How To Make Money With Cryptocurrency (Without Getting Lucky)
This post, how to make money with cryptocurrency, takes what I learned from studying Naval Ravikant’s works (tweets/podcasts/books) on “How To Get Rich (Without Getting Lucky)” and applies them to the cryptocurrency industry.
What I like about Naval’s advice is that it is timeless principals rather than specific advice or fad chasing.
In reading this article on how to make money in cryptocurrency, I hope you not only learn about some big picture crypto strategies, but also receive the cliff notes on the knowledge I received reading Naval’s book.
For the record, none of this is investment advice. I am not uber rich like Naval. I simply want to share what I have learned from reading “How To Get Rich (Without Getting Lucky)” and reframe it to apply to the crypto and blockchain world.
Naval Ravikant’s How To Get Rich (Without Getting Lucky)
Naval Ravikant released a tweet storm that went viral because of its wise wealth creation principals: https://twitter.com/naval/status/1002103360646823936?lang=en
He has since been guests on many podcasts that focus on breaking down that tweet storm further.
Someone then took one of those podcasts and (with permission) turned it into the book “How To Get Rich (Without Getting Lucky)”
The fact that so many Twitter users, and then other influential podcasters + an author found this media so impactful that they ran with it – made me want to give the book a read. It was great.
Wealth Creation Principals
There is a lot to unpack in the tweet storm so we won’t cover it all. If this article, How to make money with cryptocurrency, resonates with you – I recommend you read the book.
What we’re going to focus on is the term Business Leverage and how it applies to the four buckets of wealth creation:
Capital, Labor, Media, and Tech
We’ll go over what Naval has to say about them in general and then we’ll look at examples and concepts within the blockchain and cryptocurrency industry to further drive home the point.
What is Business Leverage
Naval defines leverage as “a force multiplier for your judgement”. What he means is that the more leverage you create the more important your decisions are. The more you can do / the more wealth you can create by simply making a 2 second decision as opposed to working an 8 hour day.
He argues we live in an extremely leveraged society. That is why a CEO of a major corporation will make so much money. If their judgement is just .01% better than the next person, when dealing with the leverage of a 100 Billion Dollar company, that better judgement really adds up.
Now that we’ve quickly defined leverage, we can get to the meat of this post which is analyzing the 4 buckets of wealth creation and how they apply to – how to make money with cryptocurrency.
Wealth Creation Principal: Capital
Capital is perhaps the oldest form of leverage and wealth creation. It simple means you use your money to make money.
Investing your capital in passive income / growth opportunities is an awesome way to build wealth, but the problem is… you need capital to do it.
For that reason, Naval calls capital “permissioned leverage.”
While no one specifically gives you permission to be rich – not everyone can use this strategy. You need to come across some money first.
So while Capital is the oldest strategy for making money (and perhaps easiest in terms of time/work?) it might be the last of the four principals you focus on for how to make money with cryptocurrency.
That being said..
How to Make Money with Cryptocurrency using capital
Defi.
The crypto world is ripe with opportunities for earning massive APRs and passive income — if you have the initial base of crypto to make it happen. It is not uncommon to earn 100%+ on your money in the crypto world.
NOW, please be careful. It is not uncommon for that defi protocol to go bust and fall to 0 – losing not only your earned interest but also your initial principal.
Risks are certainly present in the defi world, but that is what makes for the outsized rewards. And if you pick the right protocols, and the right teams solving real problems and building real companies – your capital can definitely make you rich.
An analogy I often like to use for the cryptocurrency/defi world is that it’s like if 1000s of new banks are opening every day in your neighborhood. They all need new users. So they all are offering that special sign up bonus.
In defi, that special sign up bonus is the 500%+ APR for the first couple months you’re staking your coins, or providing liquidity to a new token pair.
The Risk and Reward of Defi
Defi is risky and you’re trusting new products and tokens, but if those tokens take off, and you were in there first: Your capital in the crypto world can work wonders for you.
On top of that, there are plenty of (relatively) safe opportunities to earn 10% on stable coins and more established cryptos like ETH or wBTC. Stable coins are crypto tokens that are pegged to the US Dollar. They are in high demand by traders, and you can lend them out on decentralized or centralized exchanges. You can even mint a stablecoin using a MakerDAO CDP, one of the most popular defi applications.
While this is seen as relatively safe, it is not without risk. Anything with high reward is going to have an element of risk, so please do your own research.
It’s too much in this article for me to dig into true Defi – follow me on YouTube where I get into those things – but there are some more familiar centralized ways to earn high rewards on your crypto.
Wealth Creation Principal: Labor
Labor is another form of a permissioned resource. At the basic level of labor, you need permission to work for someone. They need to decide to hire you and pay you.
To add leverage to this “labor” bucket you need people to work for you. That too is permissioned as they need to decide they want to work with you and follow your lead.
With labor, if you are working yourself, you only have so many hours in the day. If you build a company and have others working for you, you earn a piece of their earnings and are therefore working more hours than you could on your own by “scaling yourself”.
Like the Capital concept, Labor is a relatively old source of wealth building. However, Crypto does provide some interesting additions to the mix.
How to Make Money with Cryptocurrency using Labor
As a first step, you can get a job in the blockchain industry to use labor to make money with cryptocurrency. There are tons of jobs out there for most traditional skillsets. Marketing, operations, HR, community management, and of course blockchain development.
In fact, blockchain developers are some of the most in demand skills in the world right now. If you can code in solidity, rust, react js, or really any language you’re in a good spot.
