It is difficult to find a person who has not yet heard of Bitcoin, but what is Cryptocurrency in simple words and how to make money on it? This is the right question, the answer to which will help you make money in practice.
The content of the article:
- Just about the complex: what is Cryptocurrency?
- Reasons for the popularity of cryptocurrency
- How do people make money on cryptocurrency now?
- How to make money on mining?
- Buying and selling cryptocurrency is fast, a lot, but risky
- How much can you earn with cryptocurrency?
Just about the complex: what is Cryptocurrency?
Cryptocurrency – cryptographic currency (encrypted) is electronic money, a means of settlement in the network. Such a currency appeared due to the impossibility of its forgery, since when it is created (issued) it is encrypted and additionally protected by the technology on which it is built – the blockchain.
Cryptocurrencies are ubiquitous almost all over the world – the more developed a country is, the more this electronic money has taken root. They are used for fast, safe, untraceable and most importantly uncontrolled settlements.
There are already several thousand types of “crypt” in the world.some are more successful, others less. But it is very easy to make your choice – no one in their mind will invest in an unsuccessful “coin”. With the capitalization of one separate cryptocurrency from $ 5 million, you can safely start working with it.
Reasons for the popularity of cryptocurrency
The popularity of cryptocurrencies is due to two main reasons:
- Impossibility of counterfeiting – thanks to blockchain technology, it is impossible to issue a fake digital coin. But about the blockchain below.
- Decentralization – behind this difficult word lies a simple essence: no one (!) Manages cryptocurrencies. That is, users themselves receive it, they themselves increase the demand for it and decide for themselves what to do with it – this is the most real and so far the only “people s money”. There is no governing body, like, for example, a “state” that wanted and arranged an artificial depreciation of the currency, after which your savings literally melted away.
Currency protection is built, first of all, on the technology of its creation – blockchain. It assumes the sequence of creating blocks for which a reward in the form of a cryptocurrency is issued. This sequence cannot be changed, there are no ways to wedge into blocks already built one after another.
Thus, if someone wanted to create fake “coins” (units of cryptocurrency), they would break the whole chain. But such a “modernized” chain cannot be used, since there are tens of millions of copies of the original chain around the world – from everyone who is engaged in the “mining” (extraction) of cryptocurrency.
At first glance, the explanations above may seem confusing, but this is the simplest explanation of the essence of cryptocurrency and its main feature – security. It is difficult to imagine a simpler description of a phenomenon worth more than $ 300 million.
How do people make money on cryptocurrency now?
There are a number of ways, some of them are popular and available to the average user, and some require either huge investments or special knowledge and skills.
Now we will analyze the methods that are in demand among ordinary people. You and me. It s about:
- Mining (direct mining of cryptocurrency);
- Purchase and sale coins already mined by someone.
Cryptocurrency mining – “printing money” with your own hands. Mining is the foundation, the production of computations at the expense of the participants capacities.
The extraction isthat a computer (video card or less often a processor) performs complex calculations, something like solving equations for a person.
As a result, when the equation (block) for several thousand, or even millions of lines is solved, you receive a reward from the system for this – from one to several thousand coins, depending on the chosen cryptocurrency.
It is important to understandthat when mining it is necessary to use the maximum available power, which absorbs electricity endlessly. For this reason, mining any cryptocurrency on a home computer was relevant for the last time a few years ago. Now specialized energy-efficient equipment is used for this.
How to make money on mining?
Today, the very first and at the same time expensive and popular cryptocurrency is Bitcoin… It is unprofitable to mine it on a regular video card to such an extent that it will take many times more for electricity bills than it will be possible to earn from the sale of the received bitcoins.
Why? This is due to the fact that the complexity of cryptocurrency computations periodically increases and Bitcoin is now the highest among all cryptocurrencies.
Solution – the use of the so-called ASIC (ASIC) – these are ready-made solutions that are sharpened for the extraction of cryptocurrency (most often Bitcoin).
ASIC is a medium-sized device consisting of a powerful power supply unit and a large number of chips configured to mine cryptocurrency.
The peculiarity of ASICs in power: one such device can be equal to 1000 home computers or laptops, and at the same time it costs only several times higher.
