We’re taking a look at how to diversify your cryptocurrency portfolio; why it’s important and how some savvy investors in the past few years have created value not by buying bitcoin and sitting on it, but by actively using it and taking advantage of opportunities to buy, hold and trade in altcoins.
As you build a cryptocurrency portfolio, consider taking advantage of up-and-coming altcoins while potentially reducing losses as the market continues to fluctuate.
Bitcoin is Just the Tip of the Iceberg
Bitcoin still tends to absorb the lion’s share of media attention on cryptocurrencies, but it is far from the only one making waves in the marketplace. ETH—the altcoin associated with the Ethereum protocol—has seen an appreciation over the last year that is in some respects more astonishing than Bitcoin’s own eye-opening marketcap.
Other popular altcoins include Dash, Litecoin, and Bitcoin forks such as Bitcoin Cash and Bitcoin Gold. By researching what’s out there and developing a portfolio that balances risks across a number of the most promising cryptocurrencies, you can capitalize on a flexible diversification strategy and guard against volatility.
No one can be sure of the exact price trajectory for any particular cryptocurrency. But the field is extremely active and innovative, and each is competing to fix technical flaws and improve implementation of blockchain technology.
Some Benefits and Drawbacks of Popular Cryptocurrencies
- Bitcoin (BTC) has first-mover advantages that are hard to replicate. As the world’s first peer-to-peer decentralized digital currency, it has greater recognition than all the other cryptocurrencies put together. BTC benefits from network effects, meaning that it has gained additional value as more people use it. This helps with everything from its developer ecosystem to its accessibility and liquidity. However, BTC’s age means that newer cryptocurrencies have been able to introduce improved technical innovations.
- Ethereum (ETH) is the second most traded cryptocurrency in the world after BTC. Ethereum is not just a virtual currency. Ethereum is a virtual, open source platform on which you can develop and run various applications. On the other hand, ETH has no limits on the number of coins created unlike BTC. This may be a benefit or drawback depending on your perspective.
- Dash is much faster than most other cryptocurrencies, including BTC. Dash maintains a two-tier architecture with miners and “masternodes” that allow the Dash network to perform near-instant transactions as well as coin-mixing for an additional layer of privacy. However, Dash is a relatively young cryptocurrency and still lacks a critical mass of users and merchants.
If you’re interested in transferring value between cryptocurrencies to diversify your portfolio, consider setting up an account with Uphold, a digital wallet that allows you to buy, sell, and send over 30 different currencies.
Balancing Your Portfolio with Uphold
Uphold makes it easy to diversify your cryptocurrency investments as well as balance your portfolio with traditional currencies and even precious metal commodities.
With Uphold’s easy-to-use dashboard, you can easily and instantly make decisions for your portfolio flexibly and securely.
After opening an Uphold account and adding funds, there are over 30 currencies both crypto and traditional immediately at your fingertips. Cards for cryptocurrencies, traditional currencies, and precious metal commodities can easily be added and removed from your dashboard based on your desired portfolio structure. Each card will show you how much value you are holding in the given currency.
Uphold makes cryptocurrency portfolio diversification easy. You have the tools at your fingertips; the rest is up to you!
This does not constitute investment advice. Please consult your financial professional if you have questions about investing in cryptocurrency.