Bitcoin is a cryptocurrency created in 2009. Marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies. Bitcoin is a new currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto.
Transactions are made with no middlemen – meaning, no banks! Bitcoin can be used to book hotels on Expedia, shop for furniture on Overstock, and buy Xbox games. But much of the hype is about getting rich by trading it. The price of bitcoin skyrocketed into the thousands in 2017.
Bitcoins can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Small businesses may like them because there are no credit card fees. Some people just buy bitcoins as an investment, hoping that they’ll go up in value.
- What are some Practically Ways to Make Money with Bitcoin?
- What are some Advantages of Paying With Bitcoin?
- What can i do with Bitcoin?
- What you Need to Know About Bitcoin
What are some Practically Ways to Make Money with Bitcoin?
By now, you might have heard of how you can make money with bitcoin, magic internet money and digital currency that can be traded or used to make purchases. This digital money uses encryption to make safe and secure transactions instantly from anywhere in the world.
Read Also: Bitcoin Explained
Not regulated by any bank, government, or Federal Reserve, this open network is managed by the users and investors themselves. Here is our guide to earning real money with bitcoin in 2020. Below are some of the most famous ways to make money with bitcoin.
1. Mining bitcoin
Mining Bitcoin used to be relatively simple, and the earliest miners were able to mine thousands of Bitcoin using their home computers. However, in today’s very competitive and volatile market, miners buy expensive computer parts, that the high street customer has little access to, required for more processing power in order to mine more difficult algorithms.
Since this is a race that can solve blocks faster, miners team up in what we call mining pools where they combine their processing power in order to solve each transaction first. The reward mostly comes from several miners’ fees, is then split up by members of the pool.
This video helps to explain the process of bitcoin mining more visually:
Remember that bitcoin mining is not as profitable as it used to and many are claiming it to be the end of profitable mining.
It presents new miners with new challenges and also unique opportunities to come into the market when everyone else is leaving and then the price of bitcoin will go up. It all depends on your ability to analyze the market and correctly predict future changes.
2. Bitcoin Faucets
If you don’t mind looking at a few ads and answering surveys, you can visit a bitcoin faucet website. Generally, these websites generate revenue from advertisements placed on their pages. Those who visit their site and answer short questions or captchas will be paid from a small portion of their revenue.
3. Pay To Click (PTC) Websites
There are several websites that will pay you in bitcoin if you watch an ad or click to a certain page containing ads. If you are ad immune and want to make quick crypto buck–this can be a good idea. Bear in mind, to make any significant money is still very hard work and a rather tedious task. BTC4ADS pays around 100 satoshis (0.00000100 ฿) and Coinadder pays around 25 satoshis per click.
4. Doing Micro Jobs
Much like Microworkers and Cloudfactory, which pay you a small fee to complete very simple tasks like watching a YouTube video or completing someone’s survey, there are several micro working sites that will pay you in bitcoin.
Bitcoinget is the major player in this market which will pay you around 20,000 satoshis per task while there are several others like Cointasker that will pay you a slightly lower sum.
5. Writing about bitcoin
Cryptocurrency, in general, is a new niche and there is a scarcity of writers who genuinely know this niche. This means the market is flooded with newbie copywriters who simply rehash the content that contributes to the deterioration of quality. However, if you really know this niche and you have decent writing skills, you can actually make money.
CCN, Blockchain Aliens are among several websites that pay you for writing about bitcoin. You can also find a lot of related jobs freelance websites like Upwork and freelancer.com
6. Help others, get tipped in bitcoin
You can also get tipped in bitcoin by helping other people. One of the most notable platform to do so is bitfortip, which tips bitcoin as an incentive for helping people.
Bitcoin is a new technology and there are people who are genuinely passionate about it and excited about what is to follow so incentives like this help to build a positive vibe around the community and also help people solve their problems.
7. Gambling bitcoin
Though its not advisable to anyone, if you are self-aware enough, the bitcoin gambling market can still be a good source of income.
Just like any form of gambling, the people in general always lose and the casinos always win but since bitcoin gambling is a very little heard of the term, you can get huge bonuses for joining or even several rounds of your stake to start with. Sites like Bitstarz and mbit are major players in the Crypto gambling business.