And also, which is a decisive factor, in energy efficiency – all unnecessary things are removed from these devices that can consume energy, but at the same time do not give an increase in computing.
You can buy ASIC in online stores (American, European and Chinese) or by contacting a specialized dealer.
For other cryptocurrencies, ordinary video cards are still suitable, which can be purchased without any problems on the shelves of our stores. Another thing is that due to the worldwide popularity, the complexity of mining all cryptocurrencies has increased greatly and now in order to to earn, you need not one or 2 video cards, but the whole Farm!
What is a mining farm? This is a group of video cards, the ratio of computing power and power consumption of which is optimal for continuous operation at full capacity. These video cards are assembled into a single stand and connected to the already familiar components of home computers.
As a result, a farm with high computing power is obtained, which, after setting up, can stand in your home and earn the selected cryptocurrency without your participation. Depending on the region of residence, you will spend from 5 to 50% of the money earned by the farm to pay for electricity…
In addition, there is the so-called “cloud mining”. But this topic is for a separate material, since it requires a very detailed disclosure.
Whichever mining option you choose, it is definitely recommended that you consult with the appropriate specialist before starting. This will allow you to avoid the standard mistakes of beginners and earn many times more!
Buying and selling cryptocurrency is fast, a lot, but risky
There is also an alternative option for working with cryptocurrencies – making money on the difference in the exchange rate (which has only been growing in recent years). In common with mining – investments, their volume will depend on how much and in what time frame you can earn.
It is difficult to talk professionally about making money by buying and selling cryptocurrency, since traders are engaged in this. And for people with such a colossal income, it is difficult to find an incentive for which they would share all the ins and outs.
But in general terms, the principle looks like this:
- The most successful cryptocurrency for a number of factors is selected: its history is studied, the exchange rate in the past and at the moment, news and prospects are analyzed.
- The amount of investment is taken at your discretion, it can be from $ 20 to a million dollars or more, since nothing prevents you from buying only a piece of a coin (yes, if a unit of the selected cryptocurrency costs $ 100, then you can easily purchase 0.02 coins for $ 2).
- These investments are entered on the selected exchange, where you buy cryptocurrency for money and hold it until the rate rises, after which you sell it and get your money and earnings back.
- Repeat as many times as you like!
Some of the most striking recent examples: Ethereum cryptocurrency (Ethereum or Ether for short). In mid-February 2017, it cost $ 12 per coin, and by mid-June it reached $ 390 for the same coin. Growth 32.5 times…
Let s say a small percentage will be spent on depositing and withdrawing funds from the exchange, as well as when buying cryptocurrency. The output is a net multiplication of investments by 30 times.
With the help of Ethereum, you could invest $ 1000, and after 4 months, withdraw your $ 30,000 without doing anything, of which $ 29,000 is pure profit. Impressive, isn t it? Traders call this high volatility, when the rate can change several times.
For instance, after reaching a maximum of ~ $ 390, Ethereum began to fall in price up to $ 150 per coin. But then he partially returned the cost and for several months was in the corridor of $ 200-350 per coin. After that, another growth began and by the beginning of winter (December 1) the price of one Ethereum unit was equal to $ 470, and the growth continues.
In other words, on buying and selling (in other words, market speculation), you can easily multiply your investments several times, the main thing is to have patience and not sell the currency while it is cheap…
How much can you earn with cryptocurrency?
As much as you like. And this will be the most accurate answer to your question. You can invest in ASIC and earn daily on it, gradually recovering its cost and starting to get money out of thin air. You can do the same with video card farms, which, if used correctly, pay off within 12 months.
As for the sale and purchase of cryptocurrency – here the risks and opportunities to earn are several times larger and wider. By investing the same money that you could have spent on an ASIC or a farm, you can multiply it 2-30 times over several months.
Or you can choose an unsuccessful cryptocurrency at the maximum growth, after which it will go to a natural temporary fall and you, frightened, sell it, losing part of your investment.
Remember the main thing: in order to invest successfully and really make big money, you must either study the market for a long time and persistently, or trust a real specialist who will guide you into the world of big electronic money!