As soon as you have joined the world of bitcoin and get your first handful of the cryptocurrency, the question naturally occurs if you can multiply bitcoins and make them work for yourself. In fact there are quite a few ways to make profit with cryptocurrency. What follows is just an outline of the most accessible options. There are some traditional ways of earning, which are there from the very dawn of the bitcoin era. However, things are changing rapidly, and these days some of the old methods can be deemed less efficient and may soon become completely obsolete.
- Mining. Generation of blockchain segments in exchange for a bitcoin reward was where the whole story started. For years it has been helping to build and maintain the system and was the principal way for anyone to get bitcoins. A spare computer motherboard with a few graphics cards – a primitive mining rig – could make you rich. However, in accordance with the original protocol, as time passes the complexity of the task is growing while the reward is being diminished. What once could be achieved with an average home PC now requires huge industrial-scale datacentres and specially designed hardware. For individual users pool mining and cloudmining still remain reasonable options, but it is obvious that large companies are taking over and sooner or later will leave no space for home miners.
- Exchanges. You can trade bitcoin trying to capitalise on price fluctuations. Only make sure to pick up a reliable, scam-free and hack-proof exchange. The scheme here is exactly the same as with any exchange market. There are strategies and rules allowing an experienced player to detect the best moments to buy bitcoins or to dump them with profit. It used to be an exciting game in the days of wild bitcoin volatility, which could make you an overnight millionaire. However this early speculative phase seems to be over, and with bitcoin prices stabilising you can hardly expect to make a fortune quickly by a stroke of luck.
- Faucets. These are websites which give away small amounts of bitcoin in exchange for some simple tasks, such as clicking a weblink, solving a Captcha or simply staying on the page for a certain time, say, playing a game. It could have been fun if not for minuscule rewards: you will be earning only hundreds of satoshi (less than 0,0001 BTC) spending considerable time online (which also costs). To make things a bit easier there are faucet rotators – specialised websites which navigate you from one place to another automatically, to save you some search time. Whether it is worth it – up to you to decide.
As the focus of bitcoin economy is shifting from speculative to consumer activity, more and more it reminds 'real' currency. There is already a variety of options to do with bitcoins what people normally do with fiat money. Hence next tips on how to multiply bitcoins:
- Work for it. There is a growing list of jobs paid in bitcoin. Look for them on the internet. You have better chances to find one if you have any IT qualification. And in most cases it will be a freelance one-off kind of thing. However some companies, especially bitcoin-related startups, do offer permanent positions for BTC.
- Sell for it. You may simply de-clutter your attic for a car boot sale (or Ebay, if you prefer). Or you may have your own small business, like a shop or a service. Give customers an option to pay with bitcoin, put the ‘Bitcoin accepted here’ sign at your door and pin a QR-code with your wallet address by the till. If you sell stuff online, there are dozens of merchant solutions – internet services which help to process payments in bitcoin. Alternatively, you can receive tips in bitcoins. Using special online tools people can print out QR-code vouchers to give away for tips in places like cafes and restaurants. There are two legal niceties you should carefully consider: accounting and taxation. Because in most jurisdictions bitcoin is regarded as a commodity rather than money, you must figure out, first, how to book your bitcoin transactions, and second, what kind of taxes you are liable for (sales, income, capital gain etc). As the fiscal status of bitcoin is still pretty much a grey area, it may be a good idea to consult a qualified accountant or solicitor on that matter.
- Lend it out. There are two ways to gain bitcoins by lending. You can give it out to borrowers and collect interest via peer-to-peer lending sites. In this case you are your own banker. The key thing is to find a trustworthy site which can guarantee for its borrowers. The rest is the same as with traditional currency loans. The best way to avoid the risk of default is to lend out small amounts to many users. Another choice is to entrust the whole thing to a bitcoin bank. All you need to do is to deposit a sum to a site which would pay you a fixed interest over time. The advantage is that you don’t need to deal with many borrowers directly. The downside is your money now is in hands of a single borrower which is the bank, so make sure to use a reliable one.
- Gamble. Bitcoin casinos have a number of advantages comparing to traditional gambling places. Playing fees are minimal, deposit and withdrawal take minutes, and your participation is totally anonymous. The only thing you need to prove is your ability to pay. But of course this way of earning has its obvious drawbacks. First, no one can guarantee you will win, and also you need to have some initial reserve of bitcoins and be ready to risk it.