This guide aims to demonstrate how to the average trader or investor can profit from Bitcoin. While returns are never guaranteed, we outline nine diverse methods which encompass a broad spectrum of strategies. Here’s what to know about the Bitcoin market and its associated money-making opportunities in 2024.
KEY TAKEAWAYS
► Bitcoin offers diverse money-making opportunities, from trading and lending to passive interest and staking options.
► Risk levels vary across methods, with trading and yield farming being high-risk, while HODLing and staking offer lower-risk alternatives.
► You can earn Bitcoin without owning it through play-to-earn games, airdrops, and running a Lightning Network node.
► The increasing adoption and versatility of Bitcoin provide flexible options for both new and experienced investors to generate profits.
Top ways to make money with Bitcoin
There are several opportunities to make money with Bitcoin. If you hold Bitcoin, you can trade, passively earn interest, or perform some tasks to rack up BTC. Let’s explore each of these options.
1. Trading Bitcoin
“Buy low, sell high, and do that many times.“ If this describes you, you fit the bill of a trader. Bitcoin trading is the opposite of the traditional buy-and-HODL method.
Trading Bitcoin essentially involves taking advantage of the extremely volatile nature of the crypto market. The concept revolves around speculating the direction of Bitcoin and other cryptocurrencies. Here are some trading methods you can use to profit with Bitcoin:
Day trading
Day trading is one of the most popular and lucrative ways to make money with Bitcoin. It offers short-term ways to make money. Rather than buying and holding coins for the long term, you can actually profit from the market within short periods.
Day trading, also called intraday trading, essentially involves entering and exiting the crypto market daily. Its aim is to constantly make small incremental profits from the highly volatile crypto market.
The exciting part of day trading is that you can make money even when the market fluctuations are unstable, as you can speculate on either upward or downward movement.
Swing trading
Swing trading is a trading strategy where investors hold positions for a short to medium time frame. The concept behind this is that the crypto market moves in waves. Prices will go up for some time and then trend down for another period of time.
This is an excellent way for traders to profit from these “swings.” A swing trader seeks to leverage these waves of price fluctuations.
Arbitrage
Arbitrage involves concurrent buying and selling of the same or similar crypto asset on two different exchanges for advantageously different prices. This is a great way to profit from crypto and make money with Bitcoin.
To put it simply, you buy a cryptocurrency for a low price on one exchange and sell it for a higher price on another.
2. Buy and hold
The buy-and-HODL method is the easiest and the most friendly way of making money with crypto. The joy of “buying the dip” and then opening your wallet the following day, week, or month and seeing a massive increase in your holdings is second to none.
This method doesn’t require any technical or analytical skills. You can simply decide to buy when the price is down and then sell when the price is up.
“I really like Bitcoin. I own Bitcoins. It’s a store of value, a distributed ledger. It’s also a good investment vehicle if you have an appetite for risk. But it won’t be a currency until volatility slows down.”
David Marcus, CEO of Paypal
As much as this investment strategy requires little to no effort, it’s important to buy and hold more stable and volatile assets. Cryptocurrencies like Bitcoin and Ethereum are large-cap assets with high liquidity. Therefore, they maintain regular price movements and can be considered relatively safe investments.
Disclaimer: There’s no such thing as a completely safe investment in crypto. Rapidly changing market sentiment and the possibility of black swan events means profits are never guaranteed. As such, you should never invest more than you can afford to lose.
3. Earn interest with your Bitcoin holding
As much as holding Bitcoin might give you an edge to buy many other altcoins, other large-cap coins such as Ethereum offer easy access to interest gains via staking. The most popular means of earning rewards on your BTC holdings is by opening a savings account with a reputable crypto savings platform.
Alternatively, you can tokenize your Bitcoin in order to explore DeFi. Wrapped BTC (WBTC) has emerged as a leading tokenized Bitcoin asset.
Ultimately, WBTC is an ERC-20 token hosted on the Ethereum network, pegged to the price of Bitcoin. You can use it with Ethereum’s smart contracts and earn interest on WBTC without any custodian party controlling your funds.
4. Bitcoin lending
Bitcoin lending involves investors lending their cryptocurrency to borrowers to earn interest. Like mortgage loans or any other traditional loan, you can obtain a loan and pay it off over time by pledging your crypto assets as collateral. The same principle applies to lenders. You can earn money by giving out loans to borrowers.
You can borrow and lend your tokenized Bitcoin or open a crypto savings account via Aave, Compound, MakerDAO, Binance, etc. However, it’s important to note that certain risks come with Bitcoin lending.
Before engaging in it, you must understand the risks, especially the result of seeing your cryptocurrency’s value drop rapidly. Other risks include smart contract, liquidation, and standard investment risks.
5. Yield farming
Yield farming is the process of depositing your crypto into a liquidity pool and then using the LP tokens to deposit or stake on another platform. This is a popular strategy in DeFi, and in the case of BTC, you will first have to convert the token into WBTC or an equivalent asset.