8. Buying and Holding
Start with creating a wallet to keep your bitcoin safe. There are many places that allow you to do so. Paxful, for example, provides a free digital wallet whenever you sign up for an account. This is the easiest way if you are planning on buying and holding bitcoin. Make sure that the website you’re using is a safe and reliable one.
Investing in Bitcoin is a waiting game of its value to rise. This lets you decide when is a good time to buy or sell. There are several factors that contribute to how bitcoin is valued and you never know what will trigger the next bear market.
“Hodl”, a term the Bitcoin community whenever they are holding their coin with the belief their coin will be profitable one day. The slang word earned the backronym “Hold On for Dear Life” in the cryptocurrency space.
Note that this method can be tricky so don’t take anyone’s advice about it. Research and learn about Bitcoin and come up to your own conclusion.
9. Running a signature campaign in Bitcoin Talk forum
Bitcointalk is one of the oldest bitcoin forum set up by Satoshi Nakamoto himself. This is probably the most popular forum in crypto sphere and used by millions of people. If you are an avid follower of the forum and you have racked up some authority from consistent posting, then your posts of bitcointalk will have a sponsored signature and you’ll get paid by sponsors for every post you make on the forum.
According to Steemit, you can easily make a bit of coin doing simple forum posting – for example, a full member can earn 0.0003 btc per post
10. Bitcoin Trading
There is potential to make big money trading bitcoin. Unlike buying and holding, trading bitcoin means you buy at a low price and sell them back at a higher price. This requires practice and knowledge of the market and to some extent a crystal ball. Given that the cryptocurrency market is extremely volatile, this method can be very risky.
There is money in Arbitrage
The volatile nature of the market, however, gives rise to opportunities for arbitrage. Arbitrage–as per Investopedia is the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.
There are several reasons why bitcoin arbitrage takes place, Market demands, the difference in the quality of the markets and diversity in client behaviors to name a few. If you have a good knowledge of the market and you can keep surveillance over multiple exchanges spanning over multiple countries, there is a good chance of making a big profit margin.
If you have at least some technical knowledge, you can also profit from using arbitrage bots. Profit Strategy using bitcoin bots arbitrage
Day trading has a good profit margin if done correctly
Though bitcoin is getting less volatile by day, we should not forget that its still early adoption years and there was price fluctuations of more than 3% in a single minute as early as April 2018. Day trading has a lower risk than say “hodling” but also lower rewards unless you are investing heavily.
But if you are prepared to do your research on the bitcoin market and rules of economics in general, you can come up with your own strategies to profit from day trading without sacrificing too much.
11. Accepting Bitcoin as a means of payment
Bitcoin is, after all, a digital currency. So why not sell goods or services in exchange for bitcoin. This gives you the freedom to sell anything to anyone without going through any banks or financial institutions that may prevent you to do so. If you are already selling, why not accept bitcoin as payment. As a matter of fact, there is a massive list of businesses that accept bitcoin.
These are some ways in which you can earn money with bitcoin. If you choose to mine or invest, it is important to do as much research as possible and be prepared for all possible outcomes.
12. Lending bitcoin
The decentralized nature of bitcoin and other cryptocurrencies make it simpler to make transactions without needing authorities to validate it. In such a case, you can also loan bitcoin to potential loanees at a certain interest rate.
It is also a very good alternative to “hodling” as you are actually making use of the wealth rather than keep it unmoved and it’s better for the economy in general. Several lend-and-borrow platforms like Unchained Capital, Bitbond, and BTCpop allow you to lend your bitcoin for an interest rate up to 15%.
Bear in mind that this is still a new market and there are hustlers who may try to cheat you. Always choose trustworthy platforms and loanees while making your investments.
13. Binary Trading with bitcoin
Binary tradings have existed in the financial world for a very long time and did not take long enough to make a journey for that financial scheme to migrate to the crypto world.
Binary–as the name suggests has just two options, a trader purchases an option and at the expiration time, the trader either is either “in the money” or “out of the money”. In its true essence, its not too much further from gambling or Russian roulette.
All you have to do is make an investment on an option. Say there are two options to invest– for the bitcoin price of $3000 now (at 10 AM), you can either invest in the price will be more than $3000 by 6 PM or the price will be less than $3000 by 6 PM.
