Maximizing your earnings: How to make money with cryptocurrency

Blockchain and cryptocurrencies have come a long way since Bitcoin’s launch in 2009. What started as a niche experiment has grown into a $3 trillion asset class, with digital currencies now playing a serious role in mainstream finance.

Crypto’s no longer just for experienced investors or the tech-savvy – everyday people from all backgrounds across the globe are buying in, too. If you're one of those many newcomers to the world of digital assets and the opportunities it offers, you're probably hoping to learn how to make money with crypto.

Here, we've got 10 of the most common strategies traders use to turn a profit, plus tips for earning passively and choosing the right platforms. Whether you're curious about trading, staking, or lending, this guide will get you started.

Can you make money with cryptocurrency?

Yes, you can make money with cryptocurrency. But that doesn’t mean you will. Millions of investors worldwide have realized significant gains – but plenty have also lost money. Investing in cryptocurrencies comes with risk and requires careful planning and the right know-how.

So then, how do cryptos make money? It often comes down to understanding the market, how different coins and tokens work, and your tolerance for volatility as an investor. As the saying goes, invest only what you can afford to lose.

First, anyone curious about how to trade cryptocurrency and make a profit should know that crypto is famous for its price swings. Those ups and downs can bring huge wins – or just as easily wipe out your entire investment.

Investors use all kinds of strategies to try to earn crypto rewards or build a passive income stream, from day trading and staking to yield farming. And unlike traditional markets, crypto runs 24/7, which means the chances to buy and sell – and to gain and lose – are endless.

There's no one path to big wins in crypto, but successful traders often have three things in common. They combine short-term opportunities with longer-term investments. They diversify their digital assets. And they keep their coins safe in secure wallets.

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How to make money with cryptocurrency

Here’s a look at 10 practical ways investors use digital assets to make a profit – from simple strategies like staking to more complex options like yield farming and crypto mining:

1. Staking and yield farming 

Crypto staking involves locking up your cryptocurrency in a blockchain network to help secure it and validate transactions. In return, you can earn rewards, typically in the form of more coins or tokens.

Yield farming takes things a step further. It’s a more advanced strategy where you provide liquidity to decentralized exchanges (DEXs) or lending protocols to earn rewards. This method can be riskier but often offers higher potential returns, making it attractive to traders and investors looking to make money in the fast-paced crypto market.

2. Earning through crypto mining

Mining was the first way to earn cryptocurrency, especially on proof-of-work (PoW) blockchains like Bitcoin (BTC). It requires powerful computers to solve complex mathematical problems that validate new transactions and secure the blockchain. As a reward, miners earn newly minted tokens, making it a potential source of income for those who invest in the right equipment and understand the market dynamics.

For years, headlines about Bitcoin often highlighted the high energy demands of the network and its mining rigs. But with major institutions like Microsoft, AT&T, and Block (formerly Square) now accepting BTC in some form – as payment or investment – many investors are once again looking at how to make money with crypto mining.

3. Participating in airdrops and bounty programs

Airdrops are marketing strategies in which crypto projects distribute free tokens to users to boost adoption and reward loyalty. Participating often involves holding specific coins or completing tasks like joining social media groups. Unfortunately, scams are common, so thorough research is a must.

Bounty programs also offer opportunities to earn crypto rewards for helping a project succeed. Tasks might include finding bugs, promoting the project on social media, or creating content – all ways to get involved and earn digital assets while supporting the crypto ecosystem.

4. Lending and borrowing crypto

Crypto lending lets you loan your digital assets to borrowers through decentralized or centralized exchanges (DEXs or CEXs) and earn interest on your holdings. The process is usually collateralized, meaning borrowers provide other crypto as security.

Borrowers might use crypto for leveraged trading, to avoid selling their existing investments, or for other strategies. For lenders, it’s a way to make passive income, while borrowers get quick access to liquidity. In the right market conditions, crypto lending can help investors diversify their income streams and profit from their coins.

5. NFTs (non-fungible tokens) and digital collectibles 

Non-fungible tokens (NFTs) represent unique digital assets – like art, music, in-game items, or even virtual real estate – stored in a digital wallet. Creators can mint and sell NFTs, earning royalties on subsequent sales, while investors can buy and sell NFTs hoping their value will rise. NFTs add another layer of opportunity for those looking to make money with cryptocurrencies beyond traditional coins and tokens.

6. Arbitrage trading

Arbitrage trading involves buying and selling the same cryptocurrency on different exchanges simultaneously to profit from price discrepancies. Because of factors like liquidity, trading volumes, and regional demands, price differences of 5–30% can exist across crypto exchanges. Arbitrage traders – often using automated bots – take advantage of these short-term opportunities to profit from temporary market inefficiencies.

7. Day trading and swing trading

For more experienced investors, day trading and swing trading are active strategies for buying and selling cryptocurrencies in the short or medium term to profit from price movements.

Day traders aim to profit from intraday market shifts, often closing all positions by the end of the trading day. Swing traders hold positions for a few days or weeks, looking to capture larger price swings. Both approaches require a strong understanding of market trends, technical charting skills, and solid risk management.

