Finally, the day has come. All of us have been lying to each other, stating that ‘we are in here for the tech’. Today, I’ll spin things around and ONLY talk about the good old moolah! And to be honest, it isn’t as bad as a lot of people think. Money could very well be a motivator for some. After all, it is a necessary evil needed for your very existence. So, how do you earn from cryptocurrency?
Turns out you are in luck. Because I’ve got not one, not two but 12 ways to earn from cryptocurrency. By the end of this post, you are most likely to know all the ways you can deploy to start earning in this space. Be it a college student, a working professional, a tech-geek, or a general speculator, we’ve got your back. Let’s go!
Top 12 [Proven] Strategies for Making Money with Crypto in 2022
I don’t know why, but I am particularly excited about writing this one. Maybe because it is a way of giving back to the community. The strategies I am going to talk about today aren’t less than alpha. After all, it won’t make sense to talk about obsolete ways of making money. Let us dig into each one of them individually:
1. Play-to-earn crypto games
Gaming has had a beautiful trajectory over the years. It started with fun (not so pretty though) looking games, and they have evolved into life-like experiences. The recent acquisition of the gaming company, Activision, by Microsoft, for a staggering $69 Billion, is the biggest example of the quantum of the industry.
And as the Blockchain and crypto impact the fundamentals of core human behaviour, gaming is just a small feat to achieve.
Just kidding. The transformation potential here is huge. To truly appreciate the impact, let us nosedive into the evolution of revenue models in the gaming industry.
1.1 Evolution of gaming
All of it, of course, began with the humble arcade games. You simply go to a gaming parlour, pay upfront money to the vendor, purchase some coins to start the game (based on time), and once you are done, wait for your next allowance.
Later, gaming entered our houses through PCs and desktops. Of course, the start was a little shabby in the form of flash games, but soon enough, complex story-based games hit the market. At this point, you were supposed to buy a game pre-installed on a compact disk OR over the internet. Both modes required you to pay upfront to the game developers.
Of late, this was changed in a rather innovative way. You could now own the game for almost free. However, progressing in the game required certain potions, weapons, hacks, etc. These were now sold as DLC or downloadable content in the game. Instead of spending the money upfront, the value was generated in the in-game marketplace. Oh, if you are thinking that who spends money on virtual skins? It is a $40B industry globally!
1.2 The P2E era
And once again, we are on a brink of another shift in this revenue model. Blockchains add a layer of incentivization such that you can earn money for playing the game.
One of the first successful implementations of this model was through a P2E game called Axie Infinity. The game became so popular that a lot of people in south-east Asia picked it up as a legitimate profession.
Axie Infinity allows players to purchase, battle and breed virtual creatures (called “Axies”) minted exclusively on the Ethereum blockchain. Because each Axie is represented by an NFT, they can be bought and sold peer-to-peer using cryptocurrency.
This also opens the possibility for non-gamers to hold on to the native token of Axie Infinity (AXS) and benefit from its growth. As more people start playing Axie infinity, the demand for AXS would bump up and thus increasing the price.
Because Blockchains enable ownership, these NFTs can also be traded on the marketplace for newer players.
Apart from Axie infinity, other famous P2E games are Splinterlands, Star Atlas, Cryptokitties etc.
And how can we forget about this? The best part about investing in cryptocurrencies is that if you get it right, it doesn’t matter if you are a long-term holder or a quick trader. The space rewards patience and agility alike.
So, if you are someone who wants to buy and forget, some cryptocurrencies have great prospects over the coming years. Starting with BTC and ETH, you can move to Layer 2 solutions like Polygon, Harmony etc. Once you complete that ecosystem, you can move to alternate layer 1s like Solana, Avalanche, Cardano etc.
On the flip side, if you want to make a quick buck, cryptocurrencies are a great place to start. The bouts of volatility are perfect for a trader to earn some money.
But what if you are neither of the above? If you have a hard time shortlisting cryptocurrencies, here’s a fix. Coin Sets by Mudrex allows you to invest in broader themes. This helps you diversify and hedge your risks.
3. Staking and earning interest
We often talk about the potential of crypto replacing traditional banks. So why not start doing what a bank does? Yes. You can lock up your crypto in a protocol to earn interest on top of it.
You see, in a proof-of-stake Blockchain network, validators or nodes are processing the transactions. As a user of the network, you can choose to contribute to the network by staking your crypto with one of the validators. In return, the validator gets an increased probability of validating more blocks, and you receive a share of the rewards that he gets.
You can start staking for blockchains like Solana, Cosmos Hub, Cardano, etc.
Another way to earn money by locking crypto is through interest accounts. They are very similar to traditional bank accounts where you earn interest on your capital. There are multiple centralized platforms like Binance that offer these services.
4. Cloud mining
Let us revise the basics of mining for a moment. There are nodes that solve a complicated mathematical problem to validate the block. To achieve this feat, these nodes have to purchase equipment and hence provide computation by using electricity.
Cloud mining, on the other hand, is a way to do this by borrowing computation from the cloud mining services like nicehash etc. These cloud mining platforms reduce the barriers to entry for an average individual who wants to get into mining.
