{"id":5500,"date":"2020-09-28T11:06:31","date_gmt":"2020-09-28T08:06:31","guid":{"rendered":"https:\/\/godex.io\/blog\/?p=5500"},"modified":"2021-10-15T13:17:27","modified_gmt":"2021-10-15T10:17:27","slug":"mine-or-trade-crypto-mining-vs-trading","status":"publish","type":"post","link":"https:\/\/godex.io\/blog\/mine-or-trade-crypto-mining-vs-trading","title":{"rendered":"Mine or Trade Crypto (Mining vs Trading)"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_25_1 counter-hierarchy counter-decimal ez-toc-grey\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" style=\"display: none;\"><label for=\"item\" aria-label=\"Table of Content\"><i class=\"ez-toc-glyphicon ez-toc-icon-toggle\"><\/i><\/label><input type=\"checkbox\" id=\"item\"><\/a><\/span><\/div>\n<nav><ul class=\"ez-toc-list ez-toc-list-level-1\"><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/godex.io\/blog\/mine-or-trade-crypto-mining-vs-trading\/#different_ways_to_make_money_from_cryptocurrency\" title=\"Different\u00a0Ways to Make\u00a0Money\u00a0from Cryptocurrency\">Different\u00a0Ways to Make\u00a0Money\u00a0from Cryptocurrency<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/godex.io\/blog\/mine-or-trade-crypto-mining-vs-trading\/#what_does_cryptocurrency_investing_mean\" title=\"What Does Cryptocurrency Investing Mean?\">What Does Cryptocurrency Investing Mean?<\/a><ul class=\"ez-toc-list-level-3\"><li class=\"ez-toc-heading-level-3\"><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/godex.io\/blog\/mine-or-trade-crypto-mining-vs-trading\/#drawbacks_of_cryptocurrency_investing\" title=\"Drawbacks of Cryptocurrency Investing\">Drawbacks of Cryptocurrency Investing<\/a><\/li><\/ul><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/godex.io\/blog\/mine-or-trade-crypto-mining-vs-trading\/#all_about_digital_asset_trading\" title=\"All About Digital Asset\u00a0Trading\">All About Digital Asset\u00a0Trading<\/a><ul class=\"ez-toc-list-level-3\"><li class=\"ez-toc-heading-level-3\"><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/godex.io\/blog\/mine-or-trade-crypto-mining-vs-trading\/#disadvantages_of_simple_cryptocurrency_trading\" title=\"Disadvantages of Simple Cryptocurrency\u00a0Trading\">Disadvantages of Simple Cryptocurrency\u00a0Trading<\/a><\/li><\/ul><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/godex.io\/blog\/mine-or-trade-crypto-mining-vs-trading\/#more_complex_and_risky_forms_of_trading\" title=\"More Complex (and Risky) Forms of\u00a0Trading\">More Complex (and Risky) Forms of\u00a0Trading<\/a><ul class=\"ez-toc-list-level-3\"><li class=\"ez-toc-heading-level-3\"><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/godex.io\/blog\/mine-or-trade-crypto-mining-vs-trading\/#trading_with_leverage\" title=\"Trading\u00a0with Leverage\">Trading\u00a0with Leverage<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-3\"><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/godex.io\/blog\/mine-or-trade-crypto-mining-vs-trading\/#futures_trading\" title=\"Futures\u00a0Trading\">Futures\u00a0Trading<\/a><\/li><\/ul><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/godex.io\/blog\/mine-or-trade-crypto-mining-vs-trading\/#all_about_cryptocurrency_mining\" title=\"All About Cryptocurrency\u00a0Mining\">All About Cryptocurrency\u00a0Mining<\/a><ul class=\"ez-toc-list-level-3\"><li class=\"ez-toc-heading-level-3\"><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/godex.io\/blog\/mine-or-trade-crypto-mining-vs-trading\/#disadvantages_of_mining\" title=\"Disadvantages of\u00a0Mining\">Disadvantages of\u00a0Mining<\/a><\/li><\/ul><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/godex.io\/blog\/mine-or-trade-crypto-mining-vs-trading\/#conclusion_how_to_profit_from_cryptocurrency\" title=\"Conclusion: How to Profit from Cryptocurrency\">Conclusion: How to Profit from Cryptocurrency<\/a><\/li><\/ul><\/nav><\/div>\n<p><span style=\"font-weight: 400;\">These days, everyone is looking to make a quick buck off the <\/span><a target=\"_blank\" rel=\u201dnofollow,noopener\u201d href=\"https:\/\/godex.io\/\"><span style=\"font-weight: 400;\">bitcoin market<\/span><\/a><span style=\"font-weight: 400;\">. With many investors\u00a0<\/span><a target=\"_blank\" rel=\u201dnofollow,noopener\u201d href=\"https:\/\/www.theguardian.com\/technology\/2018\/jun\/13\/meet-erik-finman-the-teenage-bitcoin-millionaire\"><span style=\"font-weight: 400;\">making banks<\/span><\/a><span style=\"font-weight: 400;\">\u00a0thanks to an early entering of the market, a lot of those new to the industry are hopeful that they can do the same.