Cryptocurrencies are the next big thing in the world after space exploration. It’s the new craze that has gripped everyone’s attention these days so much so that pretty much everyone is talking about them all of sudden. Cryptocurrencies are creating new millionaires and shaking the current economic order. The tremors of movements in cryptocurrencies are being felt in the stock markets also now. So at such a time, it is very important to understand what is cryptocurrency and how to make money from Cryptocurrencies!
Before we dive deeper into cryptocurrencies, you should know about cryptography. Cryptography is made of 2 parts Crypto (meaning concealed, hidden or secret) and Graphy (meaning to write), giving it the meaning – the method of protecting information and communications through the use of codes or ciphers.
What is a cryptocurrency?
Cryptocurrencies are electronic currencies that don’t have a physical counterpart. Everything else about them, that confuses you, is the logistics of how cryptocurrencies work. So while you can trade in a bitcoin electronically you can’t really hold a bitcoin or put it in your wallet.
The cryptocurrencies are peer-to-peer (read person-to-person) in nature. This means there is no central bank that prints or issues or controls them. Therefore their value is decided simply by the gap between supply and demand.
These currencies are called crypto-currencies because crypto money is essentially an encrypted digital file that makes the transactions safe. It also helps other entities reliably verify the transaction. By a broad estimate, as of date, there are over 4000 cryptocurrencies, however, most of the cryptocurrencies can’t be converted to physical currencies. They can be used to buy things and the number of businesses accepting cryptocurrencies is growing rapidly.
Is cryptocurrency legal in India?
To understand why there is confusion regarding the legal status of cryptocurrencies in India, you have to understand the difference between legality and regulation. Cryptocurrencies are not illegal in India, but they are not regulated by RBI, India’s central bank. This means is that anyone in India can buy, sell and trade cryptocurrencies.
However, RBI has no framework to regulate cryptocurrencies. In other words, there is no way to ensure that these currencies are not used to fund illegal activities. These activities may include financial fraud, tax evasion, money laundering and other issues related to misuse of money. Such regulations are in place for Rupee or for that matter every other physical currency in the world. Till that happens cryptocurrencies will not get to play a significant role in the country’s economy. However, trading in cryptocurrencies is as legal as trading in Indian Rupee is.
What is a cryptocurrency exchange?
A cryptocurrency exchange AKA DCE (Digital currency exchange) is a platform (an app/website or both) that allows users to trade cryptocurrencies or digital currencies. The users can trade crypto for real (read Fiat) money or other digital currencies. The exchanges accept all forms of electronic payments in exchange for cryptocurrencies. They typically charge a commission or a certain fee for each transaction.
Dedicated cryptocurrency exchanges like Binance and Coinbase allow cryptocurrency withdrawals. Some of the exchanges can also convert the balance into prepaid cards that can be used to withdraw money from ATMs worldwide.
How to make money from cryptocurrencies?
There are different ways in which you can make money from cryptocurrencies. We are listing a few below with basic details but we promise to come up with a full article on how to get rich by investing in different types of cryptocurrencies, soon.
- Trading: Trading in crypto is just the same as stock trading. You can buy and sell coins/tokens at different costs and make a profit from the margin between the sell and buy price.
- Investing: Investing is perhaps the simplest, easiest and one of the best ways to grow your crypto money. However, you have to have patience and should be ready to play the long-term game. This is often referred to as Holding also although holding doesn’t necessarily need investing.
- Bonus Coins: Participating in bonus coins programs is a great way to earn cryptocurrencies without spending anything. You just need to join a bounty program and perform some tasks.
- Trade with Cryptocurrencies: If you sell any services or products then you can start accepting payments in cryptocurrencies. It is a wonderful way of saving on the commission you have to pay while buying crypto via an exchange.
- Staking: Staking is basically investing or locking up funds in a cryptocurrency to earn new cryptocurrencies as the interest of your investment.
- Crypto Dividends: Well, as the name sounds, they are very much the same as stock dividends. You buy crypto and hold it for a long period to earn dividends.
- Referral programs: Referrals are the easiest way to jumpstart your crypto journey. Almost every crypto app and website has a referral program and if you know other people who are curious about cryptocurrencies then you can get a decent amount of crypto from referral credits.
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Which are the best cryptocurrencies to invest in?
Here are our top picks for cryptocurrencies that can give you good returns in the short and long run.
Bitcoin (BTC) – Price ~ US$ 33,030.00
Ethereum (ETH) – Price ~ US$ 2,520.00
Binance Coin (BNB) – Price: US$ 353.00
Decred (DCR) – Price ~ US$ 132.00
Maker (MKR) – Price ~ US$3,300.00
Cardano (ADA) – Price ~ US$158.00
Litecoin (LTC) – Price ~ US$158.00
SHIBA INU (SHIB) – Price ~ US$0.0000072
Theta Fuel (TFUEL) – Price ~ US$0.57
Dogecoin (DOGE) – Price ~ US$0.33
You must know that the cryptocurrency trade market is also susceptible to volatility just like the stock markets. Some currencies are more sensitive than others but, in general, the variations in cryptocurrencies are much more rapid than in traditional stocks. Therefore one needs to stay in touch with the crypto prices on a daily basis so as to cash on the big prize or to avoid a big loss.
Caution for investors
If you plan to invest in cryptocurrencies then you must regularly follow up on the crypto trade market. Cryptocurrency trade is a fast-changing landscape and we are still learning about which events can impact the value of a currency.
You know that emotions play a big role in price fluctuations when you see a tweet making a currency’s value drop by 30%. Emotion-driven fluctuations indicate that the market is still far away from maturity and needs stronger metrics.
If you plan to place a bet on a cryptocurrency and then forget it for a couple of years to let it grow then that’s a good strategy. However, in such a case we would advise that you don’t invest a large sum of money in single crypto. Hedging always helps when investing a substantial amount of money. Thankfully, there are so many good cryptocurrencies with diverse purposes and features which makes it easy to hedge the risk.
We hope that we were able to explain how to make money from cryptocurrencies in a simple manner. We’ll soon be coming up with more interesting content like the best crypto exchanges in India, different types of cryptos and how to use them to create a balanced investment portfolio in crypto. Meanwhile, you can also make some real (physical) money from these websites – Best online gaming websites to win real cash
Disclaimer: We are not cryptocurrency experts and the “best cryptocurrencies to invest” list posted in this article is a result of our research based on data and information available on the internet. This is not an advisory and the readers should use their discretion or seek expert opinion before investing in cryptocurrencies.