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How to Make Money with Bitcoin: A 2024 Guide

Kane William by Kane William
August 9, 2024
Reading Time: 9 mins read
How to Make Money with Bitcoin: A 2024 Guide
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Wondering how to make money with Bitcoin? Interested in the Bitcoin lifestyle? The Bitcoin adoption has been underway since 2009. While not everyone makes money with cryptocurrency, here we discuss ways you can potentially make money with Bitcoin. 

There are a few different strategies to make money with Bitcoin here. They range from long-term investment strategies to earning passive income. So let’s dig in and learn how to invest in Bitcoin and fingers crossed, get a good return on your investment.

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Investing in Bitcoins

Bitcoin isn’t just a buzzword; it’s a potential income source. But with its volatile nature, you are going to have to know the right strategies to get some wins. If you’re wondering about how to buy bitcoin uk, understanding strategies can help you navigate the market effectively. Here are some ideas for a roadmap to positive investment returns from Bitcoin.

Buying and Holding Bitcoin (HODLing):

Buying and selling Bitcoins is one strategy, but what about buying and holding Bitcoin? That is, instead of selling Bitcoin, you keep it for the long-term. Nicknamed HoDL-ing (holding on for dear life) this has been proven to be an interesting strategy although there has been high market volatility 

This long-term investment strategy involves buying Bitcoin and holding onto it, anticipating its value will increase over time. It’s the digital equivalent of buying real estate and waiting for it to appreciate.

Patience is key here. Bitcoin’s price is notorious for its swings, so HODLing requires a strong belief in its long-term potential.  

Some crypto enthusiasts bought Bitcoin as early as 2010, 2011, and 2012, when prices were low compared to 2024. So for them,  HoDLing was a great strategy. But ask people who bought Bitcoin when it was at its all time high price (ATH) of £56,955 on Mar 14, 2024. The price has fallen since then, so HoDLing for them may only result in an investment return if the price rises even higher than the ATH in the future. 

Can you make money with Bitcoins while HoDLing? Yes, but only if you buy at the right time.

Expert opinion

According to Asher Tan, CEO of crypto exchange CoinJar, HoDLing, or holding onto Bitcoin for the long term, is often considered the best method for making money on Bitcoin. “Historically, Bitcoin has shown significant long-term growth despite dips and corrections. Those who have held onto their Bitcoin for at least five years have typically seen substantial returns on their investment.

“As Bitcoin and blockchain technology continue to mature, we see increasing adoption by both individuals and institutions. This growing acceptance and integration into the financial system further bolster Bitcoin’s value proposition and long-term potential.”

Buying and selling Bitcoin (trading)

Trading involves buying Bitcoin low and selling it high, taking an investment return from short-term price fluctuations. This requires a keen understanding of market trends and technical analysis.

Trading can be high-risk. It’s not for the faint of heart and requires constant monitoring of the Bitcoin price. However you could start with a small amount of Bitcoin and see how you feel.

You could also look into dollar-cost-averaging. Dollar-cost averaging (DCA) in crypto means investing a fixed amount of money regularly, no matter the price of the crypto you are buying. This reduces risk, takes the emotion out of investing, and makes it possible to get started with small amounts. It’s a long-term strategy for those who believe in a cryptocurrency’s future potential.

On an app like CoinJar, you don’t need to set up a wallet or even know the heavy technical details. The app keeps your crypto for you in a wallet set up for you inside your account, so for beginners, this is a convenient and user-friendly option. You can then move to the CoinJar Exchange when you have more confidence. 

Tan says that trading Bitcoin can lead to a positive investment return through several strategies and approaches, each with its own risk-reward profile. “Crypto is known for its high volatility. While this can pose risks, it also offers opportunities for investment return. Traders can capitalise on price swings by buying low and selling high.”

Earn interest on Bitcoin and other passive income

This kind of opportunity is offered via centralised (CeFi) and decentralised finance (deFi) platforms, which can be quite technical. So be sure you read up on how to use them before jumping in.

Crypto lending

Several platforms offer crypto lending, where you lend your Bitcoin and earn interest. Among these are Aave, Compound, and Yearn Finance. Some require a bit more technical knowledge than others to use, so make sure you do some tutorials first on how to use them. You can also use a test amount of your Bitcoin first, before committing to a higher amount another time.

There are risks here. Crypto lending involves transferring control of your assets to a third party, introducing potential risks. For instance, there have been cases where borrowers faced liquidation, and the recovered amount was less than the total lent. Additionally, with centralised exchanges (CEXs), there exists a risk of bankruptcy or platform closure, potentially leading to the loss of deposited Bitcoin

Crypto interest accounts

Similar to traditional savings accounts, certain crypto exchanges offer interest-bearing accounts for your Bitcoin holdings. However there can be strict guidelines to earning interest. For example, on the platform Aqru.io, you must have a minimum deposit amount of around £193,000 to earn interest on Bitcoin.

Again there are some risks here. Exchanges that offer interest accounts aren’t immune to bankruptcy, hacks or closure. If such an event occurs, users could potentially lose their deposited Bitcoin.