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Whilst there are certainly a few\u00a0<\/span><span style=\"font-weight: 400;\">different<\/span><span style=\"font-weight: 400;\">\u00a0ways to make\u00a0<\/span><span style=\"font-weight: 400;\">money<\/span><span style=\"font-weight: 400;\">\u00a0from cryptocurrency, they all come with potential downsides. As the saying goes \u201cthere&#8217;s no such thing as a free lunch\u201d. In this article, we&#8217;ll look at some of the more popular ways individuals and companies have profited from the explosion in interest surrounding cryptocurrency. It&#8217;s vital you understand both the advantages and disadvantages of each before you just dive right in!<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"different_ways_to_make_money_from_cryptocurrency\"><\/span><b>Different<\/b><b>\u00a0Ways to Make\u00a0<\/b><b>Money<\/b><b>\u00a0from Cryptocurrency<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The most popular ways to profit from cryptocurrency are:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Investing.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Trading.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Mining.\u00a0<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"what_does_cryptocurrency_investing_mean\"><\/span><b>What Does Cryptocurrency Investing Mean?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The most straightforward way to make\u00a0<\/span><span style=\"font-weight: 400;\">money<\/span><span style=\"font-weight: 400;\">\u00a0from cryptocurrencies is to simply <\/span><span style=\"font-weight: 400;\">invest<\/span><span style=\"font-weight: 400;\">\u00a0in them. This doesn&#8217;t require much explanation since it&#8217;s by far the least demanding of any of those methods we are going to cover in this article. As such, it&#8217;s not really the focus of this piece but it&#8217;s still important to understand what we mean by the term.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Investing in cryptocurrency is easy. You just buy some and keep hold of it in a suitable\u00a0<\/span><span style=\"font-weight: 400;\">wallet<\/span><span style=\"font-weight: 400;\">. The hope is that its dollar\u00a0<\/span><span style=\"font-weight: 400;\">value<\/span><span style=\"font-weight: 400;\">\u00a0will increase relative to your entry point.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Cryptocurrency investing has been hugely profitable for many people \u2013 particularly those that took up positions early. Bitcoin, the most popular and longest-running cryptocurrency, currently trades just above $10,000. At the time when the digital asset was launched for the first time, it was worth nothing at all.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Thanks to its fixed cap on supply, increases in demand for Bitcoin increase its\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">. Over the course of its existence demand for Bitcoin has increased dramatically. The first commercial\u00a0<\/span><span style=\"font-weight: 400;\">transaction<\/span><span style=\"font-weight: 400;\">\u00a0of Bitcoin saw 10,000 BTC spent on a\u00a0<\/span><a target=\"_blank\" rel=\u201dnofollow,noopener\u201d href=\"https:\/\/www.investopedia.com\/news\/bitcoin-pizza-day-celebrating-20-million-pizza-order\/\"><span style=\"font-weight: 400;\">pair of pizzas in 2010<\/span><\/a><span style=\"font-weight: 400;\">. Today, 10,000 BTC worth $110 million!<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, just because you&#8217;re newer to the industry doesn&#8217;t mean that you&#8217;ve missed the boat on investing. There are many industry analysts that believe Bitcoin is heading much higher. Numbers like $100,000, $1 million, and even\u00a0<\/span><a target=\"_blank\" rel=\u201dnofollow,noopener\u201d href=\"https:\/\/thenextweb.com\/hardfork\/2019\/08\/24\/satoshi-nakaboto-hal-finney-calculated-a-bitcoin-price-of-10-million-per-coin\/\"><span style=\"font-weight: 400;\">$10 million<\/span><\/a><span style=\"font-weight: 400;\">\u00a0per Bitcoin have been put forward as Bitcoin\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0predictions by many experienced financial analysts and industry insiders.