Different Ways To Profit In Crypto

Undeniably a huge space and an even bigger opportunity, arguably the most recent evolution of money, crypto allows multiple ways to profit, and in addition provide value to the world. Here we will look at some of the most common ones.

1) Building On The Blockchain
This incorporates writing smart contracts, dapps, coding on the blockchain, making your own defi protocols and many other options. Of course, in order to do this, you have to either know how to code, or be willing to learn it.

2) Day Trading Crypto Assets

Day Trading is a very specific skill, and empirical data suggests that most traders are not actually successful, and end up losing money in the long run. However, for the select few it can be very lucrative, and while day trading is not possible only in crypto (you can also day trade stocks, commodities, forex and other financial assets), crypto might be a good option due to the high volatility inherent to the asset class. Significant and fast jumps and drops in prices can be a potential gold-mine for a highly skilled trader. The apparent downside is that you can just as quickly lose loads of money as make it, and most people are not capable of handling this volatility on an emotional level, and to be a successful trader, apart from strong technical knowledge of trading itself, you also need ironclad nerves and a very calculated, disciplined approach.

3) Investing In Asset Properties

Another option that pertains to crypto as well as other financial assets. The best way to explain this is with an example. Let’s say you believe that real estate in a specific city is going to go up in price in the next 5 or 10 years, and you think that 3-bedroom homes in particular are going to be much more valuable in that specific city in the future. And you decide to buy four 3-bedroom homes in this city. Now, you’re not going to be looking at the dollar value of each home every day, right? That would be ridiculous. Rather, how you would go about investing in asset properties is, you want to acquire those assets, you want to acquire those homes, because you believe they will be much more valuable in the future.

How this principle would look when transferred to crypto is “I believe in layer 1s, and I believe layer 1s are going to be much more valuable in 2/5/10 years time, so I want to scoop up as much of them as possible right now.” Or perhaps you can say “I believe in Insurance protocols, it’s not sexy or cool, but I think Insurance will be necessary for mass market adoption to happen, and I wanna set myself up now.”
But then you’re not going to look at the dollar price of each Insurance protocol, or each Layer 1 every day, because the price fluctuations in the short-term don’t matter. This is Investing in Asset Prices. You invest because you believe they will be much more valuable years down the line, and don’t look at what the price does on a daily, weekly, or monthly level.

4) Investing in an Individual/Team

There are some people that you may inherently trust, both in terms of trustworthiness and competence, and whenever they’re in something, you want to be a part of it. For example, you may say “I believe in Elon Musk. I don’t really have an opinion about Tesla, or electric cars, or going to Mars, but I believe in Elon Musk, and whatever he does, I’m in”. This is an example of investing in a team or an individual.
On the other hand, if you believe electric cars are the future, that would be an example of investing in asset properties.

5) Ecosystems and Synergies

If you don’t believe in crypto personally, or it’s too hard to deal with and you can’t be bothered, but you believe others will rush into crypto, or rush out of crypto. Essentially, there will be money flowing in and out of the space. So how can you benefit from it? Arbitrage and trading fees.
Arbitrage boils down to benefiting from different prices on different exchanges for the same asset. Let’s say Bitcoin is $21000 on one exchange, but it’s $21200 on another exchange. You can buy it on one exchange for $21000, and then sell it immediately for $21200 on another exchange. This is called arbitrage.

Trading fees are a great solution if you believe people are going to continue trading crypto. You can simply provide liquidity on decentralized exchanges, which fosters commerce and trading, and you will be getting a portion of the trading fees whenever anyone makes a trade as passive income.

As an interesting side note, this approach was taken during the 1850s by Levi Strauss, the biggest winner of the Gold Rush. He opener a dry goods store in San Francisco, and sold mining equipment to the miners, like pickaxes, durable clothes etc. He didn’t necessarily believe that mining for gold was the best option, but he realized that other people will believe it is, so he took advantage of the opportunity.

6) Investing in Strong Projects During a Bear Market

Arguably only present in crypto, this is one of the simplest ways to invest. You invest during the bear market, and you invest only in strong, fundamentally solid players in the crypto space. Then you simply wait for the bull market to come, and sell for profit. The reason why you are only choosing to invest in the project with strong fundamentals is because bear markets in crypto are extremely harsh, and many projects simply don’t survive the bear market to be able to reap the benefits when the bull market comes.

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Of course, there is no reason to restrict yourself to only one of those. Any combination of these is fine, although doing all 6 might be a bit too much. Regardless, most people only think of trading and investing while the price is going up when it comes to crypto, and it’s important to be cognizant of all the various ways to be a part of and benefit from the crypto market.