THE ULTIMATE GUIDE
The Bitcoin Finance World and How to Earn Money with Bitcoin
The more people using Bitcoin, the more financial services are created for the cryptocurrency. There are constantly new Bitcoin companies created that develop applications for the future financial world.
One significant advantage of Bitcoin compared to conventional currencies is that it’s protected from inflation. No central authority can manipulate the supply and value of the digital currency.
It’s popular to save money in Bitcoin because its value is preserved. In that way, it’s better to save in Bitcoin instead of saving cash in the mattress.
However, there are several ways to earn money with Bitcoin instead of storing them in your digital wallet. In this guide, we go through various ways to make money with Bitcoin and financial services on the market.
All services offered by the bank are also available in the Bitcoin financial world. You can get paid by lending your Bitcoin. There are Bitcoin Savings Accounts that give you interest. More about this soon.
Additionally, you can earn money with Bitcoin HYIPs (High-yield investment programs), although the risk is high that you lose all the money. Otherwise, there are Bitcoin Faucets where you can get free Bitcoin entirely risk free.
In this guide, you will learn how all this works. There are risks in the Bitcoin market because it’s hard to regulate Bitcoin companies. Therefore, you also need to know how to protect your Bitcoin.
We recommend that you read this guide before using any financial services on the Bitcoin market.
Top 3 Bitcoin Exchanges - July 2020
Welcome to CryptoRunner! I’m David Andersson, co-founder of this site.
We understand that cryptocurrencies can be confusing and frustrating. That’s why we are here to help you.
Make Money with Bitcoin
You can earn money with Bitcoin in a variety of ways. Above we mentioned some financial services such as Bitcoin savings accounts and Bitcoin lending. In addition to Bitcoin financial services, you can make money in other ways.
One way that has worked so far is to buy and hold Bitcoin. You can earn a lot of money by investing in Bitcoin. However, this requires that the trend continues to be positive. Even though the price has risen several thousand percents, there is no indication that growth is slowing down.
In recent years, it has also become popular with Bitcoin Trading. The difference between investing and trading is time horizon. If you are trading, you’re speculating on short term price. Read the guide about Cryptocurrency Trading to learn more.
Trading does not fit all because it involves high risk. For others, Bitcoin savings accounts can be a better option. There are many benefits of a Bitcoin savings account compared to a regular savings account at the bank. We will explain why.
Otherwise, you can make money by lending out Bitcoin. There are Exchanges where you can lend your Bitcoin with interest, as well as Bitcoin lending companies. For example, there are platforms for startups seeking funding and peer-to-peer lending.
Bitcoin Mining is another way you can earn money with Bitcoin. However, because the competition is fierce, it’s hard to make money on Bitcoin Mining. It requires a lot of resources and costs a lot of energy.
If you are interested in mining, we recommend a Bitcoin Mining Pool. Here you can learn more about Bitcoin Mining.
We also mentioned Bitcoin HYIPs (High-yield Investment Programs) that you can invest in and get paid a high-interest rate. However, their high-interest rates are untenable, and sooner or later they will shut down the program and probably not pay back the money.
If you want something risk free, Bitcoin Faucets give away free Bitcoin. This is possible because they have ads and advertisement on the website.
Otherwise, there is always Bitcoin Gambling where you can earn money on casino games, betting, poker and more. You should not play for money that you are not prepared to lose.
Instead of just being a Bitcoin user, you can become a Bitcoin investor. The more people who start using Bitcoin, the more the price can rise.
People buy Bitcoin for various reasons. Many use Bitcoin because it’s easy to pay with. Others use Bitcoin because you can transfer money cheap around the world. While others save money in Bitcoin to avoid inflation.
Bitcoin and Blockchain technology has many applications and will improve many things in the future. The growth potential is high, and therefore many choose to invest in Bitcoin.
At the same time as the potential for Bitcoin is high, the risk is also high. If you are going to invest in Bitcoin, you need to be prepared for major price changes. Although volatility has fallen in recent years, events can lead to big reactions on the Bitcoin market.
You should be a long-term investor, meaning that you don’t abandon the ship if the weather gets stormy. The market is not rational, and the price of Bitcoin will continually fluctuate. The important thing is that you have done a fundamental analysis. In other words, you understand how Bitcoin works and see growth opportunities.