8. Liquidity providing

On decentralized finance (DeFi) platforms, especially decentralized exchanges (DEXs), users can deposit pairs of cryptocurrencies into liquidity pools and earn a share of the trading fees they generate. These DEXs often use automated market maker (AMM) models instead of traditional order books, meaning they execute trades directly against a pool of tokens rather than matching them with another buyer or seller.

Liquidity provision is central to DEXs because it allows users to buy and sell digital assets without relying on a centralized order book, making trading more decentralized and accessible. Liquidity providers also play a key role in the crypto ecosystem by keeping trades running smoothly and markets active. But it’s important to be aware of risks like impermanent loss – when the value of your deposited assets changes compared to just holding them – that can reduce returns if prices shift significantly.

9. Running a crypto node

For the more tech-savvy, running a full or validator node can be a way to earn rewards in exchange for time and energy.

A full node stores a complete copy of the blockchain and helps validate transactions, contributing to the network’s decentralization and security. Validator nodes, especially in proof-of-stake (PoS) systems like Ethereum (ETH), handle the task of proposing and validating new blocks, earning staking rewards for their participation. (In a PoS system, validators with more tokens at stake typically get a higher chance of verifying transactions, which incentivizes honest behavior and secures the network.)

10. Crypto faucets and microtasks

While not a significant income generator, crypto faucets are websites or apps that distribute small amounts of cryptocurrency as rewards for completing simple tasks like solving captchas or watching ads. Microtask platforms also pay small crypto rewards for online tasks such as data entry or surveys. These strategies allow beginners to accumulate small amounts of crypto at no cost.

Tips for maximizing passive earnings

While active trading can be exciting, building passive income streams in crypto offers a more sustainable and less stressful path to wealth accumulation. Here are four key tips for maximizing your passive earnings:

1. Expand your approach

Don't put all your eggs in one basket. Instead, diversify across multiple methods to spread risk and increase income streams. This approach mitigates losses from market downturns or platform failures while maximizing potential returns.

2. Conduct research before committing to a strategy

The crypto space is full of opportunities but also has plenty of pitfalls. Before committing your funds to any staking pool, yield farm, or lending platform, research the project's team, smart contract audits, community sentiment, and the sustainability of its stated returns.

3. Begin with small steps and grow over time

It's tempting to jump in with significant capital, especially when faced with the possibility of high yields. But starting slow allows you to learn the ropes, understand the intricacies of different platforms, and test your strategies without exposing yourself to undue risk. As you gain experience and confidence, you can gradually increase your investment.

4. Stay vigilant against scams

Be wary of projects promising unrealistic returns, unsolicited offers, or pressure to invest quickly. Stick with reputable platforms and wallets, verify official websites and smart contract addresses, and never share your private keys or seed phrases with anyone. A healthy dose of skepticism is your best defense against crypto scams.

Where to earn crypto

Hundreds of platforms exist within the crypto ecosystem, each catering to different earning strategies, including CEXs, DEXs, staking platforms, lending protocols, and NFT marketplaces. Here’s a breakdown of earning strategies and well-known platforms to consider. You’ll find some in more than one category because they offer a mix of features, like trading, staking, and lending, all in one place:

Buy and hold 

This strategy involves earning long-term capital appreciation by holding cryptocurrencies.

Platforms

• Coinbase is user-friendly, regulated, and ideal for beginners, with robust security and educational resources that allow users to earn free crypto.
• Binance offers high liquidity and a wide range of coins, making it ideal for building a diversified portfolio.
• Kraken is known for competitive fees and strong security, making it suitable for long-term investors.

Trading

Active trading aims to profit from price fluctuations in the crypto market.

Platforms

• Bybit features low fees and advanced tools for derivatives trading, making it a good choice for experienced traders.
• Binance is the largest exchange by volume and offers a comprehensive suite of trading features and bots for automation.
• KuCoin provides a wide selection of altcoins and innovative trading features, which attract traders interested in less common cryptocurrencies and futures.

Staking

Staking generates passive income by locking cryptocurrency to support PoS networks.

Platforms

• Lido is a decentralized staking platform for Ethereum, offering stETH tokens that can be used in DeFi for additional yield.
• Binance simplifies staking with flexible or locked options that yield between 5% and 20%.
• Kraken offers competitive yields of up to 20% and features a user-friendly interface for beginners.

Yield farming

Yield farming provides passive income by supplying liquidity to DeFi protocols.

Platforms

• Uniswap is a leading DEX that offers attractive yields for liquidity providers.
• Aave is a lending protocol that provides stable yields of 3% to 10% and supports collateral-backed loans.
• PancakeSwap is a popular DEX and DeFi hub on the Binance Smart Chain that offers various liquidity pools, farms, and lottery games.

Crypto can be complex. Your taxes don’t have to be

From staking and yield farming to NFTs and DeFi, crypto offers countless ways to grow your portfolio. But with every trade, reward, and fee triggering a potential taxable event, staying compliant can get overwhelming.

CoinTracker keeps it simple. The Portfolio Tracker connects with over 500 wallets, exchanges, and DeFi platforms to automatically log your crypto activity year-round. When tax season arrives, CoinTracker generates IRS-compliant forms for your CPA or tax software like TurboTax and H&R Block.

Whether you’re investing, staking, or earning passive income, CoinTracker helps you stay organized – so you can spend less time tracking and more time trading.

Get started for free and take the stress out of crypto taxes.

Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.