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Any other cryptocurrency can be an\u00a0<\/span><span style=\"font-weight: 400;\">investment<\/span><span style=\"font-weight: 400;\">\u00a0too. It&#8217;s just important to fully understand what it is you&#8217;re buying before doing so. Look at the project&#8217;s whitepaper, look at the team behind it, and consider the proposed use case for the asset. If the crypto has a fixed total supply and you think demand will increase, then it may indeed be a worthy\u00a0<\/span><span style=\"font-weight: 400;\">investment<\/span><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"drawbacks_of_cryptocurrency_investing\"><\/span><b>Drawbacks of Cryptocurrency Investing<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">As mentioned above, no method of profiting from cryptocurrency is flawless. Here are some downsides associated with cryptocurrency investing:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Volatile markets. Bitcoin and other cryptocurrency prices are incredibly volatile. They can go up and down a lot over just a few hours. Successful investing demands you to focus on the long-term. This is easier said than done when your position loses 20% or more of its\u00a0<\/span><span style=\"font-weight: 400;\">value<\/span><span style=\"font-weight: 400;\">\u00a0in a single day!<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Cryptocurrency isn&#8217;t guaranteed to increase in\u00a0<\/span><span style=\"font-weight: 400;\">value<\/span><span style=\"font-weight: 400;\">. Since there is nothing physical (no product or\u00a0<\/span><span style=\"font-weight: 400;\">hard<\/span><span style=\"font-weight: 400;\">\u00a0asset) backing cryptocurrency the\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0of any asset could drop to zero in a very short amount of time.\u00a0<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"all_about_digital_asset_trading\"><\/span><b>All About Digital Asset\u00a0Trading<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Cryptocurrency\u00a0<\/span><span style=\"font-weight: 400;\">trading<\/span><span style=\"font-weight: 400;\">\u00a0aims to take advantage of the volatility mentioned above. A trader will analyze charts in an attempt to predict which way the\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0of an asset will move in relation to the asset being traded. If you think one asset will increase in\u00a0<\/span><span style=\"font-weight: 400;\">value<\/span><span style=\"font-weight: 400;\">\u00a0relative to the other, you want to have exposure to the one you think will rise before it does.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, if you were\u00a0<\/span><span style=\"font-weight: 400;\">trading<\/span><span style=\"font-weight: 400;\">\u00a0Bitcoin versus the US dollar and thought that the Bitcoin\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0was due a correction, you would\u00a0<\/span><span style=\"font-weight: 400;\">trade<\/span><span style=\"font-weight: 400;\">\u00a0your Bitcoin for dollars. If and when you thought the BTC\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0was ready to head back up again, you&#8217;d buy Bitcoin with your dollars again.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As a simple example, let&#8217;s say the\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0of Bitcoin was exactly $10,000 today. You, the trader, currently hold one whole Bitcoin but think the\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0is about to drop. You\u00a0<\/span><span style=\"font-weight: 400;\">sell<\/span><span style=\"font-weight: 400;\">\u00a0your Bitcoin for dollars and receive $10,000 (minus a bit in\u00a0<\/span><span style=\"font-weight: 400;\">exchange<\/span><span style=\"font-weight: 400;\">\u00a0fees). The\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0does drop over the next few days. When it reaches $8,000 exactly, your charts tell you that the\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0will head up again.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You buy Bitcoin again with your $10,000. This time you get 1.25 Bitcoin or close to it (mind\u00a0<\/span><span style=\"font-weight: 400;\">exchange<\/span><span style=\"font-weight: 400;\">\u00a0fees!). You made a profitable\u00a0<\/span><span style=\"font-weight: 400;\">trade<\/span><span style=\"font-weight: 400;\">! Now, you look for another entry point at a higher\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0than $8,000.