If you want to invest in Bitcoin and regularly buy the cryptocurrency, you should know what you are buying. Before investing larger sums in Bitcoin, we recommend reading these guides; What is Bitcoin? and How Does Bitcoin Work?
You should have a good understanding of your investments. Bitcoin has many faithful followers who are convinced that it will be the primary currency in a more globalized society in the future.
Because no state controls the digital currency, Bitcoin is the world’s first global currency. Whether you want to buy Bitcoin or invest in the cryptocurrency, you should understand how the Bitcoin market works.
Start by reading this guide if you want to buy Bitcoin and cryptocurrencies. We talk about security, costs and the best Bitcoin Exchange for you.
Keep in mind that past performance is no guarantee of future results.
Bitcoin Savings Accounts
Saving Bitcoin on a savings account can be better than just storing them in a Bitcoin wallet. You put your Bitcoin into work and get a passive income that continuously pays you.
There are many benefits of a Bitcoin savings account compared to a regular savings account at the bank. Below we have listed the main benefits:
- User-friendly – It is much easier to use a Bitcoin savings account than a bank account. You can transfer Bitcoin and start earning money right away.
- Shorter lending period – Bitcoin savings accounts offer shorter loan periods. The bank will try to tie up your savings capital for several years.
- Frequent payments – You get payments more often with Bitcoin savings accounts. Your interest is paid daily or monthly while the bank pays on an annual basis.
- Compound interest – The fact that Bitcoin savings accounts have more frequent payments means more money for you. You will get paid interest on the interest you have already received.
- Inflation protection – As the supply is limited with a predetermined amount of Bitcoin on the market, you are protected from inflation. With normal fiat currencies, the central bank is printing more and more money. This leads to inflation and your money lose value.
- Security – Although Bitcoin savings accounts are not protected by deposit guarantees, their lending share is usually lower. As banks use venture capital, they borrow most of their capital. Bitcoin savings accounts don’t have that uncertainty.
How is the interest on your Bitcoin savings account guaranteed? The company can guarantee you an interest because they lend money to other people for a higher interest rate. This simplifies the process for both corporations and individuals who want to borrow and lend Bitcoin.
At present, you get an interest rate of 1-3% for Bitcoin savings accounts. This is constantly changing depending on different market conditions. In the same way, new Bitcoin companies that offer savings accounts are constantly started.
We only recommend using Bitcoin savings accounts at larger companies. It should be a company that has been on the market for a while and is reliable. The most popular Bitcoin savings account is offered by Magnr, an established company.
With a Bitcoin Faucet, you can get Bitcoin for free. These are tiny amount but are an easy way to get started with Bitcoin.
A Bitcoin Faucet is a website that distributes small sums of Bitcoin to visitors. The site owner earns money by placing ads on the page. In other words, you get a portion of the advertising revenue to visit the page.
It usually is between 100 satoshi (0.000001 BTC) and 10,000 satoshi (0.0001 BTC) but may vary more. After receiving your payment, you need to wait a predetermined amount of time, usually about 60 minutes, before you can get more free Bitcoin.
All you need to start is a Bitcoin wallet. Because there are very small sums, you can’t make a lot of money on Bitcoin Faucets. However, you learn how to create a Bitcoin Wallet and how to use Bitcoin.
Bitcoin Faucets started with people helping others get started with Bitcoin. But the primary purpose of the owner is, of course, to make money on his Bitcoin Faucet.
You can create your own Bitcoin Faucet if you want. All that is needed is a simple web page that doesn’t require much maintenance. Today, there are very many Bitcoin Faucets. Some of the biggest Bitcoin websites on the internet are Bitcoin Faucets.
Because there are so many Bitcoin Faucets, you can also find Bitcoin Faucet Rotators. This is a web page that allows you to quickly visit different Bitcoin Faucets without having to open new tabs or windows in your browser.
NOTE! Do not use the same password on multiple websites because there are Bitcoin Faucets that is created to collect passwords from visitors. Even though people are aware of the risk, there are still people who use the same password on multiple websites. This can cause your accounts to be hacked.
Bitcoin HYIP stands for “High-yield investment program“. You can make a lot of money with small sums, but it is very risky. Most programs earn money through day trading or sports betting.
