How to Make Money with Ethereum

Looking to make money with Ethereum? Stake Ethereum on Coinbase today and earn up to 2.17% APY.

Ethereum is a decentralized, open-source blockchain network that has been gaining a lot of attention in recent years. Unlike Bitcoin, which is primarily a digital currency, Ethereum is a platform that enables users to create and execute smart contracts on its blockchain. These smart contracts are self-executing agreements with the terms of the contract directly written into code.

Ethereum’s network is powered by Ether, the token that rewards users for connecting their computers to the blockchain and enabling more transactions. When you visit a cryptocurrency broker and purchase Ethereum, you’re actually investing in the Ether token.

While many investors see Ether as a speculative asset to buy and hold in the hope of price appreciation, there are other ways to make money using Ethereum. ranging from simple investment strategies to more advanced activities like staking. It’s important to do your own research and understand the risks involved before getting started with any Ethereum-related activity. This article breaks down a few different methods you can use to generate Ether tokens — and earn money.

Can You Make Money with Ethereum?

Ethereum, like Bitcoin, is one of the most well-known cryptocurrencies in the market today. Many people have heard about Ethereum and its potential for profitability, but the question remains: can you actually make money with Ethereum?

The short answer is yes, it is possible to make money with Ethereum. However, making money with Ethereum goes beyond simply buying and selling coins; it involves understanding the underlying technology, exploring decentralized applications (dApps), and actively participating in the Ethereum ecosystem.

How to Make Money with Ethereum

Let's delve into the strategies and tools you can use to start making money with Ethereum today.

Mine Ethereum

Ethereum’s crypto token Ether is produced through a process called “mining.” During the mining process, computer operators compete with one another to solve computational problems to add blocks to the Ethereum blockchain. 

Consistently adding blocks to the blockchain makes decentralized application functionality possible. Miners are a backbone of the Ethereum network — and they are rewarded with Ether tokens.

If you know anything about mining on the Bitcoin network, you’ve probably heard that mining requires a massive amount of computing power. While this is true on the Bitcoin network, Ethereum’s mining network is much more efficient. For example, the average block mining takes around 10 minutes on the Bitcoin network, while Ethereum network’s proof-of-work algorithm adds one block every 12 seconds.

This doesn’t mean that you’ll be able to gain 1 Ether every 12 seconds. Remember that you are competing with thousands of other miners for these tokens. At the average difficulty level, it’s possible to mine 1 Ether every 41.5 days. Mining also requires specialized machinery and a large amount of technical knowledge to begin. 

Trade Ethereum

Trading Ether is a method you can use to make money from Ethereum with a much lower entry bar. Trading Ether is similar to buying and selling shares of stock.

To get started, you’ll open an account with a cryptocurrency exchange that supports the purchase and sale of Ethereum. Fund your account with fiat currency. When you believe the price of Ether is low, convert your fiat currency into Ether. Traders then convert their Ether back to fiat (or to a stablecoin like Tether) when the price of Ether rises again.

Like all cryptocurrencies, Ether can show exceptional volatility. This allows traders to capitalize on small, short-term price movements throughout the month or day. The specific analysis and charting tools will vary depending on the broker you choose and the broker’s unique trading platform. 

If you do decide to take a short-term approach, such as day trading crypto, you should also be mindful of fees and commissions, which can quickly cut into your profits. 

Stake Ethereum

Ethereum staking is the process of participating in the Ethereum network by depositing a certain amount of Ethereum as collateral to support the network's operations and transactions. You can stake by yourself or by pooling your Ether together with other owners in a mining pool. In return, stakers are rewarded with additional Ethereum tokens for their contributions. Staking helps to secure the network by incentivizing participants to hold a stake in the system and follow its rules. This mechanism is essential for maintaining the integrity and stability of the Ethereum blockchain.

When you initiate a transaction on the Ethereum network, your transaction is only finalized after it is recorded on the blockchain. To prevent double spending, your transaction must be verified by the proof-of-stake network, which involves multiple computers on the blockchain confirming your transaction before the transfer is finalized.

As a validator, you are responsible for storing data, processing transactions and adding new blocks through mining. In exchange, you’ll earn a small percentage of the “gas” fee that users pay to initiate actions on the blockchain.