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Over the next few days, the Bitcoin\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0increases to $10,000, and once again, your charts tell you that this looks like a market top. Thinking that a reversal is imminent, you\u00a0<\/span><span style=\"font-weight: 400;\">sell<\/span><span style=\"font-weight: 400;\">\u00a0your 1.25 BTC for dollars and receive $12,500. This overly simple example is the bare bones of what\u00a0<\/span><span style=\"font-weight: 400;\">trading<\/span><span style=\"font-weight: 400;\">\u00a0is.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Traders spend hours analyzing charts with\u00a0<\/span><span style=\"font-weight: 400;\">different<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><a target=\"_blank\" rel=\u201dnofollow,noopener\u201d href=\"https:\/\/www.ig.com\/uk\/trading-strategies\/10-trading-indicators-every-trader-should-know-190604\"><span style=\"font-weight: 400;\">indicators<\/span><\/a><span style=\"font-weight: 400;\">\u00a0for signs that the\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0of an asset will increase or decrease. They look at how the\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0has been moving over recent days, weeks, months, or even years.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Markets do seem to follow patterns and it&#8217;s these patterns that expert traders are looking for. To identify them, they&#8217;ll use\u00a0<\/span><span style=\"font-weight: 400;\">different<\/span><span style=\"font-weight: 400;\">\u00a0approaches. Unfortunately, this primer on profiting from cryptocurrency is much too short to explain each in any detail but popular indicators include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Moving averages.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Bollinger bands.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Ichimoku clouds.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Stochastic oscillators.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Fibonacci lines.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">These are just a few of the indicators out there. Some traders develop their own too with mixed successes. It&#8217;s unlikely any complete novices will understand what an Ichimoku cloud or Fibonacci line is from the name alone. If you&#8217;re serious about becoming a trader, it&#8217;s vital that you study them though!<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"disadvantages_of_simple_cryptocurrency_trading\"><\/span><b>Disadvantages of Simple Cryptocurrency\u00a0<\/b><b>Trading<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The market can move against you and never offer a profitable re-entry position.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Cryptocurrency markets operate 24 hours a day, seven days a week. Unlike traditional markets that have a clear close for the day, crypto\u00a0<\/span><span style=\"font-weight: 400;\">trading<\/span><span style=\"font-weight: 400;\">\u00a0is always happening. You could miss vital information for profitable trades whilst you&#8217;re sleeping.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">You can\u00a0<\/span><a target=\"_blank\" rel=\u201dnofollow,noopener\u201d href=\"https:\/\/www.wealthwithin.com.au\/learning-centre\/share-trading-tips\/trading-the-stock-market\"><span style=\"font-weight: 400;\">lose a lot of\u00a0<\/span><span style=\"font-weight: 400;\">money<\/span><\/a><span style=\"font-weight: 400;\">\u00a0from bad calls!<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">If you&#8217;re not overly put-off by the downsides to\u00a0<\/span><span style=\"font-weight: 400;\">trading<\/span><span style=\"font-weight: 400;\">, you can try for yourself at\u00a0<\/span><span style=\"font-weight: 400;\">Godex<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><span style=\"font-weight: 400;\">exchange<\/span><span style=\"font-weight: 400;\">. You can start\u00a0<\/span><span style=\"font-weight: 400;\">trading<\/span><span style=\"font-weight: 400;\">\u00a0there without creating an account, which is great for the privacy-conscious. Just\u00a0<\/span><span style=\"font-weight: 400;\">transfer<\/span><span style=\"font-weight: 400;\">\u00a0funds from your\u00a0<\/span><span style=\"font-weight: 400;\">wallet<\/span><span style=\"font-weight: 400;\">\u00a0to the platform to get started.