How To Make (Or Lose) Money With Cardano (ADA)?

Last Updated September 14th 2021
7 Min Read

In the last four years, Cardano token prices grew by more than 10800%. It also grew from a rather unknown altcoin - dubbed ethereum killer - to the third-largest cryptocurrency with a market capitalization of $78 Billion.

In its journey here, Cardano has helped countless individuals build wealth and move up social classes. But you probably have heard of others who weren’t so lucky and ended up losing money by making poor decisions with Cardano investments.

Do you want to join the former and make money with Cardano? We will tell of the most practical steps you can take to build wealth with Cardano today. Further, and since we want you to retain as much of the fortune earned with Cardano, we will tell you how past ADA investors lost money with the cryptocurrency and how you can avoid repeating their mistakes.

Read on.

Ways To Make Money With Cardano (ADA)

Before looking at the three most common ways of making money with Cardano, it is important to note that ADA tokens were not designed to serve as an investment product. They are supposed to, and do actually, facilitate transactions on the Cardano network.

Nevertheless, because of their volatile price action and consistent value appreciation, they have been picked by traders and investors and turned into a speculative investment product that is currently traded on crypto exchanges and brokerages. You, too, can treat it as such and make money with ADA through:

Staking & lending

Cardano uses the energy-efficient proof of stake consensus (POS) algorithm to validate and confirm transactions on the network. After buying some Cardano tokens, you could choose to simply lock them in the network and have them used to verify transactions on the network.

In return, you will be rewarded with extra Cardano tokens. At the moment, the Annual Staking Yield (ASY) on Cardano is set at 4.0%, implying that the higher your staked ADA tokens.

Alternatively, you could choose to stake your Cardano holdings with third-party DeFi lending platforms like Binance, which pay flexible interest of between 0.48% and 100% or a fixed interest of 5-7.79% p.a. Others include Staking Rewards, whose interest currently stands at 6.21% .p.a.

In most cases, these platforms ask you to lock your ADA tokens with them, they lend it out to traders and investors (without risking your investment) and share the interest paid by the traders and investors with you.

Cardano Trading

You could simply choose to trade the altcoin by leveraging Cardano’s volatile price action. As is the case with traditional investments, Cardano trading involves buying the altcoin at a relatively low price, holding on to it for a short while, and selling when its price rises. Traders often open and close multiple trades throughout the day, scooping a little profit with every trade, which can be a great way of making money with Cardano.

In this case, you have the option of trading the actual ADA tokens or Cardano CFDs. The primary benefit of trading ADA CFDs is that you have the option of going long (buy) when you expect token prices to increase or short (sell) when you expect them to take a hit - effectively making money from either ADA price direction. Plus, CFD trading gives you access to leveraged funds.

Don't Miss: Cardano Price Prediction Forecast

Cardano Investing

Investing is perhaps the most popular and most beginner-friendly way of making money with Cardano. Unlike trading, which involves constantly buying and selling Cardano tokens, investing involves buying ADA tokens, depositing them to a secure wallet - preferably a hardware wallet and holding on to them for years. Unlike active traders who seek to make money off marginal fluctuations of Cardano tokens, investors hope to grow their wealth gradually as the token prices increase over time.

To become a Cardano investor, therefore, you first need to believe in the network’s future and believe that its prices will perpetually rise. You need to be as confident as the analysts at CoinPriceForecast, who believe that ADA prices will grow by more than 570% to reach $16 in the next 10 years.

Ways to Lose Money With Cardano (ADA)

There are different ways through which you can lose money with Cardano. Here are the three most common and tips on how to avoid them.

Trading

By now, you already know that cryptocurrencies have been the most lucrative but also the most volatile investment product of the last decade. When trading, you only make money if you accurately predict Cardano’s next price action.

But given the crypto market and Cardano’s volatile price action, most traders end up misinterpreting price data and entering into losing trades. The amount of money lost in ADA trades will especially dent your portfolio if trading Cardano CFDs on leverage.

To avoid losing money when trading, we advise that you first learn how to trade and perfect a strategy using virtual funds in a demo trading account. Once confident about trading skills, embrace all the risk management tools provided by your brokerage, and, where possible, find a PRO trader to mentor you.

Hacking

Hacking is increasingly turning into a menace within the crypto industry as more individuals turned to hacking as a career. They then target wallets, exchanges, and DeFi staking platforms that hold popular and fast-moving cryptocurrencies like Cardano.

Loss of money to hackers is more lethal than from price volatility when trading because this loss is permanent. There often is no way of recovering the lost assets, and neither is there an insurance cover to redeem you from such a loss. 

To avoid losing Cardano to hackers, we advise you to invest in the ultra-secure hardware wallet that stores the private keys for your coins offline. You could also make it harder for them to access the ADA tokens you are actively trading by securing your exchange/brokerage account with a strong and unique password. Equally important, activate multi-factor authentication for log-ins and funds transfer.

Scams

Scams are as lethal and as prevalent as hacking. Instead of using brute force to steal your Cardano, however, scammers trick you into willingly surrendering control over your ADA tokens with attractive investments. They will, for instance, come up with Ponzi and Pyramid schemes that promise guaranteed and above-industry return on investments.

But as soon as you lock funds into their investment programs or fake DeFi protocols, they cease communication and eventually take down the investment platform - running away with investor funds.

You can avoid losing money to scammers by doing due diligence when investing. This involves only investing in highly reputable programs, checking the reputation of investment platform founders, and going through their past and current investor reviews of the platform.

Even more importantly, you need to know that crypto trading/investing is not a get-rich-quick scheme and treat anyone who tells you otherwise suspiciously.

Bottom line: How to keep your Cardano Safe

Making money with Cardano and retaining it to create wealth is not complicated. However, you need to remember that not everyone who buys cryptos like Cardano makes money. Succeeding and turning a small ADA investment into a fortune takes experience and a little bit of luck.

By informing you of the most common ways that others have used to create wealth with Cardano and giving you tips on how to avoid losing the monies earned here, we hope that we have been placed on a path to succeeding as a Cardano investor or trader. 

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eToro have proven themselves trustworthy within the crypto industry over many years – we recommend you try them out.

Virtual currencies are highly volatile. Your capital is at risk.

Read More:

Can Cardano Realize the Target of $10 Any Time Soon?

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Why Cardano Is So Cheap?

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11 Reasons Why You Should Invest in Cardano ADA Today

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