Understanding Crypto Trading vs Crypto Mining

Richard Montana | August 15, 2022

Everyone who knows about cryptocurrencies often begins with the question, “how do I acquire crypto?” During its infancy, acquiring cryptocurrency was challenging. These days, you can own crypto by trading it, receiving it as payment, staking, and many other ways. While there are many ways to acquire cryptocurrency, trading and mining stand out as the best methods. Below, we compare these two methods and determine which is the best for you.

How Do I Acquire Crypto?

Essentially, if you want to own cryptocurrency, there are many ways to acquire it. The four basic methods are:

  • Mining
  • Trading (Buy or sell)
  • Receiving cryptocurrency from others as payment
  • Staking

Buying Crypto

You can buy cryptos through online exchanges like Netcoins and Coinbase or crypto marketplaces. Either way, buying Crypto is straightforward, direct, and less complex.

How Do I Buy Crypto?

How you buy a cryptocurrency depends on where you’re buying it from. To start, you need to have a digital wallet and a crypto account to enable you to store your crypto assets. Whether you’re buying crypto from an exchange or crypto brokerage, having an account also allows you to trade (buy, sell, transact, hold) your cryptocurrency.

In addition, crypto exchange platforms give you access to communities of like-minded people who are either novices or experts in crypto. These people can support you throughout your venture journey with ideas, knowledge, forecasts, and market trends.

Advantages of Buying Crypto

  • Instant: Like the exchange of fiat money, buying crypto is an instant transaction. Most can take as low as 15 minutes to complete.
  • Own any value: Most crypto coins allow you to buy any value from a fraction to a whole unit. For example, Bitcoin has a small unit value called Satoshi, equivalent to 0.00000001 BTC. Many people prefer to start their crypto journey with smaller units.

Mining Crypto

Crypto mining involves using algorithms, networks, and computer power to ‘create the coins’ or bring them into circulation. This involves two key things:

  1. Verifying crypto transactions on its supported blockchain. Miners have to accumulate recent crypto transaction blocks (blockchains) and solve a ciphered puzzle to return them into circulation.
  2. Releasing cryptocurrency (coin) into circulation. Using a technology called “blockchain reward”, solving a ciphered puzzle (verifying them) releases crypto coins back into circulation.

While many people mine the coins, only the first person to solve the puzzle (adding a block to the chain) earns a reward paid in the form of a crypto coin. A crypto coin’s value depends on the type of cryptocurrency. Two important things are involved in crypto mining:

  • Anyone can mine cryptocurrencies, as they’re decentralized and free from government (or anyone’s) manipulation or interference
  • Crypto mining requires three important things: powerful computer hardware, stable electricity, and a proper internet connection. This makes cryptocurrency mining a high-cost/equipment investment

Crypto Buying vs. Mining: Which Is Profitable?

It’s hard to say which option is the most profitable between mining and investing (buying). Mining might be profitable in the long run, but it requires a high initial investment to get started. It also requires knowledge of computers and programming to be successful. This makes it challenging for anyone to get involved in mining. Since cryptocurrency appears as a “gold rush” today, buying seems the better option to some, as it’s instant and can provide rewards (and losses) both in the short and long terms.

Endnote

There are more ways to acquire cryptocurrencies other than buying and mining. You can receive it as a reward, a payment, or a token, to mention a few. Whichever way you choose to obtain crypto, you’ll be among the people who’ve seen that it’s the mode of payment, trading, and investment for the future. Acquiring crypto now, could give you an upper hand if it is widley utilised for future transactions.

About the Author

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Richard Montana
Richard has many years of experience in broker research, testing, analysis and reviews. He knows what to look for through years of trading himself with different brokers and listening to the feedback of others.

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