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"more_complex_and_risky_forms_of_trading\"><\/span><b>More Complex (and Risky) Forms of\u00a0<\/b><b>Trading<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Our above example of buying low and selling high is a very basic one. However, some traders make good\u00a0<\/span><span style=\"font-weight: 400;\">money<\/span><span style=\"font-weight: 400;\">\u00a0from this simple form of\u00a0<\/span><span style=\"font-weight: 400;\">trading<\/span><span style=\"font-weight: 400;\">. Yet, it&#8217;s not the only one. Other tools and markets can increase the profitability of the activity but also invite much greater risk. We will briefly discuss some of them below.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"trading_with_leverage\"><\/span><b>Trading<\/b><b>\u00a0with Leverage<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Some\u00a0<\/span><span style=\"font-weight: 400;\">trading<\/span><span style=\"font-weight: 400;\">\u00a0venues offer what&#8217;s known as leverage. This essentially means borrowing\u00a0<\/span><span style=\"font-weight: 400;\">money<\/span><span style=\"font-weight: 400;\">\u00a0from the platform to make bigger bets on the\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0of the traded asset.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If your trades are profitable when you&#8217;re\u00a0<\/span><span style=\"font-weight: 400;\">trading<\/span><span style=\"font-weight: 400;\">\u00a0with leverage, then happy days. You&#8217;ll make more\u00a0<\/span><span style=\"font-weight: 400;\">money<\/span><span style=\"font-weight: 400;\">. However, if they&#8217;re not profitable you can run into trouble. Any losses you sustain are amplified by the amount of leverage you use. If you were\u00a0<\/span><span style=\"font-weight: 400;\">trading<\/span><span style=\"font-weight: 400;\">\u00a0on 50x leverage, and the\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0of the crypto asset you&#8217;re\u00a0<\/span><span style=\"font-weight: 400;\">trading<\/span><span style=\"font-weight: 400;\">\u00a0moved against your\u00a0<\/span><span style=\"font-weight: 400;\">trade<\/span><span style=\"font-weight: 400;\">\u00a0by $100, you&#8217;d actually be liable for losses of $5,000.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"futures_trading\"><\/span><b>Futures\u00a0<\/b><b>Trading<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><a target=\"_blank\" rel=\u201dnofollow,noopener\u201d href=\"https:\/\/www.investopedia.com\/terms\/f\/futuresmarket.asp\"><span style=\"font-weight: 400;\">Futures\u00a0<\/span><span style=\"font-weight: 400;\">trading<\/span><\/a><span style=\"font-weight: 400;\">\u00a0is another form of riskier\u00a0<\/span><span style=\"font-weight: 400;\">trading<\/span><span style=\"font-weight: 400;\">. Futures\u00a0<\/span><span style=\"font-weight: 400;\">trading<\/span><span style=\"font-weight: 400;\">\u00a0is essentially an agreement to buy or\u00a0<\/span><span style=\"font-weight: 400;\">sell<\/span><span style=\"font-weight: 400;\">\u00a0an asset at the set future date for whatever\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0you decide at the time you open the contract.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you think the\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0will increase over the period of a futures contract, you might set the\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0of the futures contract at the current rate. This allows you to buy lower than the market\u00a0<\/span><span style=\"font-weight: 400;\">value<\/span><span style=\"font-weight: 400;\">\u00a0when the contract expires. If it does indeed increase, the difference between the\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0you set and the\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0when the contract expires is your profit. If the price drops, you will lose the difference. If the\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0drops a lot, you will lose a lot!<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Meanwhile, if you think the\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0will go down over the period of a contract, you can again agree to buy the asset in the future for a\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0higher than you think it will end up. The same risks apply. If your\u00a0<\/span><span style=\"font-weight: 400;\">trade<\/span><span style=\"font-weight: 400;\">\u00a0is wrong, you&#8217;ll end up out of pocket.