need investors to pay the full nodes.
Rewards pools for full node investors
Without a revenue source to draw from, the solution has been to reward full node contributors via a rewards pool funded by project tokenomics. That is, investor returns come from a pool of money provided by other investors and any side revenue streams. A portion of the funds provided by new investors goes to sustaining the rewards pool. If the investors dry up, the rewards dry up. Sounds like a Ponzi scheme, but real revenue may also be just over the horizon…
This is why full nodes, as a form of passive income, are both risky but have lots of potential. If investors remain committed to NaaS projects and the project teams can demonstrate their use case, NaaS will grow alongside BaaS. But then again, this might not happen.
We currently run a full node for the ETH blockchain and earn passive income from it. We will report back soon on how that investment is going. Stay tuned!
11. Trading options and margins
(Investing level: Advanced)
As with stocks, these products are for more advanced traders. Options allow you to ‘short’ coins and make money if the price goes down. Margin allows you to leverage other peoples money to trade, which amplifies both gains and losses.You can get access to these products on centralised exchanges like Binance and Kucoin.
We don’t use these strategies as we’re not professional traders. Only head for these options and margin trading if you’re willing to learn them in detail and take very large risks.
12. Yield farm
(Investing level: Advanced)
Yield farming is a way of generating two interest payments on the one investment. Sounds too good to be true and sometimes it is. Here’s an overview of how it works:
- Decentralised exchanges and protocols need liquidity so that their users can swap different coins on their platform
- You can become a Liquidity Provider (LP) for these exchanges by contributing your crypto into a liquidity pool. You usually contribute two different coins or tokens at a specific ratio. For example, you might provide liquidity into a DAI/ETH pool by transferring both ETH and DAI into that pool. The pool will determine the ratio of the coins you contribute – for example 1:1.
- In return for providing liquidity into the pool, you’re given LP tokens equal to your liquidity deposit.
- You earn two interest payments by:
- providing the liquidity into the pool (so that others can use that liquidity to trade) in the first place. You get a small percentage of the trading fees, and
- lending your LP tokens on other decentralised protocols and earning interest on them.
The important thing to know about yield farming is that it’s complex, not at all passive, and you can risk losing your money through something called ‘impermanent loss‘.
This is more advanced and there’s a bigger risk you’ll lose your pants if you don’t know what you’re doing. Yield farming is for the intrepid crypto journeymen and women. Make sure you fully understand how it works first if you decide to dive in.
Where to start with cryptocurrency investing
1. Start with our quickstep guide
If you’re back at square one, we have a free quickstep guide on how to buy, move & secure your crypto assets. Check it out right of screen ->
This guide will get you set up with online security, an account with a cryptocurrency exchange, and an idea of how to buy your first crypto. All in just 2 pages.
2. Set up an account with a crypto exchange
Binance – You can hodl, lend, stake, trade and participate in Airdrops directly using Binance. We find the Binance Wallet the easiest to use all-in-one crypto exchange. It’s a great place to start out making money with cryptocurrency. Read our Binance review if you want to know more about its best features for crypto investing.
Coinspot – We recommend Coinspot for Aussie investors as you can buy loads of coins directly with AUD. It’s also a nice easy interface. It doesn’t have any staking or interest bearing products however, so you can’t do much more than hodl.
Coinbase – If you’re from the US where there are restrictions on using Binance, you can set up a Coinbase account. We find the fees are higher on Coinbase and there are not as many coins listed or different investment products available (as Binance).
Kucoin – You can also set up a Kucoin account as a US citizen. Neither Coinbase nor Kucoin are as easy to navigate and use as the Binance app and they don’t have as many products (or money making opportunities) on offer when it comes to staking and earning from your crypto.
3. Learn about crypto
Check out our other posts on investing in cryptocurrency and making money with decentralised finance. Or read through our articles on NFTs and digital tokens. The more you know, the further you’ll go.
If you’re smart, you can even earn to learn on Coinbase or Coin Market Cap as you go!
4. Experiment with the ecosystem
Decide which strategies are right for you and give it a go!
- Transfer some fiat into your Binance account.
- Buy some coins and tokens.
- Use the products and services Binance has available to see how it all works.
- Send some coins to your MetaMask or other crypto wallet.
- Connect your MetaMask to a DeFI protocol and stake some coins. Unstake them.
