Better than a dollar. 4 ways to save money with cryptocurrencies

Amid the escalation of the geopolitical situation in the world, Russians began to buy stablecoins en masse in order to protect themselves from the fall of the ruble and inflation. This is indicated by increased trading volumes in the USDT/RUB pair (according to CoinGecko). But there are other methods to help preserve capital using cryptocurrencies. We will tell you about 4 safe ways to invest in the fast-growing field of digital assets.

Long-term investments

The easiest and safest way to invest in cryptocurrencies is through a long-term purchase. This method is called Buy&Hold, its essence is to receive income from the growth of the asset rate in the long term. It is enough to buy one or two cryptocurrencies, wait for their rise in value and then sell. Bitcoin rose by 62% in 2021, and by the end of 2020, the price of the cryptocurrency increased by more than 300%.

Source: Tradingview.com

Buy&Hold is a simple and reliable method, but it is necessary to follow some rules for purchasing and storing digital assets:

1. It is worth choosing the most popular cryptocurrencies, like BTC or ETH. New projects tend to be unstable and there is a risk of becoming a victim of scammers.
2. After buying digital assets through an exchanger or exchange, it is necessary to transfer cryptocurrency to a cold wallet. Given the political situation, cryptocurrency exchanges can freeze the accounts of Russian users at any time.
3. Long-term investments can be considered those from 1 year. You should not withdraw your assets at the first decrease in the rate - the price of cryptocurrencies, as well as other assets, is dynamic.
4. You should not buy cryptocurrency with all your money, because there is a risk of drawdowns. At such moments, you can use your pending money for additional asset purchases.

Staking

Staking is an alternative to mining used in Proof-of-Stake networks. You do not need to buy expensive equipment for staking, merely having cryptocurrency in your wallet is enough.

Platforms that use the PoS algorithm:

• Cardano
• Fantom
• Tezos
• Solana
• Algorand
• Cosmos
• TRON
• EOS
• Dash, etc.

With staking, the right to validate transactions depends on how many coins are blocked in the wallet. There are slight differences in how PoS blockchains work. Still, usually, the algorithm selects blocks randomly and assigns a validator to them, and then it checks the legitimacy of the transactions. If everything is correct, the validator adds the block to the ledger and receives the reward and fees for completing the transaction. However, if the validator adds a block with incorrect data, its staking assets will be penalized.

In 2022, there are many opportunities for staking. Cryptocurrency can be staked either on cryptocurrency exchanges such as Binance, Huobi, and FTX, or directly on specific blockchain wallets such as Fantom, Avalanche, or Solana.

Source: Binance.com

Crypto exchanges are an easier tool for staking because investors do not need to block coins manually. Such services charge users a fee (usually up to 1-2%). For example, on Binance, the AXS token can be staked at 120,6% per annum for up to 90 days (as of April 12, 2022).

Earlier GetBlock Magazine published a list of alternative exchanges to which you can withdraw funds from Binance in conditions of sanctions. The exchange announced that it will support all restrictive measures against Russia, which will be introduced by Western countries. On March 10, the platform stopped accepting Visa and Mastercard cards issued in Russia. In the same month, Binance began blocking P2P merchant adverts for using cards from sanctioned banks.

Cryptocurrency lending

Lending is the loan of cryptocurrencies at a certain percentage. That is, an investor with digital assets gives them to a third party, usually an exchange, for sale, which acts as a guarantee of return of funds. Typically, the deposit period starts from 30 days, depending on the platform.

Exchanges that support lending:

• Poloniex
• Bitfinex
• Coincheck
• YoBit

Not only can you lend digital assets on exchanges, although this is the safest option, but you can also invest in cryptocurrencies that support this feature:

• ETHLend is a cryptocurrency of the decentralized lending protocol, about 24% per annum
• FNT is a Falcon Project cryptocurrency, with up to 45% of the investment placed each month

Although lending brings quite a lot of income, it also comes with a high risk. There is a chance of encountering scammers who offer similar services and then simply do not pay back. In addition, not all cryptocurrencies have a sufficient level of liquidity, when investing in such assets, there is a risk of losing your money. Therefore, it is necessary to carefully study the exchange or digital asset before offering funds on the lending platform.

Investing in cryptocurrency companies

Cryptocurrency exchange Coinbase became public in April 2021, and is the first cryptocurrency company to enter the IPO market. Buying securities of companies from the cryptosphere is another effective way to save money and earn on digital assets, as stocks of blockchain companies have a correlation with the crypto market.

However, the entry threshold into this sphere is quite high, with some companies allowing only experienced investors to contribute funds and in large amounts only. Also, given the reduced risks, the returns will be lower.

At the moment, the most popular projects for investment are considered to be mining companies, such as:

• Marathon Digital Holdings (NASDAQ:MARA) with 2021 returns of 214%
• Riot Blockchain (NASDAQ:RIOT) with 2021 returns of 31%
• HIVE Blockchain Technologies (CVE: HIVE) with 2021 returns of 38%
• Hut 8 Mining Corp (TSE:HUT) with 2021 returns of 184%

Source: Nasdaq.com

When making investment decisions, you should be guided by standard rules. That is, study the behavior of stocks on the market and learn more about the project and its prospects. It is important to remember that such investments differ significantly from cryptocurrency investments. All transactions in the stock market are made through a broker, while the purchase of digital assets can be made independently. After the tightening of anti-Russian sanctions in March 2022, some brokers were forced to stop working with Russian clients. Such risks are also worth considering before choosing a broker to work with the stock market.

Over the past few years, cryptocurrencies have gained the status of a full-fledged asset class, which can be used for various purposes with the right approach. One such purpose is to preserve capital from depreciation and other risks. The principles described in the article can be used to protect your funds. But it is worth remembering that cryptocurrencies are highly volatile assets with high risks.