I bought my first bitcoins (or rather satoshis — bitcoin cents) in the beginning of 2016.
Not for investments, but from the pure interest. I spent time studying the bitcoin white paper , learning about blockchain and also tried using it — I bought a coffee and course using bitcoin in Paralelni Polis in Prague. Since then the value grew more than 30 fold. If I would be smarter and buy USD 2000, I could buy as Tesla car today.
The coffee and USD 150 course and USD 3 coffee I bought back them would be USD 6500 and USD 120 in today’s BTC value. Not as impressive as the urban legend of the most expensive pizza paid by 10,000 BTC, but seeing the cost in my walled (all transactions are showed in todays USD value) hurst.
Anyway, bitcoin grew and I made some money on my leftover satoshis. Seeing the nowadays growth I decided to reseach how to make money on Bitcoin.
Buy and Hold
Or also often referred in crypto community as HODL — “hold on for dear life”.
If you compare bitcoin performance as compared to the major stock, it has been the best investment. Except a few years, it largely outperformed the others.
Will it continue growing? This is a difficult question, but many people believe it will. There has been a few periods of fall in the past followed by a dramatic growth — such as 2012, 2016, 2018 and the investors already expect these lapses, so the chance that people would lose the trust altogether is rather low. But what are the main drivers of its growth?
Each of the previous massive growth was due to breaking of adaptation resistance — in 2020 it grew because the major firms showed confidence in it. BNY Mellon, Mastercard, PayPal and Tesla are only a few names who officially bet on bitcoin.
Will it continue to grow? By being already easily available to purchase, sell and to use for transactions, it will inevitably have to increase its adoption and therefore grow further.
Will it be hundreds percent? Probably not. Despite of this. It should be still a better way of keeping value of your money than keeping it on your saving account.
If you hold multiple crypto, you might want to rebalance your portfolio.
You can use these tools for it:
2. Arbitrage
There are so many different exchanges and the value often differs. The difference can be 3–5 %. So this sounds like a no-brainer. In practice, however, you need to consider more aspects — the transaction costs (these are changing based on the global number of simultaneous transactions and can be quite high) and transaction time (it might take hours to transfer from one exchange to another one), trading fees and obviously also the volume of transactions at the target exchanges. Some obscure pairs might generate huge difference from market to market, but the reason can be also a lack of buyers/sellers.
The most popular crypto trading platform is www.coinbase.com
Other popular platforms are:
All have a mobile app for an extra convenience. Trading fees vary largely — while Binance is charging only 0.1%, Gemini trades will cost you 0.75%. You can find the overview here: https://www.koinknight.com/exchange
You can scan the trading pairs spread over exchanges manually or use a tool.
They are mostly paid tools, but you can start with this fee mobile app:
3. Gambling with “shitcoins”
There seems to be unlimited number of new coins that apprear, shoot up and fail.
If you success to buy them in the growth stage and sell 10–20% later, you can make good money. However the risk is great, so this is definitely a gamble.
For this you should combine crypto news and screener. Some of good resources below:
News:
Screeners:
https://www.cryptocompare.com/
2.2 and 3.2 Robotrading:
There are a few tools available for automated trading. However there is high risk of losing money not only due to a bad algorithm, but also due to security issues. So it requires carefulness.
4. Mining
If you have a strong computer and strong GPU, you can try mining some coins. You should better join a mining pool to get a stable return rather than waiting for your luck if you would ever be the first to write the new block.
You can check the best coin to mine at the moment here:
Conclusion — is it worth it?
Only time will show if starting with crypto today is worth it, but historically all options above have been a profitable business because the whole crypto market grew massively. There is also a strong community behind bitcoin and crypto and it is fun.