Bitcoin, the first and most popular cryptocurrency in the world, has been around since 2009, and many people are trying to figure out how to make money with it.
There are several ways to do so, and there are different levels of risk involved depending on your chosen method.
If you’re looking to start making money with Bitcoin today, this guide will go over the top ways to do so while minimizing your risk as much as possible.
Basic background information
I’ve included a little background information below, whether you’re a newbie or are just wondering what all of these blocks, hashes, and keys are.
For an in-depth guide on all things cryptocurrency, head over to my previous post: The Beginner’s Guide to Cryptocurrency.
Otherwise, continue reading for some tips on how you can start making money with Bitcoin.
Mining Bitcoins
Mining bitcoins is as simple as setting up a computer and letting it run for some people.
However, unless you have specialized hardware such as an application-specific integrated circuit (ASIC) that can perform dedicated bitcoin mining calculations at high speed, your chances of getting rich overnight are close to nil.
People who want bitcoins typically buy them on digital currency exchanges or from friends and family members in exchange for goods or services they are willing to provide.
One thing that makes bitcoin mining tricky is that it’s hard to calculate profit margins or return on investment due to fluctuating costs.
If your electricity costs happen to be higher than normal, your profits will drop commensurately.
In addition, if difficulty rises too quickly, there may not be enough time to recoup your initial investment before you need to sell new bitcoins.
In short: Mining bitcoins isn’t easy; even established professionals have trouble making a living at it
Buying And Selling Bitcoins
Here’s how you can make money off of Bitcoins: You can either buy Bitcoins and hope their value rises or mine for them.
The first option is easier but will cost you big bucks; it’s also incredibly risky. If you’re going down that route, I’d highly recommend using a credit card instead of funds directly from your bank account. If something goes wrong, there’s a very good chance your losses will be covered.
There are several ways to get involved in buying and selling coins: Directly through individual sellers on eBay (and other auction sites), direct exchanges like MtGox and Bitstamp, and exchanges like Coinbase that allow buying/selling with payment processors like Dwolla or even personal sales via LocalBitcoins. com.
It’s important to note that all transactions will have varying levels of risk attached-buying and selling bitcoins themselves isn’t inherently dangerous, but buying bitcoins from sketchy sources could lead to stolen identities or hacked accounts.
As such, proceed with caution when dealing with any service that offers purchase options beyond direct purchases from individuals.
Keep in mind that bitcoins can be stolen-if someone steals your wallet file containing your private key(s), they now have full access to spend all of your bitcoin balance at once.
This means keeping backups of anything valuable should always be a priority.
Is It Worth The Effort?
Do you know how much does it cost to buy one bitcoin? Almost $40,000!
If you’re going to try and earn some extra cash by mining for Bitcoins, you’ll need a good idea of whether or not it’s worth your time.
There are two major factors that play into whether or not Bitcoin mining is right for you: cost and efficiency. In terms of cost, how much are you willing to spend on hardware?
How much do you earn per month from your day job? The more money you can put towards equipment, the faster your return on investment will be.
In terms of efficiency, how well does your hardware perform when compared to others in its class? What about cooling costs? What about electricity costs?
These questions all factor into whether or not you should invest in any given piece of hardware. One thing to keep in mind: if you want to mine bitcoins, there are better options than just buying them outright.
You can also mine other cryptocurrencies like Litecoin and Dogecoin, which may be more profitable than bitcoin at any given moment.
Final Thoughts
Cryptocurrencies are not your average investment. They’re a brand new asset class, and they come with their own risks and rewards.
Having said that, we firmly believe that everyone needs some form of exposure to cryptocurrencies.
The famous investor Warren Buffett once said, Never invest in a business you can’t understand.
While we are definitely not investors nor financial advisors, we think it is prudent for you to have some degree of knowledge about cryptocurrencies and other aspects of blockchain technology.
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