Interest rates are usually 0.5-6.0% per day. Bitcoin HYIPs usually pays every hour, day, week or month. In other words, you can get more paid in 1 day than a Bitcoin savings account pays in 1 year. Sounds too good to be true?
Unfortunately, it’s not the whole truth. Sooner or later, the program can not pay you anymore because such a high-interest rate is unsustainable. Basically all Bitcoin HYIPs turns out to be a scam or Ponzi scheme.
It may be that a Bitcoin HYIP earns money at the beginning but eventually can not pay all investors. In many cases, this results in the fact that they start paying their investors with the investors’ own money. This is what is called a Ponzi scheme.
For this reason, Bitcoin HYIPs do not last longer than a few months. Sooner or later, they close down and cancel all payments. It is possible to earn money from Bitcoin HYIPs if you only invest money for a short period of time.
But this means very high risk and the probability is high that you lose all the money. We recommend that you keep away from all websites that promise unrealistic high returns. It’s probably a scam.
If you want to earn money with Bitcoin, investing in the cryptocurrency is better. We suggest opening a Bitcoin savings account or testing Bitcoin Trading if you find that interesting. What fits you depends on the level of risk you feel comfortable with.
We believe that the risk level is too high with Bitcoin HYIPs. Another way to get a high return on your capital is through Bitcoin P2P lending. Below we explain how it works.
Bitcoin P2P Lending
Bitcoin P2P lending is a platform based on a peer-to-peer system. This means that individuals can borrow and lend Bitcoin to each other on the platform.
People can borrow Bitcoin at reasonable rates while lenders receive higher interest rates than other interest-bearing assets. P2P lending is good for both parties as there are lower fees than ordinary loan companies.
It’s a platform where people can meet to fund startups and earn more money. However, the interest rate is high because it involves high risk.
If you invest in small business loans and the company goes bankrupt, you will most likely never get your money back. We recommend that you don’t lend more money than you are prepared to lose.
At the same time, there are several benefits with Bitcoin P2P lending. Here we have listed a few:
- Fast process – You can quickly borrow money because there is no waiting period after any requirements. At the bank, this is a slow process.
- High interest rates – Regular interest rates are 3-7% per month. This is significantly higher rates than on Bitcoin savings accounts. At the same time, some loans pay even higher interest rates. But a higher interest rate also means greater risk.
- Low fees – Whether you want to lend or borrow Bitcoin, the fee is usually 1-2% of the payment. This is a low fee compared to banks and loan companies.
- More options – There are also other features on platforms for Bitcoin lending. For example, there are usually different risk levels, geographical areas, and other criteria to choose from. Otherwise, you can make an own evaluation of the borrower.
- Global Platform – Nobody can prevent you from participating in the P2P platform since there are no national borders with Bitcoin.
- Individual Evaluation – All loan applications are usually evaluated individually on the Bitcoin P2P platform. This is to increase security and prevent fraud. But the risk is still greater than lending money on a Bitcoin Exchange. More about that in the next section.
It is important that you check the person before lending money. Ask many questions and understand why the person wants to borrow money. Check out reviews from previous lenders.
We recommend to only use larger Bitcoin P2P platforms because of security reasons. A popular peer-to-peer platform is Bitbond with almost 100,000 users.
Lending on Crytocurrency Exchanges
A smarter option than P2P lending may be to lend your Bitcoin on an exchange. Bitcoin Exchanges have loans between users to increase the trading volume and offer traders a leverage.
This is called Margin Funding / Margin Lending and is much safer than P2P lending. It’s different because you don’t know who you lend to but you know that the money is used for trading at the Bitcoin Exchange. The person can’t take your money and run away.
It is risk-free because margin traders lend with their portfolio as collateral. Their portfolio value can not be less than the loan plus the interest rate. If necessary, the exchange will force liquidate their positions to repay the lender.
The risk that remains is that the exchange can get hacked or go bankrupt. You need to decide from exchange to exchange how big that risk is. However, you should always use multiple Bitcoin Exchanges to spread the risks.
The interest rate on Margin Lending is usually 0.15-0.50% per day. It may look like a small amount, but it’s not. If you could lend your money every day for 0.5%, you would get a return of 20% per year.
