The cryptocurrency industry is a fast-paced world that has caused many investors to make or lose millions within short periods. The industry offers investors a wide array of investment options. Inexperienced investors have a hard time picking the right strategy of investment options because of fear.
To avoid unnecessarily high risks, low-risk investments are a viable option. While you can’t completely get rid of the risks involved in the cryptocurrency industry, some investments mitigate risks. These investment options are passive. So, you don’t need to be actively involved to benefit from cryptocurrency.
Cryptocurrency Staking
If you’ve ever put some money in a bank account and accumulated interest on it over time, you should understand the basic principle of staking. Staking cryptocurrency involves “saving” a certain amount of cryptocurrency in a staking pool for some time to earn interest in it. Staked coins can earn you cryptocurrency interest in other coins, or in the parent coin that you have staked.
There are two ways that staking can be applied; cryptocurrency farms or pools. Farms help you earn cryptocurrency that is yet to be launched on popular exchanges. This gives you a head start for even these tokens eventually launched. Pools allow you to stake your coin to earn popular coins that are already listed on exchanges. With the way staking works, you can remove your staked coins whenever you want.
Run a Master Node
Those who run master nodes are people who own a certain amount of a cryptocurrency and earn interest from it whenever certain transactions and verifications are required on a blockchain. They are vital parts of the infrastructure of big tokens like Bitcoin and Ethereum.
The number of coins required to become a master node varies from cryptocurrency to cryptocurrency. However, unlike with staking, master nodes cannot continue to earn from the blockchain if the amount of crypto they have is less than the minimum requirement.
Automated Trading
Auto trading involves the use of artificial intelligence bots, to run automated trades. This one requires a little experience and action to work. The software used in auto-trading either copies trades from industry experts or uses an algorithm to determine the best coins to trade and what direction the market will take.
Some trading bots can help you gain long-term in the spot market by purchasing cryptocurrencies that seem promising. Others trade futures markets and take advantage of dips and pumps. The accuracy and the method that auto traders use depends on their algorithm and functions. You may also need to set the parameters.
Diversification
Another great way to mitigate risks in the cryptocurrency industry is to ensure that your wallet is diverse. This means holding multiple promising coins and trading multiple accounts. You can reduce risk by keeping both long and short-term cryptocurrency investments. Also, you can buy stocks that are available on your exchange. Exchange-Traded Funds are shares that allow you to significantly diversify your wallet by purchasing stock from real-life organizations.
Bottomline
Every day new ways to invest in crypto come into existence. Some other ways to earn include airdrops, NFTs, Apps, etc. You can stay in the loop by getting actionable information from OSOM Insights.