Cryptocurrency: Earnings on “virtual money” – the main aspects

Cryptocurrency, experts say, provides many opportunities for making money online. Moreover, exchange cryptocurrency to cash or withdraw to a card is not particularly difficult today. Whether we are talking about the well-known bitcoin or some other little-known representative of the virtual «money family».

But of course, such a “method of making money” is quite difficult and requires certain knowledge — it is… in many ways… a profession in which, in order to be successful, desire alone is not enough. Financial market mechanisms, legal subtleties, psychology of achieving goals, etc. — experts say that the cryptocurrency business consists of little things, but each of which works (or does not work) for the result.

If we talk directly about the main ways of earning money on cryptocurrency, there are several of them:

Trading (trading):

• Short-term trading: buying and selling cryptocurrency for short periods of time to profit from price fluctuations.
• Long-term investing: buying cryptocurrency and holding it for a long period of time in the hopes of its value increasing significantly.

Mining:

• Mining: Using computing power to solve complex mathematical problems that verify transactions on the blockchain. Miners are rewarded with cryptocurrency.
• cloud mining: renting computing power from specialized companies, which allows you to mine cryptocurrency without having to purchase expensive equipment.

Staking:

• staking: holding a certain amount of cryptocurrency in a wallet to support the blockchain (Proof-of-Stake). In return, you receive a reward in the form of additional coins.

Yield farming:

• Yield farming: Providing liquidity to decentralized finance (DeFi) platforms and receiving rewards for it. This may include pledging your assets as collateral or participating in liquidity pools.

Altcoins and ICOs:

• Altcoins: Investing in Lesser-Known Cryptocurrencies with Growth Potential
• ICO (Initial Coin Offering) and IDO (Initial DEX Offering): participation in initial offerings of new cryptocurrencies, which allows you to purchase them at early stages at low prices.

Lending (crediting):

• Cryptocurrency lending: lending your assets to other users through decentralized or centralized platforms and earning interest for it.

NFT (Non-Fungible Tokens):

• NFT trading: buying and selling unique digital objects (e.g. art, game items) on specialized platforms.

Arbitration:

• Arbitrage: buying cryptocurrency on one exchange at a low price and selling it on another exchange at a higher price, using the difference in rates to make a profit.

Each of these methods has its own characteristics and risks, and it is important to study them carefully before starting the activity.

Earnings on cryptocurrency — legal aspects

In Russia, cryptocurrency legislation is still in development, and not all aspects of regulation are fully defined. However, some ways of interacting with cryptocurrency in Russia have a clearer legal status. What you need to know here:

Features of the legislation:

• In January 2021, the law «On Digital Financial Assets» (DFA) came into force, which partially regulates the cryptocurrency market in Russia. This law prohibits the use of cryptocurrencies to pay for goods and services, but allows their purchase, sale and mining.
• The Central Bank of Russia opposes the use of cryptocurrencies as a means of payment, but supports the development of blockchain technologies.

Taxation:

• Income from cryptocurrency transactions is subject to personal income tax (PIT), the rate of which is 13% for residents of the Russian Federation. For non-residents, the rate may be higher.
• It is important to keep all documents confirming transactions with cryptocurrencies for the correct calculation of taxes and reporting to tax authorities.

To sum it up: although many ways to earn money on cryptocurrencies in Russia are legal, it is important to comply with all legal requirements, including income declaration and tax payment. Before starting an activity, it is recommended to consult a lawyer or tax consultant to avoid possible legal problems.

Exchange cryptocurrency for rubles

There are several ways to exchange cryptocurrency for rubles, each of which has its own characteristics and risks. Here are the main methods:

Cryptocurrency exchanges

• Centralized exchanges (CEX) provide a convenient interface for exchanging cryptocurrency for rubles. You need to register, go through the verification procedure (KYC), top up your account with cryptocurrency and then exchange it for rubles. You can withdraw funds to a bank card or e-wallets.
• decentralized exchanges (DEX): such exchanges do not require registration and verification, however, it is not always possible to exchange cryptocurrency for fiat money (rubles) on them. Most often they are used to exchange one cryptocurrency for another.

P2P platforms (Peer-to-Peer)

• such platforms allow users to exchange cryptocurrency directly with each other. These platforms provide the opportunity to choose offers from different users and agree on exchange terms that suit both parties. Funds are transferred via bank cards or e-wallets.

Cryptocurrency ATMs

• In some large cities there are cryptocurrency ATMs that allow you to exchange bitcoins (and sometimes other cryptocurrencies) for cash rubles. The addresses of such ATMs can be found on specialized websites.

Risks and precautions:

• reliability check: Before using an exchanger or P2P platform, be sure to read reviews and the service’s reputation.
• exchange rate: Compare exchange rates across multiple platforms to find the best one.
• commissions: Please note the exchange and withdrawal fees.
• safety: When making direct transactions, it is best to meet in public places and use secure methods of transferring funds. On P2P platforms, use escrow services that hold the cryptocurrency until payment is confirmed.
• legislation: Take into account legal requirements, including the need to declare income and pay taxes.

These methods will help you exchange cryptocurrency for rubles depending on from preferences and experience level. According to experts, the easiest way to exchange today is online exchangers.