If at 5 PM the bitcoin is indeed higher than $3000, you earn the payout of a certain payout percentage of your investment, if it’s lower, you lose your investment. Another option is to “put” if you think the price of BTC will go down. If the price at the expiration time is lower than the original price, you earn the option’s payout.
Remember its plain gambling and nothing to do with intricacies of bitcoin or other cryptos in any way. Nonetheless, its still a way to make money with bitcoin though its highly inadvisable.
14. Make money with Bitcoin Affiliates
Affiliate marketing works when you generate sales leads for a product or service and the organization offering a product or service pays you certain commission for bringing in potential consumers who would otherwise not have been interested.
Usually, these 3 steps allow you to set up your own affiliate business for passive income:
- Sign up for the affiliate program as an affiliate marketer.
- When you are accepted as a marketer, you will receive a unique URL that has a link to their product or service but also has a unique identifier which means they keep a record of who sent them there.
- You then share that link on any web or social media platform(Website, Facebook, Twitter etc. ) When someone comes to visit the website through your link and makes a purchase, you get a certain percentage as your affiliate fee.
We at Paxful also have an amazing affiliate program where you get paid 50% of the bitcoin escrow fee from your direct affiliate and 10% of the escrow fee from the affiliates made by your affiliates.
15. Being a master node
Bitcoin is usually used as an umbrella term for all the cryptocurrencies and though experts would say the return for being a bitcoin master node is not all that profitable, you can still serve as a master node for several other cryptocurrencies and get a reward for your service to the blockchain.
Masternode is a dedicated node that keeps track of blockchain in real-time. Much like bitcoin full nodes, they are always up and running.
In addition to saving, validating, and announcing valid transactions to other nodes, master nodes also perform other tasks with the blockchain including ensuring smooth protocol operations, governing voting events, etc Next to validating, saving, and broadcasting transactions, master nodes sometimes also facilitate other events on the blockchain-dependent on their nature, such as governing voting events, etc.
For their dedicated service, they are heavily incentivized. It typically depends on the type of cryptocurrency but Dash, PIVX, Blocknet, Stakenet, and Zcoin are the 5 major coins that have the best incentives for a master node.
What are some Advantages of Paying With Bitcoin?
Due to the unique nature of virtual currencies, there are some inherent advantages to transacting through bitcoin over fiat currencies.
Although over a decade old, the digital currency landscape is constantly changing, with most tokens being untested as a medium of exchange, and users should be careful to weigh their benefits and risks. That said, bitcoin is designed to offer users a unique set of advantages over other payment methods. Here are some of them.
1. User Autonomy
The primary draw of bitcoin for many users, and indeed one of the central tenets of cryptocurrencies more generally, is autonomy. Digital currencies allow users more autonomy over their own money than fiat currencies do, at least in theory. Users are able to control how they spend their money without dealing with an intermediary authority like a bank or government.
2. Discretion
Bitcoin purchases are discrete. Unless a user voluntarily publishes his Bitcoin transactions, his purchases are never associated with his personal identity, much like cash-only purchases, and cannot easily be traced back to him. In fact, the anonymous bitcoin address that is generated for user purchases changes with each transaction.
This is not to say that bitcoin transactions are truly anonymous or entirely untraceable, but they are much less readily linked to personal identity than some traditional forms of payment.
3. Peer-to-Peer Focus
The bitcoin payment system is purely peer-to-peer, meaning that users are able to send and receive payments to or from anyone on the network around the world without requiring approval from any external source or authority.
4. Elimination of Banking Fees
While it is considered standard among cryptocurrency exchanges to charge so-called “maker” and “taker” fees, as well as occasional deposit and withdrawal fees, bitcoin users are not subject to the litany of traditional banking fees associated with fiat currencies. This means no account maintenance or minimum balance fees, no overdraft charges and no returned deposit fees, among many others.
5. Very Low Transaction Fees for International Payments
Standard wire transfers and foreign purchases typically involve fees and exchange costs. Since bitcoin transactions have no intermediary institutions or government involvement, the costs of transacting are kept very low.
This can be a major advantage for travelers. Additionally, any transfer in bitcoins happens very quickly, eliminating the inconvenience of typical authorization requirements and wait periods.