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Leverage can also be applied to futures\u00a0<\/span><span style=\"font-weight: 400;\">trading<\/span><span style=\"font-weight: 400;\">. This makes an already risky form of\u00a0<\/span><span style=\"font-weight: 400;\">trading<\/span><span style=\"font-weight: 400;\">\u00a0even riskier. We don&#8217;t recommend newcomers even consider futures\u00a0<\/span><span style=\"font-weight: 400;\">trading<\/span><span style=\"font-weight: 400;\">\u00a0with leverage.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"all_about_cryptocurrency_mining\"><\/span><b>All About Cryptocurrency\u00a0<\/b><b>Mining<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Finally, you might be able to profit from cryptocurrency\u00a0<\/span><span style=\"font-weight: 400;\">mining<\/span><span style=\"font-weight: 400;\">.\u00a0<\/span><span style=\"font-weight: 400;\">Mining<\/span><span style=\"font-weight: 400;\">\u00a0is essential to the functioning of many digital assets. It secures the\u00a0<\/span><span style=\"font-weight: 400;\">blockchain<\/span><span style=\"font-weight: 400;\">\u00a0by making it prohibitively expensive for any entity to change network rules in their favor.<\/span><\/p>\n<p><a target=\"_blank\" rel=\u201dnofollow,noopener\u201d href=\"https:\/\/www.investopedia.com\/terms\/b\/bitcoin-mining.asp\"><span style=\"font-weight: 400;\">Mining<\/span><\/a><span style=\"font-weight: 400;\">\u00a0requires expensive\u00a0<\/span><span style=\"font-weight: 400;\">hardware<\/span><span style=\"font-weight: 400;\">\u00a0and power but it rewards those who do it with cryptocurrency for enforcing (and effectively strengthening) the rules of the network. It&#8217;s a novel incentive structure that has proved successful over the entire course of Bitcoin&#8217;s 11-year history. Miners are essentially in competition with each other for the rewards of cryptocurrency. The computer that successfully solves a cryptographic problem first receives the prize for adding their block of transactions to the\u00a0<\/span><span style=\"font-weight: 400;\">blockchain<\/span><span style=\"font-weight: 400;\">. This encourages a sort of arms race amongst miners.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Early in Bitcoin&#8217;s history, miners could solve the cryptographic puzzles with the computational power of a laptop alone. As Bitcoin became more popular, its\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0rose. As its\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0rose, the incentive to mine the network also went up.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Today, the\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">\u00a0of Bitcoin has gone up so much that extremely high-power computer systems have been designed to solve cryptographic problems. Known as ASICs (application-specific integrated circuits), these units are expensive and incredibly\u00a0<\/span><a target=\"_blank\" rel=\u201dnofollow,noopener\u201d href=\"https:\/\/www.bbc.co.uk\/news\/technology-48853230\"><span style=\"font-weight: 400;\">power-hungry<\/span><\/a><span style=\"font-weight: 400;\">. To run one profitably, you need access to very cheap power, technical knowledge to set it up, and the capital available to buy the thing in the first place. These factors render all but a select few unable to mine Bitcoin for profits.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, it&#8217;s not just Bitcoin that is mineable. Other digital currencies, like Litecoin, for example, rely on\u00a0<\/span><span style=\"font-weight: 400;\">mining<\/span><span style=\"font-weight: 400;\">. Some crypto assets are what is known as \u201c<\/span><a target=\"_blank\" rel=\u201dnofollow,noopener\u201d href=\"https:\/\/academy.binance.com\/glossary\/asic-resistant\"><span style=\"font-weight: 400;\">ASIC-resistant<\/span><\/a><span style=\"font-weight: 400;\">\u201d, meaning that the algorithms used in their design do not enable any advantage for those deploying ASICs to mine on the networks. Profitable\u00a0<\/span><span style=\"font-weight: 400;\">mining<\/span><span style=\"font-weight: 400;\">\u00a0of these assets is still possible with much more affordable equipment and far lower power demands.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">ASIC-resistant cryptocurrencies include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">AEON.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">BEAM.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Ether (for now).\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Electroneum.