How to Make Money with Bitcoin for Beginners

Bitcoin has been one of the top-performing assets in recent years, outpacing traditional investments like stocks and bonds.

But how do you, as a beginner, tap into this opportunity? 

Whether you’re interested in short-term trading or long-term investing, understanding how to make money with Bitcoin can help you open potential financial growth. 

This article will examine beginner-friendly strategies to help you get started.

Read Also: The 10 Best Bitcoin ETFs to Buy Right Now

Key Takeaways

• Beginners can make money with Bitcoin through strategies like buying and holding, trading, and using Bitcoin faucets.
• Start by investing small amounts to avoid big losses and build familiarity with Bitcoin.
• Bitcoin trading can be risky for beginners due to market volatility.
• Using a secure and easy-to-use Bitcoin wallet is essential for safely managing your Bitcoin.
• Stick to well-known cryptocurrencies and avoid chasing trendy coins with no track record.

Buy and Hold Bitcoin (Long-term Investment)

One of the easiest ways to make money with Bitcoin is by buying it and holding it for a long time. This method is called “HODLing,” a term in the Bitcoin community that stands for “Hold On for Dear Life.” The idea behind this strategy is to buy Bitcoin and hold onto it, hoping its value will increase over time.

How Buying and Holding of Bitcoin Works 

Buying and holding Bitcoin is a straightforward long-term investment strategy, ideal for beginners looking to profit from Bitcoin’s potential value growth. 

To start, you need to purchase Bitcoin through a cryptocurrency exchange, where you can deposit funds from your bank account or credit card to buy Bitcoin. 

After purchase, it’s important to store your Bitcoin securely in a digital wallet, either a hot wallet (online) for easier access or a cold wallet (offline) for better security, such as a hardware wallet like Ledger or Trezor. 

Cold wallets are recommended for long-term holding due to their enhanced protection against hacks. 

Once securely stored, the strategy is to hold onto your Bitcoin and wait for its value to increase over time, driven by factors such as increased demand, scarcity, and broader adoption. 

For example, if you buy 1 Bitcoin at $10,000 and its price rises to $20,000, you could sell it for a $10,000 profit.

Bitcoin Trading (Short-term Investment)

Source: Daily Trust

If you’re looking for quicker returns and are willing to be more active, Bitcoin trading might be a good option for you. 

Bitcoin trading involves buying and selling Bitcoin over shorter periods to profit from its price changes. 

This strategy requires regular monitoring of the market and a good understanding of how Bitcoin’s price fluctuates.

Types of Trading

There are different styles of Bitcoin trading that you can choose from, depending on how much time and effort you want to invest. Here are the most common types:

Day Trading

In day trading, you buy and sell Bitcoin within the same day. The goal is to take advantage of short-term price movements. Day traders closely monitor the market and make several trades throughout the day. 

Day trading can be highly profitable but also risky. Experienced day traders may earn anywhere from 1% to 3% of their capital per day, but this requires skill, timing, and a solid strategy. 

As a beginner, you may experience losses while learning how to manage trades effectively.

Swing Trading

Source: Strafx

Swing trading involves holding Bitcoin for days, weeks, or even a few months until its price reaches a target you have set. 

Unlike day trading, swing traders are less concerned with daily price changes and focus on medium-term trends. 

Swing traders might expect monthly returns of around 10% to 30%, depending on how well they predict price movements and market trends. 

Although there’s less active trading than day trading, it still requires good market analysis. Risk is moderate compared to day trading.

Scalping

Source: Cryptonews.net

Scalping is a very fast-paced style of trading where you make small, quick profits by entering and exiting trades multiple times in a day. Scalpers usually rely on small price movements and make many trades to accumulate profits. 

Scalpers aim to make very small profits on each trade, typically targeting gains of 0.1% to 0.5% per trade. With dozens or hundreds of trades per day, profits can add up quickly. 

However, it requires high attention to detail and constant monitoring of the market. 

Scalpers might expect a daily return between 1% and 2%, but the risks of losing in volatile conditions are high.

How Bitcoin Trading Works

Bitcoin trading can be an active way to make money, but it requires close attention to market trends.

Buy Low, Sell High

The basic principle of Bitcoin trading is to buy when the price is low and sell when the price is high. To do this, you need to monitor the market closely and look for opportunities to buy Bitcoin at a lower price, then sell it when the price increases. 

For instance, you buy Bitcoin when it drops to $27,000. After a few days, the price rises to $29,000, and you decide to sell. Your profit is $2,000.

Nathalie Llanto, Manager at Shopthemer, cautions against the common mistakes of selling during price drops or chasing trendy coins, which often fail to deliver on their promises. 