6. Mobile Payments
Like with many online payment systems, bitcoin users can pay for their coins anywhere they have Internet access. This means that purchasers never have to travel to a bank or a store to buy a product. However, unlike online payments made with U.S. bank accounts or credit cards, personal information is not necessary to complete any transaction.
7. Accessibility
Because users are able to send and receive bitcoins with only a smartphone or computer, bitcoin is theoretically available to populations of users without access to traditional banking systems, credit cards and other methods of payment.
What can i do with Bitcoin?
There are three options:
- You can can use it to pay for goods or services. An increasing number of small merchants and large businesses are now accepting bitcoin payments.
- You can trade it, either trading bitcoin for fiat currencies (AUD, USD, etc.) or other cryptocurrencies.
- You can hold onto it. Some predict that bitcoin’s value will continue to rise long-term.
But, before you buy, sell, or forget about your bitcoin, make sure it’s stored securely.
How to protect bitcoin investments
Whether you’ve invested $100 or $10,000, protecting your bitcoin — from malicious users, dodgy service providers, and forgotten passwords — should be your top priority.
The first thing to consider is your wallet. If you have already dedicated hours to researching the best wallet for your specific needs, skip ahead. But, if you created an account with the wallet provider your mum’s neighbour swears by, it’s worth taking the time to learn a bit more about the types of wallets available.
There are three main types of bitcoin wallets, each with their benefits and drawbacks:
- Web wallets, eWallets, and browser-based wallets. These are very popular, and are quick and easy to obtain. Do be diligent when selecting a web wallet, as the wallet provider hosts and holds your bitcoin.
- Mobile and desktop wallets. These are installed on your computer or smartphone, and give you complete control over your bitcoin. Be aware that you are responsible for backing-up your software wallet and storing your seed phrase securely.
- Hardware wallets. These exist as physical objects, and like software wallets, give you control over your bitcoin. While hardware wallets are very secure, as real-world objects, they can be lost.
The second thing to consider is your password. Create a password that is both random and memorable, and contains both upper- and lower-case letters and numbers. A made-up, nonsensical sentence often makes a secure password.
You may also like to use a password manager, and/or write your password down on a piece of paper. Many wallet providers make it difficult or impossible to recover a wallet if the user has forgotten their password.
Finally, if you are using a web wallet, enable two-factor authentication if possible. Now that your investment is secured, it’s time to start ‘using’ your bitcoin.
What can I buy with Bitcoin?
Bitcoin is much more mainstream now than it was a few years ago. As a result, a growing number of companies are accepting bitcoin payments. You could purchase your next holiday with bitcoin on Expedia and pay for services along the way with Travel By Bit, or let bitcoin send you to outer space with Virgin Galactic.
Buy apps for your phone, movies, and TV shows with bitcoin via the Microsoft app store, or get your hands on Bjork’s latest album.
Furnish your house with bitcoin at Overstock, or donate your bitcoin to a charity. You can buy food, electronic goods, sneakers, clothes and a plethora of other goods directly with people with no middlemen using Open Bazaar.
You can even pay your BPAY bills using bitcoin and ether right from your Bit Trade account! Finally, check out sites like Coinmap to find businesses in your local area that accept bitcoin.
How to sell bitcoin
Maybe you bought bitcoin last month, it shot up in value, and you’d like to cash in. Perhaps you’ve changed your mind about bitcoin altogether, and just want out. Or, maybe you’d like to trade some of your bitcoin in for another cryptocurrency.
Whatever the reason, there are a number of ways you can sell your bitcoin.
The first is through an exchange. Exchanges will purchase your bitcoin with fiat currencies, such as AUD or USD, or other cryptocurrencies. Although selling via an exchange is reliable and secure, if you have a large amount of bitcoin to sell, you may be stung with fees.
The second option is through a broker, like Bit Trade. We connect buyers and sellers, while eliminating any counterparty risks with strict security measures. Similar to exchanges, brokers charge fees that, if you plan on selling a large amount of bitcoin, can become costly. In these cases, it’s worth exploring the OTC market.
OTC — over-the-counter — refers to the trading of any asset in a context outside of a traditional exchange. Put simply, OTC trades involve buyers and sellers connecting directly; the buyer sends the seller funds, and once received, the seller sends bitcoin to the buyer’s wallet address.
