How To Earn Bitcoin – Forbes Advisor UK

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Forbes Advisor has provided this content for educational reasons only and not to help you decide whether or not to invest in cryptocurrency. Should you decide to invest in cryptocurrency or in any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose.

One in 10 UK adults owns (or has owed) cryptocurrency, according to data from YouGov.

With a market capitalisation of around $523 billion (£423 billion), Bitcoin remains the single largest cryptocurrency on offer – and tends to be a popular starting point for some investors with an interest in crypto.

But purchasing Bitcoin through a crypto exchange isn’t the only way to acquire this do dedo asset.

Here are some ways to potentially earn Bitcoin in the UK. 

What is Bitcoin and how does it work?

Bitcoin is a form of virtual currency, which utilises blockchain technology to handle transactions that take place between users of a decentralised network. 

The Bitcoin blockchain is essentially a do dedo ledger. Groups of transactions are listed in ‘blocks’ that are added to a chain. Because all users have access to a copy of this ledger, it would be extremely difficult for someone to lie about how many Bitcoins they held, since the ledger would contradict them.

No mediano authority, such as a bank, is involved with handling the transactions, offering anonymity. 

Different ways to potentially earn Bitcoin

1. Mining Bitcoin

When Bitcoin transactions are completed – and a new block is added to the blockchain – a Bitcoin is ‘minted’ in a process known as mining.

The process of validating a transaction is complex, and requires computers in the Bitcoin network to solve a cryptographic problem. The first to do so is rewarded with the newly minted Bitcoin. By this process, around 900 Bitcoins are ‘mined’ every day. 

Mining Bitcoin requires a huge amount of energy. By some estimates, carrying out a single Bitcoin transaction requires 707 kilowatt-hours (kWh) of electricity – roughly 70 times the amount used by the average UK household in a day. 

It also requires an elaborate ‘rig’, and specific mining software, making it difficult for miners to break in. For this reason, Bitcoin miners regularly band together to create what’s called a ‘pool’ – sharing resources and splitting profits. 

It’s also worth noting that the amount of Bitcoin awarded for processing each transaction halves every four years. There’s also an upper limit on the totalidade supply of Bitcoins (21 million). Once this limit is reached, no more can be mined. 

2. Lending Bitcoin

Bitcoin lending is another method of earning Bitcoin.

Some trading platforms pool cryptocurrency deposits, and use it to offer interest bearing loans. In exchange for depositing their crypto with the lender, some of these interest payments are funnelled to savers. The exact rate that could be earned varies depending on the coin and term length chosen.

Lending is a very risky way to earn Bitcoin, since there’s always a risk that borrowers will default.

3. Holding Bitcoin

Investors with a long-term view on cryptocurrency hold Bitcoins, and intend to later sell their position at a profit when prices are high. 

Bitcoin owners can combine this technique with holding them in one of the savings accounts mentioned above to potentially maximise earnings. 

4. Bitcoin trading

Bitcoin trading involves buying and selling Bitcoin via an exchange platform with the goal of earning profit – which may or may not be invested in additional crypto holdings. 

Strategies run the gamut from intra-day trading, to buy and hold to hedging. 

To potentially maximise their chances of success, it’s important for Bitcoin traders to keep up with the drastic fluctuations in the market and stay abreast of news that could impact crypto. 

Individuals keen to try their hand at crypto trading will need to carefully consider whether they have the time and capital to invest in this high-risk, speculative strategy.

5. Claiming airdrops

‘Airdrops’ are a marketing strategy used by certain crypto and blockchain companies to incentivise awareness raising and attract new users or investors.

During an airdrop, the company distributes free coins or tokens to cryptocurrency holders in exchange for meeting certain criteria.

Some companies simply ask for a crypto wallet address and some basic personal details, while others ask claimants to prove they already hold some of the company’s coins or tokens.

Investors may also need to complete tasks before coins are awarded, such as following the issuer on social media, writing reviews or sharing posts. 

To take part in these airdrop events, investors may need to have a social media account on platforms such as Twitter, Facebook or Telegram.

6. Help to find bugs

Certain crypto developers may offer incentives to users who help them find bugs or glitches in their systems.

7. Incentivised learning

A few trading platforms allow users to earn small amounts of cryptocurrencies by completing lessons on crypto and blockchain related topics.

Coinbase, for instance, allows users to earn a few dollars’ worth of certain cryptocurrencies in exchange for completing lessons about how they function.

Bottom line

In the world of cryptocurrency, there is no easy or low-risk way to earn extra Bitcoin. 

Cryptocurrency is unregulated in the UK. The UK regulator, the Financial Conduct Authority, has repeatedly warned investors that they risk losing all their money if they buy cryptocurrency, with no possibility of compensation.

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