How to use lending and liquidity mining to boost your crypto investment returns
If you’re interested in investing in cryptocurrency, you’ve likely heard about the
enormous returns some investors have been enjoying—on the order of thousands of percent
returns on their investment over the last few years alone. However, even though you may be
tempted to dive in and invest all your money right away, it’s important to remember that
cryptocurrencies are still quite volatile, and thus riskier than traditional investments like
stocks or bonds.
1) Crypto lending allows you to diversify
Having more than one asset class in a portfolio is always a good idea. With crypto,
you have access to three different asset classes: equity (cryptocurrencies), debt (staking),
and commodities (mining). If you want true diversification, invest in all three.
2) Liquidity Mining
Helps you earn more on assets that are already doing well
with a loan, for example, or by investing in something that can be sold immediately for cash.
Staking is another form of leverage: when you stake an asset, you’re doing two things. First,
you’re ensuring that no one will challenge its authenticity (and making sure it can be
exchanged); second, you’re putting some skin in the game so that no one tries to steal it
3) How Lending Works
There are dozens of companies out there that can lend you money in exchange for
an agreed-upon amount of cryptocurrency. They’ll charge an interest rate for doing so, as is
always true when borrowing, but at least you don’t have to physically put up any collateral.
The major downside: You have to pay back what you borrow; if your chosen coins drop in
value (like bitcoin did between December 2017 and early February 2018), you could end up
owing a lot more than you expected.
4) Getting Started with Borrowing
Here’s how it works: if you’re short on cash or want to invest more in a particular coin,
take out a loan from an exchange. This could be risky, though—lenders set their own interest
rates so there’s no way of knowing whether or not you’ll be able to pay back what you owe.
Exchanges that offer these loans include Poloniex, Bitfinex, GDAX, Bittrex and ShapeShift.
5) Ways To Earn Interest
The biggest advantage to peer-to-peer lending is that you can take out a loan, earn
interest on it, and pay back over time—usually in monthly installments. If you’re looking for a
way to make extra money or grow your wealth, peer-to-peer (or marketplace) loans are an
option that’s definitely worth considering. Here are five reasons why: Interest Rates:
Depending on where you live, interest rates on marketplace loans might be significantly
higher than those of standard bank loans.
6) Risks To Consider When Investing In Crypto Loans
Now that you’ve made up your mind about investing in crypto loans, it’s important to
note that there are some inherent risks in doing so. Firstly, lenders set their own interest
rates. That means there’s no central authority or institution to regulate cryptocurrency loan
interest rates and ensure they remain fair for both borrowers and lenders.
7) Altcoin Mining - A Passive Income Strategy?
Cryptocurrency investing is still a relatively new concept for many, but it's growing every day.
With that growth comes opportunities in different ways of making money. One of these ways
is through altcoin (alternative coin) mining. Altcoin miners may not be aware of it, but they're
using computing power to help create wealth for themselves--in addition to making their
cryptocurrency network more secure.
8) The importance of tax optimization
It’s not just about saving money; it’s about saving money that can be invested into
higher-yielding assets. The Internal Revenue Service (IRS) says if you earn more than $400
from Bitcoin or other cryptocurrency in a year, then you need to declare those earnings—but
that doesn’t mean you have to pay taxes on them.
9) Start a course
Following a course immediately gives you more knowledge and inspiration. You will
learn a lot from the best experts. In doing so, you'll build up a valuable network that, in
addition to the experts, also consists of your fellow group members, who can make your
learning experience better.