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Grin.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Monero.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Zcash.\u00a0<\/span><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"disadvantages_of_mining\"><\/span><b>Disadvantages of\u00a0<\/b><b>Mining<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Expensive to mine Bitcoin thanks to huge competition.\u00a0<\/span><span style=\"font-weight: 400;\">Mining<\/span><span style=\"font-weight: 400;\">\u00a0pools and cloud\u00a0<\/span><span style=\"font-weight: 400;\">mining<\/span><span style=\"font-weight: 400;\">\u00a0services do exist but these come with their own disadvantages such as\u00a0<\/span><a target=\"_blank\" rel=\u201dnofollow,noopener\u201d href=\"https:\/\/www.investopedia.com\/news\/bitcoin-pizza-day-celebrating-20-million-pizza-order\/0\"><span style=\"font-weight: 400;\">hackers<\/span><\/a><span style=\"font-weight: 400;\">, pool fees, and the potential to be locked in an expensive cloud\u00a0<\/span><span style=\"font-weight: 400;\">mining<\/span><span style=\"font-weight: 400;\">\u00a0contract that&#8217;s no longer profitable thanks to a drop in the crypto&#8217;s\u00a0<\/span><span style=\"font-weight: 400;\">price<\/span><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The equipment needed for profitable mining coupled with electricity bills is often too expensive to maintain.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">All\u00a0<\/span><span style=\"font-weight: 400;\">mining<\/span><span style=\"font-weight: 400;\">\u00a0requires technical expertise.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"conclusion_how_to_profit_from_cryptocurrency\"><\/span><b>Conclusion: How to Profit from Cryptocurrency<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">As you should have found out from this article, neither investing,\u00a0<\/span><span style=\"font-weight: 400;\">mining<\/span><span style=\"font-weight: 400;\"> or\u00a0<\/span><span style=\"font-weight: 400;\">trading<\/span><span style=\"font-weight: 400;\">\u00a0will bring guaranteed profits from cryptocurrency. Each has substantial risk involved and it&#8217;s important to fully understand this before you get in.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Use this article as a starting point and read around each of the three topics in great detail. Once you fully understand the risks and have decided that the potential gains outweigh them, you will be in a much better position to get involved.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Table of Contents Different\u00a0Ways to Make\u00a0Money\u00a0from CryptocurrencyWhat Does Cryptocurrency Investing Mean?Drawbacks of Cryptocurrency InvestingAll About Digital Asset\u00a0TradingDisadvantages of Simple Cryptocurrency\u00a0TradingMore Complex (and Risky) Forms of\u00a0TradingTrading\u00a0with LeverageFutures\u00a0TradingAll About Cryptocurrency\u00a0MiningDisadvantages of\u00a0MiningConclusion: How to Profit from Cryptocurrency These days, everyone is looking to make a quick buck off the bitcoin market. With many investors\u00a0making banks\u00a0thanks to an early [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":5502,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[132,135],"tags":[710,1479,1079,114,1279,112],"yst_prominent_words":[],"class_list":["post-5500","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-crypto-currencies","category-hot-topics","tag-crypto-market","tag-crypto-mining","tag-crypto-talks","tag-crypto-tips","tag-crypto-trading","tag-mining"],"lang":"en","translations":{"en":5500},"pll_sync_post":[],"_links":{"self":[{"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/posts\/5500","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/comments?post=5500"}],"version-history":[{"count":1,"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/posts\/5500\/revisions"}],"predecessor-version":[{"id":5501,"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/posts\/5500\/revisions\/5501"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/media\/5502"}],"wp:attachment":[{"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/media?parent=5500"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/categories?post=5500"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/tags?post=5500"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/yst_prominent_words?post=5500"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}