Can Someone Get Rich on Blockchain Today? Five Ways to Find Success with Crypto
Since the bitcoin price spike of late 2017, many have dreamed of getting rich off cryptocurrency. Most that seek this path to wealth are likely to meet a path full of fraught and disappointment. However, the occasional story of runaway success keeps investors chasing the seemingly unobtainable dream.
Here are five ways one could possibly succeed in crypto.
Come Up with the Next Big Crypto Idea
Crypto is largely a “if you build it, they will come” type of industry. With everyone seeking to get rich, the next big idea can potentially be worth millions, if not billions.
The computer hardware-simulating platform EOS.IO, for example, currently holds the record for the largest initial coin offering (ICO) in history. The scalable and free decentralized application and storage ecosystem which seeks to be a “better Ethereum” managed to raise $4.1 billion by its public launch in 2018. EOS.IO took the record from the social media app Telegram, which raised $1.7 billion in February.
While the question of ICO legality is still being debated, the notion that one can create a startup with a knockout premise and make a fortune in the crypto sphere is well-founded. Since the first ICO Ethereum raised over 25,000 bitcoin (over $150 million in today’s dollars), there has been a recognition that genius and creativity can means big bucks if the person has the talent and the drive to make his creation a reality.
If one was to get into the crypto startup game today, he/she might want to brush up on securities law. With the popular opinion being that most non-decentralized crypto assets are, in fact, securities, it is important that one understands his/her liabilities and if it is lawful to sell the asset in certain territories without the proper due diligence. For example, it is illegal to sell a secured asset to the public in the United States without registering it with the Securities and Exchange Commission, filing compliance paperwork, and submitting the asset to the various state-based agencies.
This is not to discourage the hundreds of startups that seek to break through, and it shouldn’t discourage you. It is believed that only 44 percent of all crypto startups survive funding, and even if you get through your ICO, you still stand a less-than-remote chance of having a token price that breaks a dollar – should you make it to the market. But, if you do make it, only imagination can dictate how high you could reach.
If lustful dreaming is not your thing, there is always proof-of-work mining. While your chance of getting rich of a top-ten cryptocurrency is moot – in most parts of the world, mining bitcoin will yield you a net loss due to energy prices, actually – one can theoretically find a relatively new coin to mine and hope to hit it rich.
This is notably fraught-bound. Of note:
- There are only a few cryptocurrencies that break the one dollar per coin threshold. Most stay as “penny stocks,” trading at a fraction of a cent for the length of their stays on the crypto market. This can be due to a lack of positive marketing and audience enthusiasm, problems with management or the due diligence of a project, production problems, or simply bad luck. Despite the rationale, the coin never “broke through.”
- Some coins do “break through,” but only temporarily. It may be due to increased speculation following positive press about an endorsement from an industry stakeholder, the release of the company’s product or service, new talent acquisition, or anything that increase the investor appeal of the project. Typically, these “breakthroughs” manifest as a sudden spike in the coin’s price. As many early adopters, waiting for this rise, will opt to sell off at this point, the spike collapses and what should have been a price plateau in the traditional market becomes a very sharp price decline.
- Most new projects are abandoning proof-of-work for proof-of-stake. Proof-of-stake allows for faster transaction times at lower transaction fees. Also, proof-of-stake is less likely to be hacked. As proof-of-stake is pre-mined, this will leave fewer opportunities for miners in the future.
- Mining, even a relatively new cryptocurrency, will require an adequate rig. A desktop computer with a strong GPU, a multithreaded CPU, and at least 16 megabytes of memory is the bare minimum. The more powerful your rig, the more likely you are to find a block.
If you wish to mine your way to fortune, it would pay to pay attention to the wisdom of gold miners: choose your plot carefully, have the right equipment, protect your claim, know what you are doing, and be patient. Despite rumors to the contrary, no one got rich off crypto overnight: it usually took a lot of work, a lot of commitment, and many sleepless nights to build a crypto fortune.
For those more comfortable mining the financial pages than a cryptographical hash, investing offers a way to cash in on crypto. The number of crypto related products – including investment baskets featuring cryptocurrencies and crypto derivatives – that have shown up on the traditional commodity market has skyrocketed in recent months. This follows the news that many traditional investment firms, at the request of their customers, are seeking to offer cryptocurrency products as portfolio items.
This is a high-risk endeavor. The common thinking with crypto investing is to invest no more than you are willing to lose.
From the New York Times: “Pete Roberts of Nottingham, England, was one of the many risk-takers who threw their savings into cryptocurrencies when prices were going through the roof last winter. Now, eight months later, the $23,000 he invested in several digital tokens is worth about $4,000, and he is clearheaded about what happened.”
