Lately, mainstream finance has watched a new asset class surge, and countless savers wonder how to invest in bitcoin and make money without losing discipline on their broader investment plan. Interest in crypto has exploded, prompting beginners and pros alike to look for practical, safer ways to participate.
Driven first by Bitcoin’s rise, access to this digital asset has widened dramatically, making entry simpler than ever. In the guide below you’ll find the core paths people use to pursue profits and a plain-English overview of reporting rules and crypto tax basics to keep you compliant.
What Is Cryptocurrency and How Does It Work?
At its core, this family of digital currencies can be used to buy and sell things or treated as a tradable token much like a speculative commodity. While Bitcoin dominates headlines, the landscape contains thousands of coins, with well-known alternatives such as Ethereum and Tether sharing attention among investors.
By design, blockchain technology underpins these networks, and strong cryptographic methods make counterfeiting impractical. Records live on decentralized, peer-to-peer systems rather than a single server, which boosts resilience and reduces reliance on traditional intermediaries.
With encryption securing the rules, issuance of new units follows code, and every transaction can be verified by the network. When activity moves through an exchange or wallet, this shared ledger confirms movement without a central authority.
Before chasing gains, it helps to view coins as speculative instruments as well as payment rails, since that commodity-like behavior is what most investors attempt to harness.
Can You Make Money With Bitcoin?
For many newcomers, the first question is whether people truly made money here or if the trend is temporary. The reality is that fortunes have been built—and lost—by those who timed moves well and respected risk.
That said, the cryptocurrency market can swing hard; volatility cuts both ways and rallies of hundreds or even thousands of dollars have appeared within hours. Such rapid repricing is rare in most traditional investment assets.
Because prices can also fall sharply, planning for downside is essential when you buy and sell coins for profit.
How to Make Money With Cryptocurrency: Crypto Trading and Beyond
Trading remains the most visible way to seek returns, though success demands skill, patience, and a clear plan. Any investment in cryptocurrency carries meaningful risk and may trigger reporting obligations—qualified professionals at Porte Brown can explain how rules apply to you.
Once your accounts, security, and strategy are set, consider the following approaches that traders frequently explore.
Long-Term Holding (Buy-and-Hold)
Many investors choose a simple route: accumulate some bitcoin and keep holding until the price reaches their targets. This approach tries to capture big cycles rather than short-term noise.
Patience matters, because downturns can run through multiple seasons and sometimes persist into 2025 or beyond before momentum returns.
Collect Crypto Dividends
While you won’t get yield from Bitcoin or most large-cap coins, a few projects share revenue with holders in a dividend-like fashion. Examples include:
- Exchange revenue share — COSS (small-cap, fee-split model)
- Platform token with profit share — KUCOIN (exchange ecosystem)
- Gas-distribution framework — NEO (smart-contract network)
Operate a Masternode
Technically inclined users can run a masternode—a specialized server that maintains live blockchain records and helps validate blocks without proposing new ones to the network. Think of it as always-on infrastructure that supports a coin’s operations.
This role typically requires collateral: operators place a sizable stake of the cryptocurrency to qualify, which aligns incentives and discourages bad behavior.
Although setup and maintenance can be demanding, many networks reward masternode operators with periodic payouts for providing dependable capacity.
Intraday Trading
Short-horizon strategies applied to crypto resemble those in other markets: analytical rigor, strict risk controls, and discipline are must-haves for any investor trying to trade frequently.
- Range-bound set-ups — Watch momentum extremes, such as overbought or oversold areas, to anticipate potential reversals.
- Scalp entries — Use heavy turnover and, often, automation to capture small price moves within minutes.
- Cross-exchange gaps — See the arbitrage section below for a deeper explanation.
Because volatility can be elevated in digital asset markets, fast strategies often face wider swings than in blue-chip equities.
Arbitrage Across Exchanges
With exchanges free to set their own rates, prices sometimes diverge, creating spreads that can be surprisingly large. These differences arise from uneven liquidity and trading volume across venues.
An arbitrageur tries to buy on a cheaper marketplace and sell on a pricier one, net of transaction fees. This can involve centralized platforms or even decentralized exchanges, though execution, costs, and timing risk must be considered carefully.
Crypto Tax and Accounting: Rules and Regulations
Now that the ways to earn are clearer, remember that crypto tax treatment in the U.S. follows property rules, not foreign currency rules. Many common crypto transactions—when they create gains or income—are taxable events and need proper documentation.
- Paying for goods or services using coins
- Receiving tokens as wages, interest, mining proceeds, or staking rewards
- Swapping one cryptocurrency for a different one
- Converting coins back to fiat money
How much you owe depends on details such as holding period and whether the gain is capital or ordinary. The IRS continues to refine guidance; the Form 1040 question changed in 2020 and 2021, with further updates through 2024 and beyond.
Common Cryptocurrency Mistakes to Avoid
High upside attracts attention, but the path is not effortless. Few become instant millionaires, and careful planning—including help from a tax specialist who understands accounting for crypto—can prevent costly errors.
Treat this market like any other investment arena and steer clear of these frequent missteps:
- Expecting a guaranteed get-rich-quick outcome
- Ignoring the possibility of a severe drawdown
- Buying tokens you haven’t researched
- Diving into complex tactics—such as intraday trading or running nodes—without understanding the mechanics
- Concentrating the majority of your portfolio in crypto
Think of coins as a high-risk slice, comparable to speculative micro-cap equities; big upside exists, but so does meaningful downside.
Keep most long-term capital in dependable core holdings—such as diversified stock and bond funds or ETFs—and size crypto positions accordingly.
Conclusion: Investment in Cryptocurrency
Opportunities in this space can be substantial, and the right plan may help you turn market cycles into progress toward your financial goals.
Before implementing any approach to Bitcoin or other coins, speak with your accountant and consult a licensed advisor to confirm that the strategy aligns with your risk tolerance and objectives.
For personalized guidance, connect with Porte Brown—one of the leading CPA firms in Chicago—to discuss planning, recordkeeping, and how to navigate evolving rules with confidence.
