Earn money online with cryptocurrency - how it works

One of the less well-known ways to make money is to participate in a cryptocurrency. This practical tip shows you how to make money online with cryptocurrency.

Earn money online with cryptocurrency: These are the options

Similar to classic currencies, you can also make money with cryptocurrencies through interest and exchange rate gains. In addition, there are other options such as mining or staking, which you cannot do with normal currencies.

• When earning money through exchange gains, you only convert part of your normal money into cryptocurrency: If the exchange rate increases, you will receive profits when you sell the cryptocurrency. The classic Bitcoin is currently subject to strong fluctuations. It is also unclear how the course will develop in the long term in the future. This method is not particularly safe in the long run.
• In addition to investing, you can also trade with cryptocurrency. In so-called "day trading", for example, you take advantage of small price fluctuations to achieve low profits. To do this, however, you must constantly watch the course closely. The rate can change by a few percent within minutes, which makes the method very risky.
• There are numerous online banks online for cryptocurrencies that - like a normal bank - promise interest gains. With "crypto lending" you lend your cryptocurrency and receive relatively high interest rates in return. However, you should be particularly careful if you are promised high interest rates per month or per day. These offerings are often high-yield investment programs where the profit is primarily based on the fact that more and more investors are joining them. Former investors, the money is paid out by new investors. You should definitely refrain from this, since it is essentially investment fraud that will collapse one day and not real "interest".
• One of the more classic ways to make money online is mining cryptocurrency. You use the computing power of your PC to create new blocks and add them to the blockchain. In return, if your computer has "cracked" a block, you will receive the transaction fees and the mined cryptocurrency. Unfortunately, this method is also not very profitable, since the costs for electricity and your computer are usually significantly higher than the amounts received. However, as the overall computing power increases (due to new participants in the mining), the difficulty with hashing increases, which is why the investment in competitive GPUs is usually far too high for private individuals.
• Finally, there is the so-called "staking". Similar to mining, this is about validating transactions. You block part of your cryptocurrency for transactions. A (theoretically) random algorithm selects a validator that can validate the respective blocks according to its proportion of "blocked" cryptocurrency. People with a particularly large amount of cryptocurrency are preferred by the algorithm. You will receive a reward for successful validation. With the "Delegated Proof of Stake" you have (depending on the amount of cryptocurrency) a "voting right" to choose the one who is allowed to validate the block. The work is outsourced to third parties.

Taxing cryptocurrencies - does that have to be?

• The European Court of Justice ruled on 22.10.2015 that services consisting of "exchanging conventional currencies in virtual currency units 'Bitcoin' and vice versa are performed against payment of an amount equal to the range provided by the The difference between the price at which the economic operator concerned buys the currencies and the price at which he sells them to his customers constitutes sales exempt from VAT within the meaning of that provision ".
• If you own the cryptocurrency for more than a year, the capital gains are tax-free. However, as soon as you earn interest, you must tax it. The speculation period increases to an additional 10 years.
• You also have to pay tax on price gains as long as the profit is greater than 600 euros.

You can find out how Bitcoin mining works in the next practical tip.