To identify good opportunities with manageable risk, she recommends sticking to well-known cryptocurrencies like Bitcoin that have stood the test of time. 

“It’s better to research and stay patient than to jump into risky bets,” Nathalie explains.

She believes that in Bitcoin, careful planning and a solid understanding will yield better results than hasty decisions.

Use a Trading Platform

To trade Bitcoin, you’ll need to use a reliable trading platform that allows you to buy and sell easily. Some popular platforms for Bitcoin trading are:

These platforms provide tools like charts, price alerts, and order types (e.g., limit orders, stop-loss orders) to help you make informed trading decisions.

Bitcoin Mining

Source: Bankrate

Bitcoin mining is the process of solving complex mathematical problems to confirm Bitcoin transactions on the blockchain. In return for their efforts, miners are rewarded with Bitcoin. 

However, over the years, Bitcoin mining has become a highly competitive and resource-intensive activity. This section will explain how Bitcoin mining works and what you need to get started.

How Bitcoin Mining Works

Bitcoin mining allows individuals to earn rewards, but it requires substantial computing power and energy. Here’s how the process works:

1. Invest in Mining Equipment

To mine Bitcoin, you need specialized hardware known as ASIC miners (Application-Specific Integrated Circuits). 

Unlike regular computers, ASIC miners are designed specifically for mining Bitcoin and are much more efficient.

• Cost: ASIC (Application-Specific Integrated Circuit) miners, designed specifically for Bitcoin mining, can be quite expensive, often ranging from several thousand dollars to tens of thousands depending on the model, performance, and efficiency. 

Also, the initial investment doesn’t stop at just the miner itself. You’ll also need to account for accessories like power supplies, cooling systems, and possibly dedicated spaces to house the equipment. 

Moreover, due to the fast pace of technological advancements in the mining industry, ASIC miners can become obsolete quickly, necessitating further investment to stay competitive.

• Electricity: Bitcoin mining is extremely energy-intensive, and electricity costs are a critical factor in determining profitability. 

Mining rigs operate continuously at high power levels, consuming vast amounts of electricity, sometimes equivalent to powering entire households or even small industrial plants. 

In areas with high electricity prices, the cost of energy can severely cut into or even eliminate profits. Miners often seek out regions with lower electricity costs, or renewable energy sources, to minimize expenses. 

The most common ASIC miners used by beginners are models from Bitmain’s Antminer series or MicroBT’s WhatsMiner series.

2. Join a Mining Pool

Mining Bitcoin on your own is difficult and often unprofitable due to the competition from large-scale mining operations. As a beginner, it’s better to join a mining pool. 

A mining pool is a group of miners who combine their computing power to mine Bitcoin together. 

When a block is mined, the rewards are shared among the participants based on their contribution.

• Why Join a Pool? Mining pools increase your chances of earning Bitcoin by pooling resources, making it more likely to mine a block.
• Popular Mining Pools: Some well-known mining pools include Braiins, F2Pool, and AntPool.

3. Earn Bitcoin as a Reward

When your mining pool successfully solves a block, the Bitcoin reward is distributed among all participants in the pool. The amount you earn depends on how much computing power you contributed to solving the block.

Bitcoin Staking

Source: Coinbase

While Bitcoin doesn’t support traditional staking like other cryptocurrencies (such as Ethereum), you can still earn passive income through Bitcoin lending. 

This involves lending your Bitcoin to others on lending platforms, allowing you to earn interest, similar to how a savings account works. This method is a way to make your Bitcoin work for you without actively trading or selling it.

The global blockchain market is expected to grow from $7.18 billion in 2022 to $163 billion by 2029.

How Bitcoin Staking Works

Bitcoin staking lets users passively grow their holdings by lending Bitcoin to trusted platforms that pay interest.

Choose a Lending Platform

To get started with Bitcoin lending, you need to choose a reliable platform that offers lending services. Some of the most popular platforms that allow Bitcoin lending include:

• BlockFi
• Nexo
• Celsius Network

These platforms work by lending your Bitcoin to borrowers, typically for trading or other purposes, and in return, they pay you interest. You can deposit your Bitcoin into these platforms and start earning interest.

Earn Interest

When you lend your Bitcoin on these platforms, you earn a percentage of interest, which is paid to you regularly (monthly or annually). 

The interest rate depends on the platform and market conditions. This is a passive income strategy, meaning you don’t need to actively manage the loan once it is set up.

The platform takes care of finding borrowers and handling the loan terms, while you earn interest on the amount of Bitcoin you have lent.

