5 ways to become financially independent with crypto
Over the last several years, cryptocurrency has emerged as one of the top financial instruments for generating wealth. From simple trades to starting your own exchange, crypto has the potential to make for a fully-funded financially independent life, without the need for attending a traditional 9–5 job. Responsible for an incredible number of individuals who FIRE (Financial Independence, Retire Early) and with an extremely low financial barrier to entry, anyone can do it.
- Work the market. First and foremost, the market is a great place to start. While investing in current high-value coins may provide a way to make a profit, balancing and diversifying your portfolio gives the best advantage to beating out market crashes and drops. When the crypto market crashed in May of 2022, many who invested in only one or two stablecoins, like TerraUSD, saw a sharp drop in portfolio value, dropping from just over $100k USD in March to a $0.15 USD in May. Choosing a larger, yet selective, number of coins to invest in ensures that if one falls, another will grow or remain the same. Working in tandem, balancing your portfolio is also a strategic way to ensure you are always on top of the market while maximizing your funds.
- Consider starting your own exchange. Although costly upfront, the return on investment has the potential to pay itself off rather quickly if done strategically. Starting an exchange is ideal for both individuals and business entities, making it one of the most diverse ways to generate funds through crypto. In the most basic earning model for an exchange owner, most funds are made from collecting deposit and withdrawal fees. When users transfer or withdraw funds on your platform, they need to pay the predetermined fees, which in turn go directly to the owner of the exchange. Opening up your own exchange also creates other opportunities like launching your own token, allowing users to trade exclusively while boosting your exchange’s notoriety.
- Try out yield farming. Yield farming is a way to earn interest on your crypto funds, the same as earning interest on money deposited to a traditional savings account, which typically earns a low-yield amount. In order to get started with yield farming, coins will have to be deposited through a decentralized, or DEX, exchange. It is important to remember that yield farming always requires the deposit of two tokens to ensure liquidity for a specific pair. Depositing and staking funds allows for the coins to earn interest according to the pair’s APY, or annual percentage yield. The return is paid out in cryptocurrency instead of fiat, so be prepared to make the necessary adjustments when withdrawing the funds as transaction and platform fees are usually required to withdraw.
- Don’t expect to “get rich quick”. A good return doesn’t come without hard work, and it certainly doesn’t come quickly. Turning a profit on crypto investments may seem simple, but it is dependent on many factors like timing and strategy. Unfortunately, the value of every coin doesn’t just go up, it takes time. The process from the initial investment to the profit can be a long one, which is why focusing on what cryptocurrency is on its way up is important. Taking a look at current trends and investing when the value is low is a great strategy to create a profit later down the road.
- Branch out. Crypto doesn’t have to be the end-all-be-all. There are plenty of other avenues to explore on the blockchain, like NFTs. Similar to crypto, NFTs can be traded and sold, creating a return if done strategically. Unlike crypto, they cannot be copied or replicated, which makes them more valuable when sold. Along with being traded, NFTs can also be created, opening up the potential to earn royalties when sold.
Knowing and understanding cryptocurrency is the first step to achieving financial independence, and the business opportunities are exponential. As cryptocurrency evolves, businesses and individuals should consider becoming more familiar with the market and how it works. Shift Markets, a leader in the institutional cryptocurrency market, offers a wide variety of crypto and web3.0 products that are propelling both individuals and institutions into the future. Learn more about our services or starting an exchange here *link to start an exchange*
Disclaimer: We are not financial advisors. The content on this site is for educational purposes only. Please consult a professional advisor before making any financial decisions.