1. Mining Bitcoin
When Bitcoin transactions are completed—and a new block is added to the blockchain—a Bitcoin is ‘minted’ in a process known as mining.
The process of validating a transaction is complex, and requires computers in the Bitcoin network to solve a cryptographic problem. The first to do so is rewarded with the newly minted Bitcoin. By this process, around 900 Bitcoins are ‘mined’ every day.
Mining Bitcoin requires a huge amount of energy. By some estimates, carrying out a single Bitcoin transaction requires 707 kilowatt-hours (kWh) of electricity—roughly 60 times the amount used by the average Australian household in a day.
It also requires an elaborate ‘rig’, and specific mining software, making it difficult for new miners to break in. For this reason, Bitcoin miners regularly band together to create what’s called a ‘pool’—sharing resources and splitting profits.
It’s also worth noting that the amount of Bitcoin awarded for processing each transaction halves every four years. The next halving will occur in April 2024, which will drop the reward from 6.25 Bitcoins per block down to 3.125. There’s also a hard limit on the total supply of Bitcoins (21 million). Once this limit is reached, no more can be mined.
2. Lending Bitcoin
Bitcoin lending is a popular method of earning Bitcoin.
Some centralised exchanges, such as Crypto.com, pool cryptocurrency deposits, and use it to offer interest-bearing loans. In exchange for depositing their crypto with the lender, some of these interest payments are funnelled to savers. The exact rate you could earn varies depending on the coin and term length you choose.
Decentralised platforms such as Aave and Compound are also options for lending Bitcoin, however, you will need to use a web3 wallet, such as Metamask. As these platforms exist on the Ethereum blockchain, the Bitcoin will need to be ‘wrapped’ first so it can be used on a blockchain outside of its own.
Interest rates vary—lending Bitcoin through Crypto.com could earn savers an annual interest rate of up to 1.5%, while lending Ethereum pays up to 2%.
Lending is a risky way to earn Bitcoin, since there’s always a chance that borrowers will default.
3. Bitcoin Trading
Bitcoin trading involves buying and selling Bitcoin via an exchange platform with the goal of earning profit, which may or may not be invested in additional crypto holdings.
Strategies run the gamut from intra-day trading, to buy and hold, to hedging.
To maximise their chances of success, Bitcoin traders need to keep up with fluctuations in the market and stay abreast of news that could affect crypto.
Individuals keen to try their hand at crypto trading will need to carefully consider whether they have the time and capital to invest in this high-risk, speculative strategy.
4. Claiming Airdrops
‘Airdrops’ are a marketing strategy used by certain crypto and blockchain companies to incentivise awareness raising and attract new users or investors.
During an airdrop, the company distributes free coins or tokens to cryptocurrency holders in exchange for meeting certain criteria.
Some companies simply ask for a crypto wallet address and some basic personal details, while others ask claimants to prove they already hold some of the company’s coins or tokens.
You may also need to complete tasks before coins are awarded, such as following the issuer on social media, writing reviews or sharing posts.
To take part in these airdrop events, you may need to have a social media account on platforms such as Twitter, Facebook or Telegram.
The most popular crypto airdrops in 2023 were Arbitrum and Maverick, scoring some recipients over $10,000 each. .
Crypto enthusiasts who want to take part in airdrop events should act quickly, since they typically operate on a first-come, first-served basis.
5. Help To Find Bugs
Certain crypto developers may offer incentives to users who help them find bugs or glitches in their systems.
For instance, the crypto exchange Kraken has a ‘Bug Bounty’ program, which rewards users with Bitcoin for finding vulnerabilities or bugs. There are also community-driven contract audits, which take place on platforms like Code4rena, that can be extremely lucrative for those with a keen eye for high-severity bugs hidden in a project’s code.
6. Incentivised Learning
A few trading platforms allow users to earn small amounts of cryptocurrencies by completing lessons on crypto and blockchain-related topics.
Coinbase and Binance, for instance, allow users to earn a few dollars’ worth of certain cryptocurrencies in exchange for completing lessons about how they function.
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