Once you understand the basics of the crypto products you’re interested in, branch out to decentralised exchanges, dApps and even bridge to other blockchains. Experimenting will help you learn how to use the ecosystem to make money. Just beware that crypto is miles apart from the traditional financial system. There are risks and pitfalls you need to know about before you start. To help with peace of mind, here are 3 tips to manage risk when you first start dipping your toes in:
3 beginners tips to manage risk early
1. Start with small amounts
it’s not as easy to transact crypto as it is with traditional finance. Why? Here’s just a few examples:
- Denominations are not in USD or AUD (for example BTC denominations are called ‘Satoshis’),
- you have to get the hang of using wallets, blockchain networks and public and private addresses.
- You also have to custody your own coins. There is no one there to call if you send your coins to a wallet and they don’t arrive.
With all of these things to learn its pretty easy to make a mistake and lose your coins. So start small! Small transactions are best until you’re confident you can use crypto infrastructure well.
2. You don’t have to start on the Ethereum blockchain
A lot of people start on the Ethereum network because it has the largest volume of dApps and protocols built on it. But it’s very expensive to use and can make experimenting costly. Ethereum really only makes good financial sense if you’re investing thousands of dollars at once. Alternative blockchain networks that you can use to start exploring crypto and DeFi are LUNA, AVAX and Binance.
3. Learn how to read blockchain explorers
Etherscan, Polygonscan and other blockchain explorers are websites that provide public access to all of the transactions that occur on a specific blockchain. You can use transaction IDs to look up and trace any transactions you make. This helps you learn about how the blockchain works. Importantly, you can also use it to find out if a transaction you made on the blockchain was successful and whether your coins will make it to their intended location!
4. Start with a focus on managing risk.
Crypto is highly volatile and speculative. But there are things you can do to manage your risks. If you want to know more, have a read of our post about how to manage the risks of investing in crypto for beginners.
Risk management should be your focus starting out. Learn risk management practices and apply them from the beginning. Focus on protecting your capital early rather than aggressively growing your investments. You’ll thank us later!
How to protect your crypto wealth
As you build your crypto portfolio you’re going to need to secure your wealth. Crypto is a self-custody asset – there are no banks to keep your coins safe for you. But exactly how do you keep your crypto assets secure from theft and loss? Here is a quick run down of the minimum security measures you MUST take to protect your coins as you build your crypto nest egg:
1. Device security
Device security is your first like of defence. Set up security for your phone or computer as this is where you’ll interact with cryptocurrency.
Firstly, you should set up up a password protector or manager for your various crypto accounts and online passwords (how many times have your passwords been exposed in a data leak?). Something like LastPass is free and effective. Then set up two factor authenticator in your device settings and download a 2FA app like Google Authenticator.
2. Hardware security
Next, buy and set up your cryptocurrency hardware wallet.
To really protect your cryptocurrency you need to keep your coins offline where they are not exposed to cyber hack. Online wallets and exchange accounts are not the safest place for your nest egg. A hardware wallet will allow you to sign transactions from your wallet but keep your private keys offline. This protects your crypto from being hacked and stolen.
We recommend getting hold of the Ledger Nano X or the Trezor Model T hardware wallets. Using a hardware wallet is simply the only way to really protect your digital wealth.
You can check out the Ledger website and purchase the Ledger Nano X here.
If you’re interest in the Trezor, we buy from the authorised reseller Privacy Pros.
3. Safety back up
While your hardware wallet will safely store your private keys and keep your coins safe, what happens if you lose your Ledger or Trezor? Y
The good news is that you can recover any lost coins.
To do this, you need the recovery phrase (seed phrase) generated when you set up the lost wallet. You can only ever recover the contents of your hardware wallet if you have this phrase. Think of this phrase as a master key for back up situations.
Some folks write their recovery phrase down but paper is a very risky medium. What if you lose it or it gets destroyed – wet, ripped up or accidentally tossed away? This is why we use seed storage wallets, otherwise known as ‘metal wallets’, to store our crypto recover phrases.
We suggest using the BillFodl metal storage wallet to store the recovery phrase to your Ledger or Trezor hardware wallet. We use it and it’s easy and pretty cool. You can buy the BillFodl direct from i’s maker Privacy Pros.