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It's surprising that so few entrepreneurs have caught onto the benefits of cryptocurrency. While there are risks, like all industries, the profit potential is orders of magnitude better than in traditional finance.
It's worth mentioning that the cryptocurrency industry is full of technical jargon, but a lot of the basic concepts are similar to what could be found in traditional finance, just with different labels. You can treat the terms "Web3," "DeFi," "cryptocurrency" and "blockchain" as practically the same thing.
The following are five simple ways to gain exposure to cryptocurrency and make your money work for you in the most efficient possible manner.
Related: 5 Things to Know Before You Invest in Cryptocurrency
1. Direct investment
There's nothing wrong with mixing traditional and modern finance. Investing in a diverse portfolio of crypto assets and simply waiting is a great way to make money, especially if you have experience and a preference for the fixed-income market.
Despite ups and downs, on a yearly basis, the crypto and wider decentralized financial markets have an excellent compound annual growth rate — better than perhaps any other market.
So if you work on three- to five-year time horizons, the returns of a crypto portfolio could be extremely lucrative. You can also invest in a mix of safer cryptocurrencies and higher-risk tokens. There is a lot of room for innovation within cryptocurrency. Investing within this market is referred to as "HODLing" — holding on for dear life — due to the turbulent nature of cryptocurrency.
2. Business creation
In the rise of any new industry, it is often side industries that are the most profitable. During the California Gold Rush in the 19th century, it was merchants involved in side industries (shovels, boots, beer, accommodation) that made the most money.
The cryptocurrency industry is like the rise of a new internet. It needs legal assistance, PR, marketing, educational resources, blockchain engineers, networking specialists, content writers, social media experts, investment specialists, portfolio managers, human resources, talent acquisition, affiliate marketing and more.
You can set up a lucrative business around any one of the above and more. You might be surprised at how easily your existing expertise can be transferred to the Web3 markets. A lot of it is just the same thing on a different infrastructure — the Web3 infrastructure.
Related: 4 Tips for Companies Looking to Enter the Crypto Market
3. Early business investment
The world's top entrepreneurs do not usually choose to set up a new business. They simply invest in businesses that have the potential to generate a substantial return with acceptable risk levels. Entrepreneurs with capital to spare can gravitate towards new startups that are likely to succeed.
The largest returns from cryptocurrency come from those who bought in early on specific projects. MATIC, a Polygon token, went from $0.015 to $2.45 from 2020 to 2021. The price now stands at around $0.75, a multiplier of about 50.
Tokens like MATIC can be compared to shares within a company: As the wider Polygon company grows, so does the MATIC token, but the upside potential for Web3 firms is far greater than that of the traditional finance markets.
For those that get in early on such projects, the returns can be very large. This is not typical and is very rare. But for entrepreneurs in the business with connections, these are the opportunities to look out for.
4. Staking
Crypto staking is available for most cryptocurrencies including Ethereum, Cardano, Binance and Solana. Crypto staking is the same as receiving interest in a deposit account in a bank. The difference is that you retain ownership of your assets and the interest is typically between 4% and 8%.
So this is quite an easy and straightforward way to make money. There is still risk and you only receive the interest when your funds are locked up — the funds have to be stored away in order to receive the interest. But this risk is minimal. The more established blockchains (such as those mentioned above) are unlikely to go anywhere. They are too powerful and your investment is generally quite safe.
Crypto staking builds on the straight investment principle mentioned above. The price of your crypto asset (such as Ethereum) can appreciate in value while you simultaneously receive interest on this asset.
Related: How Crypto Education Can Transform Your Business
5. Liquid staking
Liquid staking is another way to make money in cryptocurrency. Liquid Staking was invented by Ankr, a Web3 infrastructure firm, and it's a game changer in many respects. It allows users to gain interest from their staked tokens, but the tokens are not locked up. This is done through a derivative token.
In other words, the derivative market is being introduced to the world of cryptocurrency through Ankr and other platforms. The derivative token can be used for trading, loans, yield farming and other investment mechanisms. You can get double use out of it. You could potentially get a guaranteed 4%- 8% and then loan out the derivative token for another 4%-12%.
Of course, the market is not developed for these derivative tokens and it is by no means foolproof. This is not investment advice and all markets are risky. But the point is being made that liquid staking offers creative ways for profit maximization that should stir the interest of risk-tolerant entrepreneurs.
Putting it all together
There are many ways to earn money in crypto, and a lot of it comes down to what your skills and preferences are. A large problem with crypto is that there are so many opportunities it can be hard to focus and stick with a given investment plan.
Ultimately, however, the timeless principles still apply. Stick to your plans and work with them until they succeed. Don't jump at every shiny opportunity, because you will be split between too many different projects.
Pick your assets carefully and don't bite off more than you can chew. Even just basic crypto staking offers good rewards. Many people are still losing money in Web3 due to sheer greed and poor investment psychology. Separating the wheat from the chaff is an important investment principle across all markets.
