How to Make Money from Cryptocurrencies Without Buying Them
By David Zeiler , Associate Editor , Money Morning &bull, @DavidGZeiler &bull, October 31, 2018
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The puzzle of how to make money from cryptocurrencies just got a lotsbestemming lighter to solve, thanks to a soon-to-arrive toneel called Prism.
Anyone who has attempted to invest te cryptocurrencies knows how challenging it can be to buy and secure numerous cryptos at once.
After people buy their cryptocurrencies on an exchange, many avoid the hassles of setting up a wallet by storing their holdings on the exchange – and leaving their digital assets vulnerable to theft by hackers.
Those who download the digital wallets to their PCs find that wielding more than a few quickly becomes unwieldy, spil most cryptocurrencies each require their own wallet.
That’s where Prism, a project of the ShapeShift digital asset exchange, comes ter.
“Wij wished to do something better than either of those options, but do it ter a non-custodial way,” ShapeShift founder and CEO Erik Voorhees told Money Morning.
Prism uses the clever contract feature of Ethereum to permit customers to create their own hand-picked cryptocurrency fund. This permits investors to profit from their selected cryptocurrencies without the hassle of buying and storing the underlying digital assets, similar to how investors use exchange-traded funds te the stock-trading world.
Voorhees is a well-known innovator te the Bitcoin community. He’s also served spil head of marketing for early Bitcoin exchange BitInstant and wasgoed a co-founder of Bitcoin payment-processor and wallet company Coinapult.
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Voorhees created ShapeShift spil a place for people to exchange cryptocurrencies on a webstek without setting up an account (thus avoiding the cumbersome customer verification process other exchanges require).
And now he’s created Prism to make investing te cryptocurrencies lighter too. Right now the project is ter the testing stage, so access to Prism is by invitation only. But Prism is expected to go live sometime ter early 2018.
Here’s how it works…
How to Invest ter Cryptocurrencies the Prism Way
While the Prism practice simplifies investing te cryptocurrencies, it does require customers to own some Ethereum, since the system is based on Ethereum.
To get began, an investor needs to set up a Prism account and fund it with the Ethereum omschrijving of the amount they wish to invest. During the “beta” stage, the limit is Ten ETH, worth about $Trio,000.
ShapeShift doesn’t hold your funds, the brainy contract part of Ethereum controls the funds, which you can withdraw at any time.
You can choose up to 20 cryptocurrencies to include ter your Prism and assign by percentage how much value will be allocated to each asset. The process is similar to setting up a 401k retirement account. (See pic.)
The current test version of Prism has 45 cryptocurrencies available, but Voorhees said, “ultimately wij will have hundreds.”
But you’re not actually buying the cryptocurrencies.
Instead, each Prism wise contract is essentially a derivative contract. Its value is only based on the current prices of the underlying assets. ShapeShift doesn’t buy the cryptocurrencies, either. The prices are sourced from an “oracle,” an online juut that determines current cryptocurrency prices and is updated on the webpagina every few minutes.
You can loom te to the Prism webpagina to monitor the progress of your crypto-portfolio. Should you want to make any switches, such spil adding or deleting a cryptocurrency or rebalancing your holdings, there’s an option for that. The screen is essentially the same spil the setup screen. ShapeShift charges a 0.5% toverfee for each rebalance.
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To close your Prism, you send a transaction of 0 ETH to your Prism address, which signals the brainy contract that you’re ready to close out. You voorwaarde withdraw the entire value of the Prism. The closing toverfee is 0.05 ETH plus Two.4% of your portfolio.
The resulting ETH – your gains or losses – are then sent to your Ethereum wallet.
Prism is an innovative treatment to investing te digital assets, but some ter the cryptocurrency community have raised concerns…