This year, 2020 has been extraordinary for Bitcoin, with a marked acceleration in its price. After hitting numerous new highs, the token currently sits near $30,000, increasing the purchasing power of holders. This remarkable surge is driven by several factors, including retail investors choosing this alternative digital currency to diversify their portfolios and growing participation from institutional investors.
Robert Kiyosaki, author of Rich Dad Poor Dad, predicts BTC/USD could reach $50,000 next year. Some even forecast Bitcoin at $100,000 in 2021. If prices keep rising, there are multiple ways to benefit from this industry. Beyond buying and holding Bitcoin, what other methods exist to profit from Bitcoin in 2021?
Trade Bitcoin
Besides purchasing Bitcoins to hold and use, you can trade Bitcoin through derivatives without owning the tokens directly. Financial instruments such as CFDs (Contracts for Difference) let you speculate on Bitcoin’s price against another cryptocurrency or a fiat currency without dealing with the complexity of exchange platforms or securing tokens in a wallet.
CFD brokers provide relatively user-friendly trading platforms to speculate on Bitcoin’s rise or fall without taking possession of the asset. This allows traders to potentially profit in both bullish and bearish markets. CFDs also enable margin trading and leverage, offering greater market exposure. In every case, it’s essential to fully understand how CFDs work before getting started.
Mine Bitcoin
Because no central authority controls Bitcoin’s money supply, new coins are created through a process called mining. To mine BTC, miners contribute computing power from specialized rigs to solve complex mathematical problems and validate Bitcoin transactions.
This process secures the network and produces new Bitcoin. Each miner who successfully solves a problem is rewarded with newly created tokens as compensation for the time, effort, and energy expended in the process.
Loan Your Bitcoin
Since using Bitcoin as a currency removes intermediaries like traditional financial institutions for transactions, you can also lend your BTC by participating in crypto-lending platforms. By lending your tokens, you can earn interest on the funds you make available.
If you want to acquire BTC or select a regulated, reliable Bitcoin trading platform, a complete guide to the best brokers and exchanges can help you choose the right option.