Ways to Make (or Lose) Money With Bitcoin (BTC)

Last Updated August 31st 2021
6 Min Read

After a decade of fluctuating prices and surging adoption as a medium of exchange and an investment product, Bitcoin has helped countless individuals earn a fortune and scale the social ladder. But there also are numerous accounts of individuals and entities all across the world who have been impoverished by the pioneer digital currency.

Today Bitcoin is as loved as it is revered. Its proponents hail it as the most lucrative investment product of all time, while its critics describe it as the riskiest investment product yet.

But how can one investment product yield such extreme results? If I choose to invest in Bitcoin today, how do I maintain my investment on the winning side? These are some of the questions that Bitcoin investors and enthusiasts are asking themselves today.

In this post, we help answer this question by discussing the different ways you can make money with Bitcoins. We also study how you can retain these earnings by looking at the most common ways through which crypto investors have lost money with Bitcoins - and how to avoid them.

So, how exactly can you make it with Bitcoin, and how can you lose it.

Ways to Make Money With Bitcoin (BTC)

Before looking at the different ways individuals use Bitcoin to make money, it is important to note that digital currency was not intended to serve as an investment product. Instead, it is designed to serve as a medium of exchange and ultimately replace fiat currencies as the preferred means of payment and stove volume. Nevertheless, it has gained popularity as an investment product.

Here are the different ways in which you can make money with Bitcoin:

Trading

Bitcoin Trading is by far the most popular and most common way of interacting with and making money with Bitcoins. As is the case with traditional investments, Bitcoin trading involves buying low and selling high.

In this case, you will want to buy at a price dip, wait for its value to uptrend, and sell before the trend reverses. To succeed in Bitcoin trading, you need such basic skills as reading and interpreting price charts and the different analytical tools. You also have to settle on a particular trading strategy.

You could be a day trader who opens and closes multiple Bitcoin trades throughout the day, an intraday trader who holds onto Bitcoin trades for one or a few days, or an arbitrage trader who buys from one exchange where BTC is lowly priced and immediately sells on a different exchange get a higher value.

Trading is made all the more possible by the highly volatile Bitcoin prices. They make it possible for virtually anyone to get in and out of a position quickly and book tangible profits with each trade.

Investing

Simply put, investing is similar to trading, with the only difference being that it involves holding on to that trade for a longer time. Within the Bitcoin investment circles, they refer to this as HODLing as it involves buying Bitcoins and holding on to them eternally or until a point in time when you desperately need to convert that investment into liquid cash. 

Unlike trading, which can be done by virtually anyone, including BTC critics, investing is a preserve of individuals who believe in the digital currency's future. These are confident that Bitcoin prices will perpetually rise and that their investment in cryptocurrency today will be much more valuable over the long term.

Most Bitcoin investors, therefore, buy the digital currency today, hoping that it will help them grow their investment portfolio for years to come.

Interestingly, though, Bitcoin investing doesn't always have to involve buying actual BTC coins. It may also involve investing in Bitcoin-oriented start-ups. For instance, you may consider investing in start-ups that provide Bitcoin exchange or Bitcoin storage services.

Check Out: Is It Better To Invest Or Trade Bitcoin?

Mining

Bitcoin mining is one of the most lucrative ways of making money. However, it also is the costliest method of making money with Bitcoins. It involves investing in Bitcoin mining infrastructure, i.e., powerful computers or graphics cards, and going solo or joining a Bitcoin mining pool.

It is the most lucrative because it involves earning free Bitcoins when verifying and confirming transactions on the Bitcoin network. But it also is the costliest because it involves investing heavily in infrastructure and electricity bills.

The only other option to buying the Bitcoin mining hardware is buying or subscribing to a Bitcoin cloud-mining platform where you rent the Bitcoin mining hardware by paying once or in instalments.

Lending 

Bitcoin lending is slowly emerging as a competitive way of making money with Bitcoins. It involves lending your Bitcoin assets to traders or investors and earning interest in return.

It has been popularized by the fast-paced growth of the decentralized finance niche of the crypto industry. Today, there are multiple online-based platforms where you can lend Bitcoins to traders and investors at highly competitive rates.

The most appealing thing about Bitcoin lending is that it allows you to earn doubly from Bitcoin holdings. For starters, lending does not stand in the way of your BTC appreciating in value. And in addition to the increased value, its borrowers get to pay you interest.

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How to Lose Money With Bitcoin

When it comes to Bitcoin investments, you can lose money as easily as you earned it. Here are the three most common ways in which Bitcoin investors have lost money in the last decade - and how to avoid falling into the same trap.

Trading

When Bitcoin trading, you are essentially leveraging the digital currency’s price volatility. However, Bitcoin prices are the hardest to read and predict, making Bitcoin trading one of the riskiest Bitcoin investment strategies.

It is not uncommon for Bitcoin to change trends rapidly and lose you substantial Investments or even clean your trading account in a short time. This untamed volatility then makes Bitcoin trading the easiest way to lose money.

Solution:

If you must trade Bitcoin, consider practising trading on a demo account to perfect your skills. Secondly, always take advantage of risk management tools provided by an exchange when you eventually move to a real money account.

Don't Miss: How to Trade Bitcoin: A Step-by-Step Guide

Bitcoin scams

As Bitcoin's popularity and price rose over the years, it attracted the attention of criminals and fraudsters. To date, Bitcoins worth billions of dollars have been lost to scammers who trick their victims into investing in phoney schemes and end up taking down the website and cease communication as soon as the target is reached or the victim realizes they have been defrauded.

Today, the most popular Bitcoin scams are the social engineering and phishing scams that seek to solicit crucial personal information from you and use it to gain access to your wallet/exchange or use your identity to con other BTC investors online. Others are social media scams that seek to scam BTC investors on social media and DeFi rug pulls that are also gaining momentum today. 

Hackers

Crypto hacking is on the rise, and Bitcoin takes the bulk of all hacking reports. As its price and adoption surges in popularity, so has its appeal to criminals. Traditionally, these hackers targeted weakly guarded crypto wallets. At the time, the hackers were majorly comprised of individual rogue elements scattered all across the world. Today, however, much of the hacking is perpetrated by elite hacking groups and state-backed entities.

They have also come up with more sophisticated hacks and often go for larger targets, especially Bitcoin exchanges and wallet service providers. They have also launched ransomware and are even designed malware-infested programs aimed at stealing actual Bitcoins or information that may enable them to lay hands on your BTC. 

How Do You Keep the Money Made with Bitcoin?

The last thing you want when investing in Bitcoins is losing your hard-earned cash to scammers, hackers, or untamed volatility. You could ensure that you maintain the integrity of your investment by investing in highly secure hardware or paper wallets. You could also ensure that you keep all earnings from your Bitcoin investment by engaging professionals to help you trade and manage the risks for your BTC trades. 

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

Read More:

15 Reasons Why You Should Invest in Bitcoin Today

What Will Bitcoin (BTC) Be Worth in 2030?

Why Bitcoin Will Skyrocket

Is Now the Right Time to Buy Bitcoin?

Is Bitcoin (BTC) Safe?

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