If you’re a developer looking for a job in the blockchain world reach out to jack@peerthrough.com, our head of blockchain recruiting and placements.
I personally used to work at ConsenSys from 2017 – 2019 in the marketing department. That was “earlier on” in the blockchain industry and I was thrilled to find a role that wasn’t developer related. Here is a video I sent out the entire company when I was hired:
I have since left ConsenSys and my team and I run a blockchain staffing firm and make beautiful blockchain explainer videos for token sales and such. Check out our work here.
The Less Obvious “Labor” Opportunity in the Blockchain World
Mining.
Some would argue Mining is tech. It is very technical. However, I would classify cryptocurrency mining as Labor as opposed to tech when it comes to framing the activity into one of the four principals of wealth creation that Naval Ravikant lays out.
The reason being is, while mining is highly technical and (usually) permissionless, it is not infinitely scalable. If you want to add more mining power you need more Proof of work computers, or to run more proof of stake validators.
With mining, your marginal cost doesn’t really decrease as you scale. At least not drastically. Mining is not infinitely scalable.
For that reason, I consider mining to be within the Labor principal. It’s like having a bunch of little robots working for you 24/7. The good news is – if you can figure out how to set them up – you don’t have to convince them to follow you. So mining is relatively permissionless. However, you do need capital to scale each step of the way.
So let’s get into the new wealth creation principals that offer “permissionless leverage”
Wealth Creation Principal: Media
Media is the first form of “permissionless leverage” and it is the “leverage behind the newly rich”.
The advent of blogging and YouTube has enabled (almost) everyone to create media that could theoretically reach the entire world. No one has to give you permission or hire you to write a blog.
Assuming you’re able to read this blog post, you’re able to write your own blog post. Or make your own video or start a crypto podcast.
The world wide web is permissionless and scalable. If you make a video, it costs you nothing extra for the 1 millionth person to watch it as it does the 1st. For that reason, your media works for you and spreads your brand, your message, and your products while you sleep.
There are tons of ways to monetize content once you have created a large enough audience. This can come in the form of ad revenue, affiliate marketing, selling your own product, or just receiving access to better deals and people because of your increased presence and authority on a subject.
How to Make Money with Cryptocurrency using Media
An interesting and powerful aspect of cryptocurrency as it relates to media and creators is that it gives you an audience and community to create for.
For instance, if you make a video praising Doge coin — odds are, people in the Doge community will watch it and retweet it etc. The reason for this, is crypto aligns the incentives of individuals holding the same assets.
This is both a good thing and a bad thing.
Communities working together for an honest cause, and attempting to educate or promote an actual product are great. People simply setting up pump and dump schemes or hype-y meme ideas are not great.
I have been in the Crypto space for quite some time now, and I’ve always balked at creating media within crypto because you don’t want to just “shill” a bunch of shit. And the truth is, the algorithms and social networks favor those who shill. If you want to grow your channel fast, pander – but expect your channel to also not last long either. Take the long term approach.
Media is Massive.
If you take a long term approach, and use it to build your brand rather than chase the quick fad it will build your brand and make more money in the long run, by presenting honest opportunities and true followers.
Personally, I’ve decided to just make videos about the things I’m interested in. I take a big picture concept approach rather than focus on a coin that will 10x tomorrow. But the truth is there are a million ways to go about creating media. Despite some wins, like this blog post on how to create an NFT collection, I’m still figuring it out.
My recommendation would just be to start creating it and be as honest as you can. You’ll get better as you go and the opportunities and ad revenue will come.
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Wealth Creation Principal: Tech
Creating a piece of technology through code is the most powerful form of permissionless leverage.
Software is infinitely scalable and if it solves the right problem or has enough users founders can monetize software to an extreme level.
I don’t think I need to point to all of the billionaires who got that way by creating apps and platforms that have millions of users all funneling money toward them and their companies.
These founders and companies are making money 24/7/365 via their lines of code and the marginal cost for a new customer is usually quite small.
How to Make Money with Cryptocurrency using Tech
Blockchain has further increased the leverage of technology. Small groups of people or even single individuals are building decentralized exchanges that are replacing traditional stock markets.
Uniswap is doing almost a billion dollars a day in trading volume. This is generating 30 million dollars a day in revenue. That’s insane.
It’s all happening because they figured out how to create a decentralized trading system through lines of code. This code is open 24/7 and doesn’t even really need a physical location to exist.
Think of the stock market in the 1920’s with 1000s of traders and a huge physical floor of shouting. That’s all become tech.
In my opinion, the next “richest person in the world” to top Bezos and Musk will be a blockchain entrepreneur who creates the piece of tech that takes over much of the global financial trading ecosystem.
If you’re able to learn to code, not only are you extremely desirable to employers – you can execute on your own ideas / work closely with a cofounder and their ideas.
How To Make Money With Cryptocurrency Conclusion
Cryptocurrency and blockchain is a new and booming industry. You don’t have to cross your fingers and YOLO into a meme coin to make money. You can take a methodical long term approach across different wealth creation principals.
Hopefully this article gave you a good frame work on how to view the various opportunities in the blockchain industry.
Now remember – blockchain is new and there are a lot of wild risks and opportunities out there. Please be careful. Hopefully, by spreading your risk and focus across these 4 different buckets you’ll find long term success.
I wish you nothing but the best in your journey and thanks for reading!
Some links contained within this text are affiliate links. However, I only link to products I believe in. I also don’t let the idea of affiliate marketing govern what I write about, but if I’m already writing about things. Might as well leverage the media 🙂