As a user, you need to purchase ‘hash-power’ from one of these platforms and you earn mining rewards on a pro-rated basis, depending on your hash power.
5. Crypto arbitrage
Arbitrage is an investment strategy where the trader buys and sells a cryptocurrency simultaneously on different exchanges to leverage the price difference between that asset on both exchanges.
Confused? Here’s an example close to the home. Back in 2021, there was a FUD around the Indian government banning cryptocurrency. An Indian exchange, WazirX, saw a mass sell-off at that time.
Whereas the price of Bitcoin was unaffected on a global exchange like Binance. A lot of people bought Bitcoin at a cheap price on WazirX and sold it on Binance and thus making money in the process.
This also works for minuscule price differences if you are quick enough. For example, say the price difference between Ethereum on Exchange A and Exchange B is $0.1. While this may not sound much, if you do this over a million times, you can end up with a sweet $100,000.
You can enable this in crypto using Flash loans.
Flash loans are typically unsecured loans from the lender without any third party being involved. These loans are borrowed for a very short period (~10s) and are essentially borrowed and repaid in the same transaction.
Technically speaking, it is a smart contract that enables borrowing millions of dollars, performing a task with that money, and repaying it (all in one go). When such a smart contract is created, it checks if the loaned amount is being put to use where it can be repaid in time. Only after the validation does it get executed.
In the example quoted above, if you could write a smart contract to borrow Rs. 100M, buy ETH from Exchange A (for 100M), and sell on Exchange B worth 101M. You could rake in $1M in the entire process. Even the fee involved here is pretty low (~0.9%).
6. Airdrops and forks
Airdrops are a new-age marketing strategy where the projects drop their newly launched native token into the wallets of different crypto holders. This is often done in return for certain tasks like signing up for the platform (connecting your wallets), joining Twitter/Discord of the project, sharing it, etc.
These tokens can be worth a lot if the project becomes successful over time.
Forks are a different ballgame altogether. Forking in crypto happens when some of the nodes are not convinced about the direction a project is heading towards. In such a case, anyone is free to fork the Blockchain with a new set of rules. Whenever a fork happens, the users on the Blockchain are awarded new crypto in a 1:1 ratio of their holding on the older Blockchain. If the fork survives, this can be extremely valuable.
For example, Ethereum underwent an attack back in 2017 due to a protocol called the DAO. Ethereum foundation suggested rolling back the transactions and giving the money back to the people who are affected.
This created a rift amongst the community where some nodes never wanted to compromise with the immutability of the Blockchain. Hence, the Ethereum Classic (ETC) was born. Everyone was given ETC equal to ETH they held on the older Blockchain. ETC is currently trading at $25.
Examples of other forks are Bitcoin Cash, Bitcoin Satoshi Vision (BSV), Litecoin, etc.
DAO, or Decentralized Autonomous Organization, is a Blockchain-based governance mechanism. In essence, it is a group of like-minded individuals that come together to achieve a common goal.
This works by issuing a token of DAO to each of the employees/participants and using those tokens for governance. Every token holder is eligible to vote in the key decisions of the DAO.
Once the DAO becomes popular and a lot more people want to join, the price of the token appreciates. One of the best examples of DAOs is Uniswap. The most popular decentralized exchange in this space. It issues $UNI token to the people who provide liquidity, and these holders get to vote on key decisions regarding the protocol.
8. Yield farming and lending
Let’s simplify this jargon. Yield is nothing but the interest you earn over an investment. And farming is searching for the best way to earn maximum yield. So yield farm is a bunch of different techniques that are used to earn crypto by using your existing crypto. This yield is measured in APY or annual percentage yield.
Various techniques that fall under this gamut are as follows:
8.1 Liquidity provision
All decentralized exchanges work on a model called an automated market maker (AMM). This is opposite to the order book mechanism used by the traditional centralized exchanges. In the order book method, you simply place a buy or sell order at the desired price. This order is listed in an order book maintained by the centralized authority. Whenever someone wishes to buy/sell at a price mentioned by you, the order gets executed.
But in a decentralized exchange, there is no central authority that can maintain this order book. So instead, a pool of funds is created. For example, if you want to enable trading of ETH and USDT, you would deposit an equal amount of both these assets in this pool.
After that, a trader would come and deposit either ETH or USDT in return for the other.
As an individual, you can also provide this liquidity. Wait, what? Yes. And to provide this liquidity, you get a share of the fees generated by the swap in proportion to the amount of liquidity provided by you.
You can provide this liquidity on all key decentralized exchanges like Uniswap, Pancakeswap, etc.
8.2 Staking LP tokens
In the example above, we learned how you could provide liquidity and earn fees. This fee is often in the form of a native token called the LP token. To ensure customer stickiness, some platforms allow you to stake these LP tokens to earn more tokens on top of it.
8.3 Borrowing or lending
Borrowing or lending is the backbone of any mature economy. Banks are the central authorities that enable this. In return, they also charge a hefty fee. If you observe closely, the revenue model for the banks is very simple. They take your money, lend it to other people in return for some fee and share a part of that fee with you as the deposit interest.