Bitcoin Faucets

Bitcoin faucets are websites or apps that reward users with small amounts of Bitcoin (called satoshis, the smallest unit of Bitcoin) for completing simple tasks. 

While the rewards are very small, they can add up over time if you consistently use multiple faucets. Bitcoin faucets are a beginner-friendly way to earn Bitcoin without needing to invest any money upfront.

How Bitcoin Faucets Works

With Bitcoin faucets, you can accumulate cryptocurrency without any financial investment just your time. Here’s how it works; 

Sign Up on a Bitcoin Faucet Site

To get started with Bitcoin faucets, you need to sign up on a faucet website. There are many available, with some of the more popular ones being: FreeBitco.in, Cointiply and Bonus Bitcoin. Once registered, you can start completing tasks to earn small amounts of Bitcoin. 

Let’s say you sign up for FreeBitco.in, a popular Bitcoin faucet. You solve a captcha and earn 10 satoshis. If you continue to solve captchas every day, or complete additional tasks like watching ads, your earnings will slowly increase.

For example:

• Earnings per captcha: 10 satoshis
• Daily tasks completed: 5 captchas
• Daily earnings: 50 satoshis

After a week of completing tasks every day, you would have earned 350 satoshis. While this may seem small, over time, using multiple faucets and being consistent can lead to more significant earnings.

Complete Tasks

The tasks you need to complete are simple and can be done quickly. Some common tasks include:

• Solving Captchas: This involves filling out captchas, which are small puzzles used to prove you’re not a bot.
• Watching Ads or Videos: Some faucets reward you for watching short advertisements or promotional videos.
• Clicking Links: Some faucets will pay you for clicking on certain links or visiting specific websites.

These tasks are designed to be easy and fast, but the amount of Bitcoin you earn for each task is very small.

Collect Bitcoin

After completing a task, you’ll receive a small fraction of Bitcoin as a reward. This is usually paid out in satoshis, with 1 satoshi equal to 0.00000001 Bitcoin.

Most faucet sites will require you to accumulate a certain minimum amount of Bitcoin before you can withdraw it to your wallet. For example, some may require you to reach 10,000 satoshis before you can transfer it to your personal Bitcoin wallet.

Invest in Bitcoin Startups or Projects

Investing in Bitcoin startups or cryptocurrency-related projects is another way to earn money with Bitcoin. 

Many startups and companies working on Bitcoin-based technology or services seek funding from early investors. 

You could potentially profit if the project succeeds and grows in value by supporting these projects.

Disclaimer: Investing in startups and cryptocurrency-related projects carries a high level of risk, and there is no guarantee of success. 

You may lose some or all of your invested capital. Always conduct thorough research and consider your risk tolerance before investing.

How Investing in Bitcoin Startups or Projects Works

Learn how investing in Bitcoin startups allows you to be part of the next big breakthrough in the digital currency space.

Find Promising Projects

The first step in this investment strategy is to find Bitcoin-related startups or projects that show potential for success. 

These can be companies developing new cryptocurrency technologies, services, or applications. Some common areas where Bitcoin startups are emerging include: Bitcoin payment apps, Cryptocurrency exchanges and Blockchain development companies

You can find these opportunities through various channels like cryptocurrency news platforms, startup investment websites, and blockchain conferences.

Some platforms that showcase early-stage Bitcoin startups include:

• AngelList
• CoinList
• Kickstarter

Invest in the Project

Once you’ve identified a promising project, you can invest by buying shares of the company or purchasing tokens if the startup offers an Initial Coin Offering (ICO). Depending on the project, you might need to invest with Bitcoin, other cryptocurrencies, or traditional currencies.

• Shares: By buying shares, you own a part of the company, and your returns are based on the company’s future success.
• Tokens: If the project offers an ICO, you may buy tokens, which could increase in value if the project succeeds.

Earn Profit

If the startup or project succeeds, you may earn a return on your investment in various ways:

• Shareholders: If you bought shares, your earnings may come from the company’s profits, stock price increases, or dividends.
• Token Holders: If you bought tokens, their value may rise as the project grows, allowing you to sell them for a profit.

Read Also: Bitcoin Halving: A Complete Guide for Crypto Investors

Conclusion

Making money with Bitcoin as a beginner is possible through various methods like buying and holding, trading, mining, and more.

The key is to choose a method that suits your skills, investment level, and risk tolerance. Always remember that the cryptocurrency market can be volatile, so it’s essential to do thorough research and invest wisely.

FAQs About How to Make Money with Bitcoin for Beginners

This FAQ section addresses some common questions that can help you narrow down your choices: