Buy and hold: This one’s conceptually easy. You buy your cryptocurrency and you hold it, as in you don’t touch it until you retire or something. Difficulty low, time commitment low, earnings potential high (over time) Buy and hold for dividends: Same as right above only with dividend payments. Dividend payers include NEO, Kucoin, BitMax and Komodo. *Difficulty low, time commitment low, earnings potential medium*
Mining: Cryptocurrency mining comes up a lot in media coverage, possibly because it sounds nuts. The process is fundamental to crypto systems, however. Essentially you set your internet-connected computer to help verify crypto transactions on the blockchain ledger, and get paid a bit for each exchange. Over time, the pay can add up. Trouble is, you’re competing not with other kitchen-table PC owners, but with warehouses full of souped-up servers — to the point where most regular Joes don’t have a prayer of making crypto mining worth their while. *Difficulty high, time commitment medium, earnings potential medium to high*
Day trading: This one is for people who want to make a fulltime job of pouring over trading charts looking for inter-day price differentials. Not for beginners. *Difficulty medium, time commitment high, earnings potential medium to high*
Microtasks: There’s a burgeoning eco-system of stuff you can do online to make crypto cash. You know, surveys, app testing, things like that. The pay? It’s brutal. Work hard and you could pull in as much as the Bitcoin equivalent of $5.40 an hour. So hey, pace yourself. Difficulty low, time commitment low, earnings potential low
Other angles for earning money on cryptocurrencies include affiliate marketing programs, crypto lending, and crypto tools, trading platforms and hosting blockchain ledgers, AKA “masternodes.”
You Don’t Have to Like Cryptocurrency, But You Must Understand It
The January ETF Trends/Bitwise report stressed the attraction of cryptocurrency as a function of its hedging characteristics. But this supposed lack of correlation with other assets (read: stocks) was under question after the February correction.
Further, these currencies are so far unregulated, with no national jurisdiction considering them “electronic money,” which by current definition must be backed by a fiat currency. The SEC has repeatedly warned it sees the crypto space as an excellent haunt for fraudsters, and it has so far chucked back every attempt to register a crypto fund.
And this stink-eyed stance, common in Western economies, is relatively benign compared to the outright hostility of Russia and China. China in fact has plans of its own for a (tightly controlled) cryptocurrency of its own. A spate of Chinese crypto exchanges were shuttered in 2019, driving traders out of business or underground.
Lots of non-totalitarians dislike crypto as well. Citing some of the pie-in-the-sky rhetoric of crypto boosters, these skeptics view the whole rigamarole as an extremely tech-intensive and risky way to demonstrate one’s loathing for things like banks, regulators and authority in general.
Luckily, as an advisor, you don’t even have to be a fan or a hater of cryptocurrency. You just have to understand it, and be able to explain it to clients when they ask about it.
After all, if anything like 72% of advisors actually have clients who have bought into Bitcoin and the like, it’s in everyone’s best interests that you’re attuned to all things crypto — if only to keep their allocations at prudent levels.