It works in theory, but not in practice because it is divided into small loans with varying interest rates and maturities. During periods of high volatility, interest rates may rise above 1%. To achieve the highest possible return, you need to actively adjust your interest rate and lending period on the loan based on market conditions.
Since anyone can offer and accept loans, the interest rate is based on supply and demand on the market. In addition to Bitcoin, there are also hundreds of other cryptocurrencies, also called altcoins.
It’s normal with a lending period of a few days for Margin Lending. In other words, this is not a long-term interest rate which you can get on a Bitcoin savings accounts.
Margin Lending is a good tool for creating a passive income on your Bitcoin och cryptocurrencies. Are you interested in margin trading/lending? In that case, we recommend to open an account on the eToro exchange →
Protect Your Bitcoin
We often talk about security and how to protect your Bitcoin. When using different financial services, you will need a Bitcoin wallet. There are different types of Bitcoin wallets which have different security.
In your Bitcoin wallet, you keep your private keys that you use to prove ownership of Bitcoin. This means that if someone gets your private keys, they can steal your Bitcoin.
When using a Bitcoin Exchange or Bitcoin Savings Account, your private keys are protected by them. This is less safe because you need to trust the company with your money and there is always a risk of bankruptcy.
Additionally, Bitcoin Exchanges become a target for hackers because they hold large amounts of Bitcoin. That’s why you should not store Bitcoin and cryptocurrencies in their wallet unless you’re trading.
You should always have a Bitcoin wallet that you protect yourself. We recommend everyone to buy a Bitcoin Hardware Wallet because it’s the safest option.
Your private keys are then encrypted on a physical hardware that is not connected to the internet. In addition to using a secure Bitcoin wallet, there is a number of actions that can further protect your Bitcoin.
We will not mention everything here, but we recommend using two-factor authentication. This is an extra protection when using services on the internet. It’s easy to set up with Google Authenticator.
If you use a hardware wallet along with two-factor authentication, you have good security.
There are lots of ways to make money with Bitcoin. In this guide, we have mainly talked about options for creating a passive income. What option you should choose depends on your preferred risk level.
The most common thing option is to invest in Bitcoin and storing them in a wallet. This has the advantage of constant access to your Bitcoin. If you lend your Bitcoin, you can not use them during that period.
If you want to achieve higher returns and are prepared to take greater risk, Bitcoin Trading is an attractive option. Many cryptocurrency exchanges have a trading platform making it easy to test and learn about trading.
But do not forget to spread your risks and protect your Bitcoin. Use multiple Bitcoin Exchanges and security measures such as two-factor authentication.
The same applies to Bitcoin savings accounts and Bitcoin lending. Do not transfer all your Bitcoin to one savings account. And do not lend 100% of your Bitcoin to other people.
The Bitcoin market is always developing, and we help you stay up to date. We don’t tell you how to use your Bitcoin. Instead, we provide advice and tips.
You decide how you want to make a return on your Bitcoin. No state, bank or institution can control or prevent your transfer. With Bitcoin, you are your own bank.
Frequently Asked Questions
Is your question not answered here? Ask your question below!
Bitcoin is a digital currency, also called cryptocurrency. More specifically, Bitcoin is an independent, global and public ledger used to transfer and store value (also known as money).
- It’s independent because no state or bank controls Bitcoin.
- It’s global because money can be transferred quickly and cheaply, anytime, to anyone.
- It’s public because all transactions are stored in a shared ledger.
Learn more in this guide: What is Bitcoin?
Yes! Bitcoin is safer than the current financial system. The cryptocurrency is protected by cryptography and mathematics instead of laws and regulations that contain mistakes and deficiencies from humans. There are and will always be loopholes in laws. However, you can’t trick math.
Yes! It is completely legal to use Bitcoin. Individuals are allowed to use which currency they want as long as both parties agree on the same means of payment. However, there are countries that have indirectly or partially prohibited Bitcoin. The reason for this varies, but generally, the government wants more control over the financial market. Here is a list of all countries’ laws about Bitcoin.
When you are not using your cryptocurrencies, you must keep them in a secure Bitcoin wallet. If you leave your Bitcoin at an exchange, mobile app or online, you risk losing all your money. The safest way to store Bitcoin is in a hardware wallet. Everyone needs at least one hardware wallet. Learn more in the guide: Best Bitcoin Wallet.