Also, the price of Bitcoin can fluctuate drastically. Even if you earn interest, the overall value of your Bitcoin holdings might decrease due to market volatility.

Some platforms might have fees associated with deposits, withdrawals, or account maintenance, impacting the actual returns you receive.

Staking

Some cryptocurrencies, like Ethereum, allow you to “stake” your coins on the network. More or less, you can lock up your crypto and earn interest. This contributes to network protection, and stakers earn rewards in return.

This isn’t how the Bitcoin network works, however, so you can’t stake Bitcoin on the Bitcoin network. But some platforms offer interest in Bitcoin staking in other ways. But this is getting into the technical end of the cryptoverse, so you’ll have to do a bit of reading up before you get into this kind of investing.

Yield Farming

A more complex strategy in the realm of DeFi, yield farming involves locking your Bitcoin in liquidity pools to earn rewards. It’s high-risk, high-reward and requires a deep understanding of DeFi protocols. Even experienced traders can be miffed at this, so again, this isn’t for beginners. And of course, you could lose everything you invest. So be careful with this one.

There are risks here too. Impermanent loss is when, for example, an investor pairs their Bitcoin with a volatile altcoin, and the altcoin’s price drops significantly. The investor could face a permanent loss of their Bitcoin holdings.

Yield farming platforms rely on smart contracts, which can be vulnerable to bugs or exploits, potentially leading to the loss of funds.

Bitcoin mining

Put in layman’s terms, Bitcoin mining is where miners use powerful computers to undertake activities that help keep the Bitcoin network going. These miners are given a complex problem to solve by the Bitcoin network, and the miner that solves it first is rewarded with a Bitcoin. 

Is Bitcoin mining still profitable? While mining Bitcoin at home is no longer feasible like it used to be, individuals can join mining pools where their resources are combined with others to earn rewards. 

For example, Josh used to mine Bitcoin at home using his high-powered gaming computer. In the early days, he could mine several Bitcoins a year, making a decent profit even after accounting for electricity costs. However, as the Bitcoin network grew and the problems became more complex, his single computer couldn’t keep up. 

Josh then joined a mining pool, so he doesn’t need to buy new expensive equipment. He contributes his computing power alongside thousands of others. Now, instead of competing against the entire network, the pool works together to solve the problem, and the rewards are distributed among the participants based on their contribution. 

Using Bitcoin for cashback and rewards

Bitcoin is sometimes offered as “cashback” or “rewards” like an incentive or rebate for purchases made. This is usually through credit cards or loyalty programs. 

When you make purchases with a card company that offers a Bitcoin cashback, a percentage of your spending is returned to you in the form of Bitcoin. For instance, if a credit card offers 1.5% cashback in Bitcoin, and you spend $100, you would receive $1.50 worth of Bitcoin.

As for rewards, some platforms and programs allow you to earn Bitcoin as a reward for spending a certain amount of money, or participating in promotional activities.

Conclusion: How to make an investment return using Bitcoin

Can you make money from Bitcoins? There are multiple paths to enable you to make money with Bitcoin, but each comes with its own risk profile. It’s not a guaranteed path to a positive investment return, but with careful research, sound strategies, and a long-term perspective, Bitcoin can be a part of your diversified investment portfolio.

Asher Tan says that in the early days, what drew everyone to Bitcoin was the revolutionary potential it represented. 

“Bitcoin offered a new kind of financial system. People were excited about the idea of a digital currency that could operate independently of any central authority. The promise of lower transaction fees, faster international payments, and financial inclusion for the unbanked were also significant factors. This combination of financial innovation and technological advancement captured the imagination of early adopters and continues to drive interest in Bitcoin today.”

Standard Risk Statement

The above article is not to be read as investment, legal or tax advice and it takes no account of particular personal or market circumstances; all readers should seek independent investment advice before investing in cryptocurrencies. The article is provided for general information and educational purposes only, no responsibility or liability is accepted for any errors of fact or omission expressed therein. Past performance is not a reliable indicator of future results.

UK residents are required (in accordance with local legislation) to complete an appropriateness assessment to show they understand the risks associated with what crypto/investment they are about to buy and enabling CoinJar to categorize them as an investor. New customers are also required under local regulations to wait 24-hours as a “cooling off” period (from account creation), before their account is active (i.e. to deposit, trade, withdraw etc.).

Cryptocurrency is currently not regulated in the UK. It’s vital to understand that once your money is in the crypto ecosystem, there are no rules to protect it, unlike with regular investments. You should not expect to be protected if something goes wrong. So, if you make any crypto-related investments, you’re unlikely to have recourse to the Financial Services Compensation Scheme (FSCS) or the  Financial Ombudsman Service (FOS) if something goes wrong.

Remember:

Don’t invest unless you’re prepared to lose all the money you invest. This is a high‑risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more. 

https://www.coinjar.com/uk/risk-summary

If you use a credit card to buy cryptocurrency, you would be putting borrowed money at a risk of loss. We recommend you obtain financial advice before making a decision to use your credit card to purchase cryptoassets or to invest in cryptoassets.

Kane William

Tags: Bitcoin
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