In order to become a validator, you must already own some Ether. Staking is not risk-free — you may lose the Ether you put up as collateral if you fail to validate legitimate transactions, validate illegitimate transactions or put the pool at stake by going offline. 

Ethereum Faucets

An Ethereum faucet is a reward system that allows you to earn Ether for completing online tasks. These tasks are usually very simple — for example, solving CAPTCHA problems. In exchange for completing tasks, you’ll be rewarded with a small amount of Ether. An Ethereum faucet can allow you to earn Ether without an expensive mining rig or spending hundreds in increased electricity costs.

Ethereum faucets are funded by companies that gain ad revenue from the pages offering these tasks. The company then funnels a portion of its advertising revenue back into the program to offer more Ether. Thus, the companies that fund faucets are the primary beneficiaries. Though there are very few start-up costs associated with using an Ethereum faucet, the amount of Ether you will gain will be very small. 

Buy and Hold (HODL) Ethereum

HODLing refers to the practice of holding onto your cryptocurrency assets for a long period of time, rather than actively trading or selling them. The term originated from a misspelled forum post in 2013 where a user declared they were holding onto their Bitcoin despite market fluctuations. The idea behind HODLing Ethereum is to weather the price fluctuations and market volatility in the hopes that the value of Ethereum will increase significantly over time. By holding onto your Ethereum, you are betting on its long-term potential and resisting the urge to sell during market downturns.

This is the most popular way to earn money from Ethereum. If you do decide to take a long-term approach to investing in the Ethereum network, it’s a good idea to store your tokens on an off-broker wallet. A cryptocurrency wallet provides you with an enhanced layer of security for your tokens, as these digital wallets are significantly more difficult to hack when compared to a brokerage account.

Ethereum Lending

Ethereum lending refers to the practice of lending out Ethereum cryptocurrency in exchange for interest payments. This allows individuals to earn passive income by loaning out their Ethereum to borrowers who need it. Borrowers typically use the borrowed funds for margin trading, short selling, or simply to have access to additional capital.

ETH lending platforms facilitate these transactions by connecting lenders with borrowers and managing the loan agreements. By lending out Ethereum, individuals can potentially earn a return on their idle cryptocurrency holdings without having to actively trade or invest.

Is It Worth Investing in Ethereum?

Ethereum can be a good investment, but remember, it is a speculative investment. Like any speculative investment, you might lose your money. 

The overwhelming performance of Ethereum has attracted traditional and institutional investors alike. Ethereum and other cryptocurrencies provide you with the following advantages over traditional investments:

• Liquidity. Ethereum is arguably one of the most liquid investment assets due to the worldwide establishment of trading platforms, exchanges and online brokerages. You can easily trade Ethereum for cash or assets like gold instantly with incredibly low fees. The high liquidity associated with bitcoin makes it a great investment vessel if you’re looking for short-term profit. Digital currencies may also be a long-term investment due to their high market demand.
• Lower inflation risk. Unlike world currencies — which are regulated by their governments — Ethereum has a transparent inflation plan and is subject to less risk. The blockchain system is infinite, and there’s no need to worry about your cryptos losing their value.
• New opportunities. Ethereum and cryptocurrency trading is relatively young — new coins are becoming mainstream on a daily basis. This newness brings unpredictable swings in price and volatility, which may create opportunities for massive gains.

Best Cryptocurrency Brokers for ETH

Various brokers provide access to the cryptocurrency market, with many offering the ability to buy and sell Ether. Some brokers focus on a variety of cryptocurrencies, while others allow trading of major cryptocurrencies along with stocks and funds.

The broker you choose will dictate your trading platform, fees and the assets you have access to. Not sure where to begin your search? Consider a few of our favorite cryptocurrency brokers that support Ether below.  

Add Ethereum to Your Portfolio

With one of the first decentralized technology forefronts and an impressive infrastructure, an Ethereum investment can be a unique addition to your overall portfolio. However, it’s important to remember that the value of the Ether token is never guaranteed. 

If you do decide to invest in the Ethereum network, its token should only make up a small percentage of your overall portfolio. Use our guide to get started making money with Ethereum now.

Frequently Asked Questions