In the crypto world, you get to be your bank. As an individual, you can lend your money without the bank or borrow it if need be.
If you are wondering about the security of your funds, don’t worry. These loans are overcollateralized. This means if you have to borrow $1000, the platform would ask you to deposit at least $1200 worth of crypto as collateral. In case the price of your collateral starts falling and goes beyond a specified threshold, the collateral is sold to recoup the money.
8.4 Tokens with redistribution fees
There is a famous cryptocurrency called Safemoon, where 5% of the transaction fee is distributed amongst the holders, and 5% of it is burnt. A lot of tokens with similar economics are floating in the market. However, one needs to conduct proper due diligence before investing in them.
Crypto faucets allow you to earn free crypto in lieu of performing menial tasks on a website. These tasks vary from website to website. It could be anything from trying out a new game to filling captchas.
However, the reward for doing this task is also not great. You would barely make some cents per task, but it should be a good way to get exposure to crypto without any risk.
Apart from that, there are some faucets run by Polygon and Ethereum that provide you with a minimum amount of crypto as gas to do some transactions.
10. Work for cryptocurrency companies
Oh. So the glitz and glam of crypto didn’t even let you think in this direction? I mean, getting your shit together and going to work has always proven to be a successful method of earning money.
The only difference, crypto jobs are much more rewarding. You can either go full throttle in a web3 company for a full-time role, or you can test the waters by freelancing as a developer, consultant, writer, designer, etc.
A lot of crypto companies are hiring right now, and most of these opportunities are remote in nature. You can work for a company in Silicon Valley at their pay scale while sitting in India. There are a lot of job boards for you to explore.
11. Buy & exchange NFTs
Every day, a lot of NFT experts are flipping, flipping. For the uninitiated, flipping NFTs is the art of buying low and selling them at a high price.
While flipping is easy in principle, it does require significant research to find the best NFTs to bet on. The value of an NFT depends on its rarity and availability. Therefore, you should be smart enough to predict the trends in the market and take a future PoV on what NFTs would survive.
One of the most popular approaches in the NFT space is to buy good projects on the mint day and then flip them as the scarcity kicks in. A lot of this activity happens on Solana Blockchain due to its low-fee transactions. But with the bear run, this has mellowed down significantly.
But while you are at it, do make sure that you visit the social media handles of these projects and get a vibe of the community. Ultimately, if a community decides to hold an NFT, it is likely to survive. For example, one of the crypto punks was recently offered $10M for the NFT. However, the buyer refused to sell it because he considered the NFT to be their identity. It is the type of attachment you are aiming for.
12. Earn money with Bitcoin affiliate programs:
Affiliate marketing has been around for decades now. However, with crypto, it is just more rewarding. This method can be particularly handy if you are a content creator. You can simply plug in your custom link to a platform that you use to invite other people to join. Once they join using your link, you earn a referral commission.
Is it Too Late for Crypto?
It is very easy to be confused with the gargantuan returns that Bitcoin has generated in the past decade. One may think that the time is up, and it is very late to pick up crypto as an investment tool. However, let me assure you that we are still very, very early. The overall trading volume in crypto is hovering around 1% of the financial markets globally. Apart from that, a lot of technology is still being figured out on the go.
Therefore, it is advisable to invest a fixed portion of your portfolio in cryptocurrency at regular intervals. The current bear run is a great opportunity of kickstarting your journey.
The Internet was the biggest innovation of mankind that shaped the way we live today. Crypto is basically the economic and incentive layer of the internet. We leave it to your fine sense of judgment to establish the quantum of its potential.
1. How do I make a monthly income from crypto?
There are multiple ways to earn regular monthly income from crypto, depending on your risk appetite and time at hand. If you can spare additional time for researching and trend analysis, you could trade crypto. If you are looking for a passive mode income, you can go for yield farming or staking.
2. How long does it take to make money from cryptocurrency?
Cryptocurrency is not a get-rich-quick scheme, as perceived by many. With that being said, if you are in it for the long term, it will definitely be more rewarding than any other asset class out there. So, it is very subjective to define the time taken to earn from cryptocurrency, but you can start your journey at this very moment.
3. How can I earn free cryptocurrency?
There are various means of earning free cryptocurrency. If you already hold some funds, you can either stake them or provide liquidity to earn crypto on top of it.
In case you do not have access to crypto as of now, you should look for faucets and airdrops.
4. How can I earn 1 Bitcoin in one day?
Stealing? Just kidding. At the current price, it is very difficult for miners and investors alike to earn 1 Bitcoin per day. Such a strategy should set you on your path to becoming the world’s richest man pretty soon. Therefore, it is advisable to patiently deal in crypto and take one step at a time.
5. How much should you invest in crypto to make money?
There are ways to enter the crypto market without deploying capital. These ways can be faucets, airdrop hunting, etc. However, if you want to make it big, you might need access to some capital. Depending on the risk appetite, you would find yields between 4% to 400% in this space.