Finance: Investing In Cryptocurrency
Investing in cryptocurrency is technically a pretty safe bet.
Ways of making money in the decentralized blockchain world
Investing in cryptocurrency: buy and hold
This is certainly the easiest way if you want to invest your money in cryptocurrency.
You buy crypto like bitcoin, simply leave them in your wallet and wait. This is similar to buying gold, putting it in a vault, and hoping that it will appreciate in value and that you can sell it at a higher price in a few years.
Investing in cryptocurrency: lending
Lending is a second way to let your crypto work and use it as an investment. In principle, lending means nothing other than lending.
It works very simply. You own Bitcoins, Ether, etc., and simply lend these cryptos via a crypto exchange. Depending on the provider, you get around 5% – 10% interest per year. There are always more with certain tokens or providers, but of course, the risk also increases.
Investing in cryptocurrency: staking
In principle, staking means you make your tokens available to the blockchain network so that the network keeps running.
This allows transactions to be carried out on the network. People buy, sell, trade, etc. and make their coins and tokens available so that everything works well. Depending on the blockchain, the Proof of Stake ensures that the system works.
You can think of it as a kind of cooperative. There you pay in and thus acquire a share in this cooperative. As a result, you also benefit according to your shares from what the cooperative generates.
Depending on the platform, 5% – 20% interest or returns per year can usually be realized for staking.
Invest in cryptocurrency: Liquidity Mining
Liquidity Mining can be roughly imagined as follows: You are an exchange office on the blockchain.
There are people who want to exchange their ethers for bitcoins, for example, or who want to exchange their bitcoins for ether.
From a technical point of view, there are exactly such exchange offices on the blockchain. This exchange office is not owned by a person or a company but is also decentralized again. It practically belongs to all the people who participate in this exchange office and provide liquidity.
This is where liquidity mining comes into play. This means that you make your bitcoins available to this digital exchange office decentrally on the blockchain. They are then there and can be exchanged.
There are exchange fees for all people who want to exchange. These in turn flow to all those who have provided liquidity.