OTC trades have the advantage of being fee-free. They are, however, much riskier than selling via an exchange or established broker. The seller cannot be sure that the buyer will send through the funds, nor can the buyer be sure that the seller with transfer the bitcoin.
That being said, as trade sizes have increased, more user-friendly facilitators of OTC bitcoin trades have been established. Some exchanges now offer OTC trading desks that help high-value clients secure the best possible rates.
Bitcoin as a long-term investment
Bitcoin’s value has been anything but stagnant over the past decade. In 2010, 10,000 bitcoins were traded for two pizzas. Today (mid 2018), you could buy more than 10 million pizzas with 10,000 bitcoins. In late 2017, bitcoin reached an all-time-high of over $20,000 USD.
Whether or not bitcoin’s value will continue to rise at such a rate over the next decade is unknown. Things like government regulation, security improvements, new second-layer technologies like the Lightning Network, and adoption rates will all play a role in shaping the bitcoin of the future.
The potential of cryptocurrency and its past performance has attracted many investors, while the risks involved have scared many away. Whichever camp you fall into, holding on to a fraction (if not all) of your bitcoin long-term — ten years or more — could reap serious returns.
What you Need to Know About Bitcoin
If you’re getting started with Bitcoin, there are a few things you should know. Bitcoin lets you exchange money and transact in a different way than you normally do.
As such, you should take the time to inform yourself before using Bitcoin for any serious transaction. Bitcoin should be treated with the same care as your regular wallet, or even more in some cases
Securing your wallet
Like in real life, your wallet must be secured. Bitcoin makes it possible to transfer value anywhere in a very easy way and it allows you to be in control of your money. Such great features also come with great security concerns.
At the same time, Bitcoin can provide very high levels of security if used correctly. Always remember that it is your responsibility to adopt good practices in order to protect your money.
Bitcoin price is volatile
The price of a bitcoin can unpredictably increase or decrease over a short period of time due to its young economy, novel nature, and sometimes illiquid markets.
Consequently, keeping your savings with Bitcoin is not recommended at this point. Bitcoin should be seen like a high risk asset, and you should never store money that you cannot afford to lose with Bitcoin. If you receive payments with Bitcoin, many service providers can convert them to your local currency.
Bitcoin payments are irreversible
A Bitcoin transaction cannot be reversed, it can only be refunded by the person receiving the funds. This means you should take care to do business with people and organizations you know and trust, or who have an established reputation. For their part, businesses need to keep track of the payment requests they are displaying to their customers.
Bitcoin can detect typos and usually won’t let you send money to an invalid address by mistake, but it’s best to have controls in place for additional safety and redundancy. Additional services might exist in the future to provide more choice and protection for both businesses and consumers.
Bitcoin is not anonymous
Some effort is required to protect your privacy with Bitcoin. All Bitcoin transactions are stored publicly and permanently on the network, which means anyone can see the balance and transactions of any Bitcoin address.
Read Also: A Comprehensive Guide to Trading Bitcoin
However, the identity of the user behind an address remains unknown until information is revealed during a purchase or in other circumstances. This is one reason why Bitcoin addresses should only be used once. Always remember that it is your responsibility to adopt good practices in order to protect your privacy.
Unconfirmed transactions aren’t secure
Transactions don’t start out as irreversible. Instead, they get a confirmation score that indicates how hard it is to reverse them. Each confirmation takes between a few seconds and 90 minutes, with 10 minutes being the average. If the transaction pays too low a fee or is otherwise atypical, getting the first confirmation can take much longer.
Bitcoin is still experimental
Bitcoin is an experimental new currency that is in active development. Each improvement makes Bitcoin more appealing but also reveals new challenges as Bitcoin adoption grows.
During these growing pains, you might encounter increased fees, slower confirmations, or even more severe issues. Be prepared for problems and consult a technical expert before making any major investments, but keep in mind that nobody can predict Bitcoin’s future.
Government taxes and regulations
Bitcoin is not an official currency. That said, most jurisdictions still require you to pay income, sales, payroll, and capital gains taxes on anything that has value, including bitcoins. It is your responsibility to ensure that you adhere to tax and other legal or regulatory mandates issued by your government and/or local municipalities.