Most popular yield farming platforms — like Balancer Compound — have a WBTC pair, and the yields will vary depending on market conditions.
6. Staking
Not all cryptocurrencies can be staked. Making money through this means is only reserved for cryptocurrencies that use the “proof-of-stake” consensus mechanism. Bitcoin is one of those that can’t be staked, as it is a proof-of-work-based network.
However, WBTC can be staked, so you can convert your BTC to WBTC and stake it on several platforms. The earnings will vary wildly depending on market conditions. Most platforms — like Binance — offer WBTC staking, so pick one of your liking after a quick online search.
Methods for making money with Bitcoin compared
| Methods | Difficulty | Profit | Risk |
|---|---|---|---|
| Trading | High | High | High |
| Buy and HODL | Low | Mid | Low |
| Earn interest | Low | Low | Mid |
| Lending | Low | Mid | Mid |
| Yield farming | High | High | High |
| Staking | Low | Low | Low |
Each method for earning money with Bitcoin has its own difficulty, profitability, and risk profile. Additionally, each method also requires some nuance to understand.
For example, trading in itself is not very difficult. At its core, you simply buy low and sell high or sell high and buy low. However, it is difficult in the sense that 70-90% of traders lose money. While the process can be simple, success can be tough and illusive.
In the case of yield farming, the term covers a multitude of various complex strategies, typically involving a combination of arbitrage, lending, or borrowing. To put it simply, the profitability can be high, depending on the sophistication of the trades.
Staking and “buying and holding” are lower risk. With buying and holding, you simply wait for the price to go up, and you do not hand over your BTC. Depending on the platform that you stake on, staking simply requires you to put your BTC in a smart contract to earn profits.
In this method, if the platform is non-custodial and the smart contract is audited then the risk of losing money or ownership of your BTC is relatively low.
Make money in Bitcoin without owning BTC
The aforementioned points are different ways you can make money with your Bitcoin holding. How about the idea of making money in Bitcoin without owning BTC? Sounds good? The methods listed below will help you make Bitcoins. Let’s explore.
7. Play-to-earn games
Since crypto is already cutting across and disrupting various industries, users are beginning to earn money in several unique ways. Gaming is one of the interesting industries that allows users to earn money.
You can earn crypto assets by sitting in the corner of your room and playing crypto games. Sounds interesting, right? Let’s explore what this is all about.
Play-to-earn (or P2E) crypto games involve earning cryptocurrencies by playing games. Typically, it involves exploring a virtual world, building a deck of cards, earning in-game currency by finishing quests, and completing other kinds of challenges. Usually, you can exchange these in-game currencies for popular crypto-assets like Bitcoin, Ethereum, etc.
You can then transfer the funds realized from these games to a safe and trusted crypto wallet. Some examples of the available play-to-earn games include Axie Infinity, The Sandbox, Alien Worlds, Gods Unchained, etc.
8. Airdrops
In its most basic form, a crypto airdrop is one of the many marketing strategies crypto startups employ to amass followers and build their community.
These startups often airdrop (send) tokens to your wallet as part of an initial offering or just as a giveaway for being involved in their project. Different projects offer airdrops for various reasons. The point remains that you can earn free crypto by participating in a project.
So, how do you receive airdrops? You’ll need a crypto wallet where you store Bitcoin, Ethereum, or any other cryptocurrency. Most projects usually request a crypto wallet address during registration, so ensure you have it ready and it’s the correct wallet running on the provided blockchain.
Once you have completed the details and performed all the required tasks, the project will credit you the promised amount to your provided wallet if you’re part of the shortlisted winners.
9. Set up a lightning node
The Lightning Network is a layer-2 protocol (L2) that runs on top of the Bitcoin blockchain. It enables off-chain, energy-efficient, fast transactions through a network of two-directional payment channels called Lightning channels. Like other L2 protocols, the main idea behind this is to take some load off the main chain by processing most transactions off-chain.
You can make money by running Lightning Network nodes and charging fees to validate transactions through your Lightning channels. This earns you small amounts of BTC. For example, a Lightning node might run $5,000 worth of monthly transactions and earn a 0.125% fee, thus receiving $12.50 monthly.
Lightning Nodes explore the best-performing path for confirming transactions, so to earn a substantial amount of money, you’ll need to set your own node’s fee and balance it with network efficiency and profitability.
Bitcoin: A brief overview
Bitcoin is the first and largest cryptocurrency by market cap. Whereas most cryptocurrencies are platforms to build applications, Bitcoin acts simply as a distributed ledger and peer-to-peer currency. Its tenure has been marked by enormous cycles of volatility.
Is it easy to turn Bitcoin into profits?
Bitcoin offers different ways to make money actively and passively. As outlined in this guide, there are a wide variety of options at your disposal if you want to learn to make money with Bitcoin. While many of these methods look intriguing, it’s crucial to way up any risks and rewards and act accordingly. While BTC profits are very much possible, they are also never guaranteed.
Frequently asked questions
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