The risks and the gains of Bitcoin are becoming increasingly well-known as this previously under-the-radar cryptocurrency hits the mainstream, with everywhere from specialized exchanges down to your local pizza place now trading in it. But if income tax is making a hole in your retirement funds, then this unregulated, untaxed market – even with all its attendant risks – may begin to look attractive. Earning Bitcoin is becoming more of an option for growing your overall portfolio, not something to go all-in with. But what are the best ways to make it pay? Here are some of the easiest:
Join a mining pool
Traditionally, the way to earn with Bitcoin was through ‘mining’ – solving sophisticated mathematical algorithms to create new ledger blocks. However, those days are probably over now. You will need to invest in a Bitcoin mining pool to get access these days, as the current algorithms are too complex to be processed on a home PC and require specialist hardware that harnesses the processing power of many computers. A Bitcoin mining calculator can help you work out how profitable this might be.
Create a faucet
Bitcoin ‘faucets’ are basically websites that give away micro amounts of the currency to their users, and earn revenue through hosting advertising. The business model is referral-based, generating high-volume traffic to create more ad clicks. This can be done ‘out of the box’ with no experience in coding needed, just a domain name and website creator, plus a micro wallet payment processor service like FaucetHub. Once built, monetize the site through a provider like Google Adwords or spend time building affiliate revenue streams, where you make a small percentage of commission on referrals.
Invest in funds
It’s now possible to invest in funds that themselves invest in bitcoin. Values are increasing and have been known to double in a matter of months. So although there are definite risks, there are also significant gains to be made by doing this. With a finite supply and tightly regulated production, in theory, Bitcoin should always gain in value over time. There are other cryptocurrencies backed by global conglomerates to invest in such as Ethereum and you can even set up an ethereum IRA online.
Become a Bitcoin lender
Becoming a lender is another way to get a slice of the Bitcoin action. Buy up some currency from an exchange, and then lend to another party with interest. Lend either with no collateral and higher returns or secured against something for a lower interest rate. However, this should be approached with caution due to the lack of market regulation. Cryptocurrency is not part of any insurance scheme or regulated by any official bodies.
Accept payments in Bitcoin
The other channel is to add Bitcoin to accepted payment methods for whatever goods or services you can sell. But obviously, this depends on being able to effectively market whatever you need to in order to create the wealth. Bitcoin has brought with it some new entrepreneurial opportunities as it removes a lot of the barriers to conducting global business by virtue of its totally digital format.
Although its newness makes it a fairly high-risk option, Bitcoin is becoming increasingly mainstream. For a savvy investor, meaning knowing when to get in and get out, there may be opportunities there to make swift gains.
Can cryptocurrency be rocket fuel for your retirement fund? I still have a lot of research to do before I can honestly answer that. But with knowledge comes opportunity and understanding whether something is too risky to invest in.