“’I got too caught up in the fear of missing out and trying to make a quick buck,” he said last week. “The losses have pretty much left me financially ruined’”
“Mr. Roberts, 28, has a lot of company. After the latest round of big price drops, many cryptocurrencies have given back all of the enormous gains they experienced last winter. The value of all outstanding digital tokens has fallen by about $600 billion, or 75 percent, since the peak in January, according to data from the website coinmarketcap.com.”
During the 2017 price spike, many people became enamored with the notion of overnight crypto wealth. The reality is that those who invested in the spike were likely to lose their stake. If you must invest in crypto, do your due diligence, do not expect miracles, and be prepared to lose everything. There are some that makes a good living crypto investing, but they do not do it by being stupid.
The best way to make money on the crypto market and possibly the easiest for the novice is early staking or investing in crowdsales and first offerings of new tokens and coins. A key feature of ICOs is that it allows investors early access to a crypto asset at a price typically lower than the market insertion price.
“An ICO, also called a token sale, token generation event or initial token offering, is an event in which an organization sells digital tokens for the purpose of obtaining public capital to fund software development, business operations, business development, community management or other initiatives,” TechCrunch reports. “Tokens are cryptographically secured digital representations of a set of rights. Depending on the token, this could include the right to access and use a network or software application, the right to redeem the token for a unit of currency or a good, the right to receive a share of future earnings, the right to vote on decisions made by the organization or more.”
“As organizations continue to raise tens, sometimes hundreds, of millions of dollars in ICOs, it grows increasingly important for industry leaders and policymakers to understand the ICO economic and regulatory landscape and the technical lingo of the cryptocurrency and ICO space. There are concerns that the lack of regulation and control around this form of fundraising is risky for consumers, especially as the ICO model begins to attract mainstream retail investors.”
Ethereum, for example, sold at one dollar when it was first offered. It now sells for more than $200. This type of gain bears great risk in large part due to the lack of regulation and mandatory due diligence and must be treated with caution. However, for those that choose well and is bold, the potential for wealth is there.
While this article, by no mean, is encouraging anyone to engage in anything illegal, it would be remiss if it did not point out the obvious. The lack of oversight, as well as retroactive security measures, make crypto prime real estate for hackers. Have it be scams, wallet thefts, or exchange hacks, crypto thefts have been on the rise.
So, how acute a problem is hacking? Well, The Next Web has reported in 2017, just one group – the North Korean hacker outfit “Lazarus” – stole $571 million in 2017 alone. The majority of “Lazarus” targets were exchanges in South Korea.
The rise in crypto attacks, which hit $880 million worldwide last year and will likely top that this year, is – in part – the United States government’s fault. The leaking of the National Security Agency’s “EternalBlue,” a software package designed to exploit vulnerabilities in Window-ran systems, has created an extreme jump in hacking activity. This is despite “EternalBlue” being used in two major global attacks – WannaCry and NotPetya – and despite a patch for the exploit being available for at least 18 months.
While outright theft is a major concern, another is the theft of computer resources by means of mining hijacking. A piece of malware could install a mining script onto a computer, forcing it to mine crypto without the system’s owner knowing. Such a setup can add wear and tear to a system and ultimately force a system to heat up and break down. Typically, most hijack systems mine Monero for its privacy and anonymity.
“The threat of illicit cryptocurrency mining represents an increasingly common cybersecurity risk for enterprises and individuals,” the Cyber Threat Alliance reports. “As the values of various cryptocurrencies increase and their use becomes more prevalent, malicious cyber actors are using computers, web browsers, internet-of-things (IoT) devices, mobile devices, and network infrastructure to steal their processing power to mine cryptocurrencies. Cryptocurrency mining detections have increased sharply between 2017 and 2018. Combined data from several CTA members shows a 459 percent increase in illicit cryptocurrency mining malware detections since 2017, and recent quarterly trend reports from CTA members show that this rapid growth shows no signs of slowing down.”
“While the theft of computing cycles to make money may sound relatively benign in the face of other kinds of cyber incidents that can encrypt your data for ransom, steal your intellectual property, or disrupt important functions of critical infrastructure, it is a threat that cybersecurity providers and network defenders must address together to improve our overall cybersecurity.”
“Business owners and individuals must understand the potential impacts of illicit cryptocurrency mining on their operations. In its most basic form, illicit mining is a drain on the resources in anyone’s enterprise, increasing the workload and the risk of physical damage on IT infrastructure, causing higher electrical bills, and decreasing the productivity of the business operations that rely on computing power.”
“Most importantly, the presence of illicit cryptocurrency mining within an enterprise is indicative of flaws in their cybersecurity posture that should be addressed. The majority of illicit mining malware takes advantage of lapses in cyber hygiene or slow patch management cycles to gain a foothold and spread within a network. If miners can gain access to use the processing power of your networks, then you can be assured that more sophisticated actors may already have access. Illicit cryptocurrency mining is the figurative canary in the coal mine, warning you of much larger problems ahead. CTA members recount case after case of being called in to an incident response for a mining infection and finding signs of multiple threat actors in the network.’