Guides & Analysis

Why You Should Diversify with Cryptocurrency

By July 29, 2020 No Comments

Diversify Your Investments With Cryptocurrency

While many people have become more savvy with their finances and their investments, many are still underutilizing cryptocurrency when building up and diversifying their investment portfolio. With more industries accepting cryptocurrency, now is as good a time as ever to invest. 

Diversifying is also regarded as the golden rule in investment. Diversifying your portfolio minimises risk, as investing all your money in one asset, opens you up to a crash. This is why crypto’s should be part of your portfolio and investment strategy. 

Why Should You Diversify? 

Simply put, diversifying lowers risk, and raises the chances of success. Everyone has heard the saying of “putting all your eggs in one basket”, when it comes to your money, that isn’t the best idea. 

Splitting your investments across multiple assests ensures you don’t lose everything if there is a crash, as well as giving you more opportunities for success. There is still the chance that you could lose, but smart diversification will lower that risk. 

Why Diversify with Cryptocurrency? 

One of the biggest reasons to invest with Bitcoin, is the fact that it’s still early enough to do it. Many people are under the impression that they have missed the boat since the massive lows and then huge spikes and rewards have happened over the past few years. 

This isn’t true, it is still a great idea to invest in cryptocurrency, the market is still growing and evolving, the fundamentals of its success are still strong, and it is becoming more and more appealing to the everyday person. 

Many people believe that long-term crypto investments are the best option. The main advantage of this is that you only have to buy the cryptocurrency, and then you just leave it to simmer. There is no need to pay transfer or trading fees, just the initial investment and nothing else. 

Investing long-term with crypto’s also has historical data to back up why it is the best strategy. HODL’ing (the crypto term for holding onto your investment) has proven to achieve great ROI the longer you hold onto your crypto’s, yes the market fluctuates, but there is always an upwards trend. 

Short term investing involves you watching the market so that you don’t miss that massive spike and gains. Long term investing allows you to sit back, and let the maret do the work for you, as you will enjoy your gains later on down the line. 

Another important aspect is security. As your cryptos aren’t kept on an exchange, but rather in your crypto wallet there is little to no chance of a hack stealing your money. Whereas many hacks and thefts have taken place during exchanges. 

How to Invest With Cryptocurrency 

The first thing you are going to need is a wallet. A cryptocurrency wallet is simply an online wallet where you store your currency. These wallets connect to your bank account and allow you to easily manage and trade your crypto’s.

The next step is to link your bank account. Much like having your account linked to an online store like Amazon or the like, your wallet needs access to your account so that you can get funds, as well as deposit funds after a sale. 

There are also the more old school hardware wallets, which are similar to flash drives. These wallets allow you to store your currency offline. This is also a much more secure option, as it makes a hack and theft very unlikely. 

The third step you should take is to join a Bitcoin exchange. An exchange like this allows you to trade cryptocurrency for recognised currency, such as Dollars or Pounds. There are many exchanges available, each offering different rates. 

Once you have set all this up and familiarized yourself with it all, the next thing you can do is buy your first Bitcoin, or part of one. A whole Bitcoin can cost thousands, but you are able to buy a part of one, up to 8 decimal players. 

These are called satoshi, and allow almost everyone to be able to afford and buy into the cryptocurrency. This also allows you to build up your wallet until you eventually have a full Bitcoin. 

This means you don’t have to invest all your money or all your savings in one go, as you can still get the benefit of owning crypto’s without having to own a whole one. Brilliant for young people new to investing or those who are still sceptical but want to try it out. 

Cryptocurrency has definitely taken the world by storm, and is still as strong as ever. The hype may have died down of late as the massive spikes and gains, as well as the incredible drops haven’t happened in a while, but that doesn’t mean crypto’s are now a bad investment.

Considering there are also multiple kinds of cryptocurrency, which all work slightly different and all have different frameworks, once you become familiar with the world of crypto’s, you will be able to see which one works best for you, which has the most potential, and even strike gold when one explodes and you’ve been holding onto a lot of it. 

Diversifying with crypto’s is definitely a must in this day and age, and the fact that you can minimize risk, and be rewarded handsomely for holding onto your investment, makes it a great idea for new investors, as well as seasoned pros.